An Analysis Of The Game Between Commercial Banks And The Regulatory Authority On The Issue Of Combating Money Laundering

Money laundering activities have been more obvious in recent years, with the increasing statistics and more sophisticated methods. More and more illegal money becomes "legal" through the organized laundering system, which has dramatic negative impacts on our economic system. Preventing money laundering activities will definitely help improve the health of our national economy and the social stability. Due to the primary ways of getting illegal income is from cash or deposit, illegal money can only be laundered by means of account transfer, cash deposit and withdraw, etc. Building a robust anti-money laundering system is therefore the key to preventing this kind of illegal activities. Commercial bank is the main channel for financing in modern society. That means the focus of this issue should be on our financial system, especially those commercial banks. According to anti-money laundering experiences from other countries, preventing and supervising money laundering must take commercial bank as the principal part.As the backbone in the financial market, the commercial bank should guard against, control and combat the illicit fund which is originally from corruption or criminal activities. In the huge money-laundering system, commercial bank plays a vital role.This paper describes the current status of China’s money-laundering offenses, based on the combination of international anti-money laundering activities. We should recognize that the anti-money laundering work need governments and financial institutions to work together to achieve the Anti-Money Laundering goal.In the anti-money laundering regulatory, the anti-money laundering supervision of commercial banks is the focal point of anti-money laundering supervision. China’s commercial banks face a very severe situation of money-laundering. The subject and the methods of money-laundering have become more and more diversified. Commercial banks in China has made the efforts in anti-money laundering and achieved some success. However, there are some difficult in the anti-money laundering of commercial bank. Primary commercial banks to carry out anti-money laundering work still face a number of concepts, legal, technical, mechanisms, and management challenges.In anti-money laundering operations, the game relation exists between the three who are money launderers, commercial banks and regulatory agencies. This paper focus on the game relation between the commercial banks and regulatory agencies in the anti-money laundering. By building the complete information static game model and the complete information dynamic game model between the commercial banks and regulatory agencies, we can conclude that regulatory agencies can prompt commercial banks to actively cooperate with regulatory agencies by establishing an effective incentive mechanism,taking a proper penalize and building a sound market supervision and restraint mechanisms.