The Dilemma and Challenges of AML/CFT Implementation for Private Fund Industry in China

Li Nan

The purpose of this paper is to encourage fund institutions to enhance the ML/TF implementation based on the distinct features of the fund industry in China, to take a more holistic approach to audits, and to create a more efficient and robust monitoring process across funds. This paper highlights the key issues the auditor should penetrate to improve efficiency of the AML audit and lists the typical challenges emerging in prevailing fund practice. A more emphasized, targeted, and efficient risk-based approach should be taken, to include the depth of AML control by legal representative, risk tolerance on various fund products, risk management in a placement agent model, and extensive UBO review. It offers specific considerations for fund institutions for designing an AML audit as well.

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