China on Thursday released a draft regulation to put pressure on terrorist groups by freezing their assets, a significant move in the battle against terrorism at home and around the world.
The regulation, drafted by the People's Bank of China (PBC), the Ministry of Public Security and the Ministry of State Security, was released on Thursday to solicit public opinions. The draft applies to financial institutions and specific non-financial institutions, which include legal and accounting firms, real estate agencies, jewel and precious metal trade organizations and auction houses, established in China.
It stipulates that these institutions should immediately freeze the funds or other assets of terrorist groups and their members, on a list compiled by the Ministry of Public Security.
"No organization or individual should provide or raise funds or other assets for terrorist groups and their members, nor provide material or services of any form to them," said the draft.
Huang Feng, head of the Institute for International Criminal Law at Beijing Normal University, said Thursday that the draft would provide legal grounds for the freezing of terrorist assets.
Huang said China's current asset freezing system is at odds with UN Security Council anti-terror resolutions because it only allows the freezing of assets to go with specific criminal or civil cases. "The draft regulation, which targets those recognized as terrorists by the Ministry of Public Security, is a preventive mechanism and shuts off their financial sources," he said.
Li Wei, an anti-terrorism expert with the China Institutes of Contemporary International Relations, told the Global Times that by controlling the purse string of terrorist groups, authorities could significantly contain terrorist activities, strike their capabilities in launching attacks, and strengthening international anti-terror cooperation.
China is under the threat of terrorism, especially in its northwestern Xinjiang Uyghur Autonomous Region. East Turkestan separatists and the East Turkestan Islamic Movement, a terrorist group listed by the UN, have orchestrated a number of deadly attacks in the region. According to Li, terrorist groups are closely linked with overseas groups and their funds flow across borders. They raise funds through individuals, enterprises and criminal acts like drug trafficking and smuggling, and transfer funds through regular and illegal financial institutions as well as cash.
Huang said if a foreign country wants to freeze the Chinese assets of those on the list, they should directly provide the information to China. "However, if the group or individual is not on China's terror list, it will have to go through the process of judicial assistance," he said.
The article 18 of the draft stipulates that if an overseas department demands the freezing of funds or other assets in China or information about clients' identities and transaction, citing concerns over terrorist activities, Chinese financial institutions and specific non-financial institutions should ask it to raise the demand through diplomatic channels or judicial assistance instead of freezing the assets or providing the information directly.
The draft also says if overseas branches of these institutions freeze terror assets in accordance with local laws and regulations, they should report to their headquarters in China as well as state security authorities and the PBC.