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July 20, 2015 -- At the beginning of June, the Dow Jones Shenzhen Index fell harder than the Shanghai Composite, and, according to one Forbes contributor, is currently under its uptrend line as well as the 600 to 660 resistance zone that must be surpassed to reverse the recent breakdown.

Since the crash, mainland China’s stock market has fluctuated wildly. To combat the chaos, Chinese authorities have taken several aggressive, and some say reckless, countermeasures, including bank reserve requirements and interest rate cuts, curbing Initial Public Offerings (IPOs), loosening margin requirements, allowing the use of property as collateral for margin loans, and encouraging brokerage firms to buy stocks with cash from the People’s Bank of China, the central bank of the People’s Republic of China. The government also asked major brokerages to form a fund worth $19 billion to buy shares, which helped only a few stocks while the majority continued to fall.

Furthermore, the Chinese government has created a state-run margin trader worth over $483 billion in its attempt to stem the stock market rout threatening to assail the economic sector. Even more troubling, the Chinese police ministry and the China Securities Regulatory Commission (SRC) announced a probe to investigate evidence of “malicious” short selling of stocks and indexes.

Amidst the chaos of the stock market, the Chinese government should be monitoring money laundering more closely than ever, as current and potential investors, who would rather move assets to safer havens in foreign countries, increase currency outflows.

Not only is China a leading source of illicit capital flows, as reported in the 2015 International Narcotics Control Strategy Report (INCSR) of the United States’ Bureau of International Narcotics and Law Enforcement Affairs, but China has consistently failed to cooperate with other countries while resolving cross-border money laundering cases.

Edcomm Banker’s Academy offers both domestic and foreign Anti-Money Laundering (AML) Compliance programs in our course catalogs. Sample some of our innovatve training tutorials today!

Sources

“China Unleashes $483 Billion to Stem the Market Rout.” Bloomberg Business. Bloomberg, 17 July 2015. Web. 20 July 2015.

Denyer, Simon and Steven Mufson. “A rejuvenated China? Stock market crash punches a hole in Xi's dream.” The Washington Post. The Washington Post, 8 July 2015. Web. 20 July 2015.

Lubman, Stanley. “Dirty Dealing: China and International Money Laundering.” The Wall Street Journal. Dow Jones & Company, Inc., 13 July 2015. Web. 20 July 2015. 

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