China will implement more rigorous anti-money laundering rules in the pilot free trade zone in Shanghai to ward off potential risks as the country continues its financial reforms, a foreign specialist said yesterday.

The FTZ will allow free yuan convertibility under the capital account, interest rate liberalization and cross-border yuan settlement under the premise of “controllable risks,” the State Council, China’s Cabinet, said last month.

“It’s a necessary step for China to move toward a freer flow of the yuan,” Michael Thomas, director of Wolters Kluwer Financial Services for North Asia, said in Shanghai yesterday. “We will see more transparency from China.”

Wolters Kluwer is a global financial service provider for almost 95 percent of the world’s top-50 banks, according to the Netherlands-based company.

Adopting international financial standards shows China is serious about operating on the global stage, he said.

In 2007, China became a full member of the Financial Action Task Force, the inter-governmental organization that combats money laundering and terrorism financing.

In December, the People’s Bank of China, the central bank, issued new anti-money laundering rules that require financial institutions to rate clients’ risks based on their location and the nature of their business, including their levels of transparency.

“The financial institutions in China are required to submit new anti-money laundering solutions before the year end, which should be fully operational by 2016,” Thomas said.

“It’s important to see this coming after the change of new leadership that focuses on clamping down corruption and fraud,” he added.

The PBOC’s move also came on the heels of an international watchdog’s claim that 2.7 percent of the global gross domestic product is laundered money. Based on the United Nations Office on Drugs and Crime’s estimates, that’s equivalent to 1.35 trillion yuan (US$222 billion) every year in China.