In­creas­ingly elu­sive un­der­ground bank­ing tar­geted

China Daily (Canada) - - CHINA - By REUTERS

Chi­nese po­lice have busted un­der­ground banks that han­dled 200 bil­lion yuan ($30.2 bil­lion) in il­le­gal money trans­fers this year, theMin­istry of Pub­lic Se­cu­rity said onWed­nes­day.

Po­lice said they ar­rested 450 sus­pects in­volved in 158 cases of un­der­ground bank­ing and money laun­der­ing, ac­cord­ing to the min­istry’s web­site.

Bei­jing­has­been­fight­ing il­le­gal cross-border out­flows in an at­tempt to slow cap­i­tal flight as theyuan­cur­ren­cy­weak­enedto near six-year lows.

A spe­cial task force, launched by the MPS, the cen­tral bank and the for­eign ex­change reg­u­la­tor, un­cov­ered il­licit bank­ing ser­vices in 192 lo­ca­tions this year, the no­tice said.

On Wed­nes­day, China state broad­caster CCTV re­ported that po­lice in the south­ern city of Shen­zhen re­cently busted an un­der­ground bank that han­dled 30 bil­lion yuan in trans­ac­tions over a six-year pe­riod.

Po­lice ar­rested 26 ma­jor sus­pects in four dif­fer­ent cities, the re­port said. The un­der­ground bank was dis­guised as a trade com­pany.

“The key prob­lem is that un­der­ground banks have be­come chan­nels for drug deal­ers, smug­glers and eco­nomic crim­i­nals to trans­fer funds,” Shu Jian­ping, head of the anti-money laun­der­ing unit at the Min­istry of Pub­lic Se­cu­rity, told CCTV.

Bei­jing started a cam­paign against il­le­gal bank­ing in April last year and un­cov­ered more than 170 cases of money laun­deringandil­le­gal­fund­trans­fers in­volv­ing more than 800 bil­lion yuan as of lastNovem­ber.

The crack­down in­cluded an in­ves­ti­ga­tion into the coun­try’s big­gest un­der­ground bank­ing case, which in­volves $64 bil­lion of il­le­gal trans­ac­tions.

Although the crack­down has curbed un­der­ground bank­ing to some ex­tent, il­le­gal ac­tiv­i­ties us­ing those “gray cap­i­tal” net­works are still spread­ing and be­com­ing more elu­sive. Col­lu­sion be­tween banks in dif­fer­ent re­gions is rife, the no­tice said.

Un­der­ground banks are chan­nels for trans­fer­ring money ob­tained through il­le­gal ac­tiv­ity, in­clud­ing em­bez­zle­ment of pub­lic funds by cor­rupt of­fi­cials, an ear­lierXin­hua News Agency re­port on the crack­down said.

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