“Rule‐based but risk‐oriented” approach for combating money laundering in Chinese financial sectors

Purpose – This paper attempts to examine the practical condition of implementing risk‐based approach (RBA) in Chinese financial sectors. Design/methodology/approach – This paper compares the differences between rule‐based approach and risk‐based approach (RBA), and provides different options to financial institutions considering their own circumstances. Findings – This paper finds that capacity constraint is an issue for directly transplanting the RBA performed by developed countries to Chinese financial institutions. Originality/value – This paper creatively proposes a rule‐based but risk‐oriented AML approach or partial RBA that fits Chinese financial institutions' reality underpinned by Chinese culture, and correspondingly, different assessment methods are presented as well.