Major secret bank busted in Guangzhou

Police broke up a major secret private banking operation in Guangzhou’s Panyu district recently, cutting off a major channel used to transfer assets abroad.

The Guangzhou public security bureau said in a statement on Monday that the secret bank, which was hidden in a food bazaar in the city’s Panyu district, was investigated for suspected involvement in cross-border transactions valued at more than $70 million in the past month.

More than 10 bank accounts were frozen after the operation was raided, according to the statement.

A female suspect, surnamed Ai, who operated the secret bank, was detained. Ai, 30, a native of Sichuan province, had been illegally exchanging foreign currency in recent months, the police said.

Their investigation of Ai was aided by information provided by the operator of another secret bank that was broken up in July. The suspect in that case, surnamed Han, 19, from Gansu province, told police that Ai was active in helping local business representatives illegally exchange foreign currency and transfer money abroad.

With the information provided by Han, police questioned businesspeople and residents in the food bazaar. Ai was detained during a police operation launched on Aug 3. She confessed to the police after she was detained, according to the statement.

Earlier this year, Guangdong police cracked three major cases involving cross-border transactions through secret banks. The cases involved 33 billion yuan ($5 billion) and resulted in the detention of 30 suspects.

A senior police officer from the economic criminal unit of the Guangdong Public Security Department, said Guangdong police would expand cooperation with their counterparts in the Hong Kong and Macao special administrative regions and continue their cooperation with the People’s Bank of China, the State Administration of Foreign Exchange and other departments and organizations to combat underground banks. Transactions through such banks are considered serious economic crimes that undermine the country’s financial stability and threaten economic security.

The private banks usually charge 0.3 to 0.7 percent per transaction as commission for helping clients transfer money abroad.

Enforcement operations in major Pearl River Delta cities including Guangzhou, Shenzhen and Foshan dealt a heavy blow to the underground private banks and helped ensure the smooth financial operation of Guangdong, one of the country’s economic powerhouses, said one officer, who asked not to be identified.