China looking at deal with U.S. to recover dirty assets -report

China is looking at signing an agreement with the United States to target assets illegally taken out of China by corrupt officials, a state-run newspaper said on Monday, as the government tightens the screws in its anti-graft battle.

Reuters| Last Updated: Dec 30, 2014, 00:34 AM IST

Beijing/Washington: China is looking at signing an agreement with the United States to target assets illegally taken out of China by corrupt officials, a state-run newspaper said on Monday, as the government tightens the screws in its anti-graft battle.

China has vowed to pursue a search, dubbed Operation "Fox Hunt," beyond its borders for corrupt officials and business executives, and their assets.

But Western countries have balked at extradition deals with China, partly out of concern about the integrity of its judicial system and treatment of prisoners. Rights groups say authorities use torture, and the death penalty is common in corruption cases.

The China Daily said the central People`s Bank of China was talking to the U.S. Treasury Department`s Financial Crimes Enforcement Network (FinCEN) about an agreement targeting ill-gotten assets in the United States.

FinCEN spokesman Stephen Hudak declined to comment directly on whether negotiations with China were underway. Hudak said the agency "often engages with foreign partners to share information in order to protect the financial system from money laundering, corruption, and terrorist finance." 

Chinese state media reported earlier in December that Beijing is set to finalise a similar deal with Canada.[ID:nL3N0TZ2TA]

The central bank was also looking at a deal with Australia, the China Daily said, citing Zhang Xiaoming, deputy head of the Finance Ministry`s legal assistance and foreign affairs department.

"After the agreements are made, China will share intelligence with the U.S. and Australia, which will also offer information to their enforcement agencies to conduct further investigations," Zhang told the English-language paper.

Last year FinCEN signed what it described as an "unprecedented" agreement with Mexican authorities to share information that could help combat money laundering to terrorist financing, focused on international criminal groups in both the United States and Mexico. 

While FinCEN receives and analyses suspicious financial transaction data, and can share that data with others, it does not have the ability to freeze funds. A representative of the Justice Department, which would need to seek a court order in order to freeze or seize assets, was not immediately available for comment.

The latest senior figure to be caught up in China`s anti-corruption drive is Gu Yuanxu, brother-in-law of a one-time senior aide to former President Hu Jintao. The influential Caixin magazine reported Gu had "been taken away recently for investigation" but it did not say what for.