Thursday, August 18, 2016


The Peoples' Republic of China has announced that it has arrested 450 individuals, and charged them with money laundering. The figure 200bn Yuan (USD $30bn) has been quoted by the Ministry of Public Security, which announced the closure of 192 so-called underground (unlicensed) "banks." This is all part of China's expanding anti-corruption campaign, with seeks to rein in rampant official corruption, and to seize untaxed wealth, while punishing offenders in a very public way.

China's underground banks are covert operations that seek to illegally move capital out of Mainland China, to evade the onerous regulations on overseas transfers. A wide variety of ruses involving exports, purchases of goods and services, investments abroad, and just about every legitimate reason to transfer  money out of China are imaginatively employed, or transactions are configured to appear clean.

 Chinese nationals are limited to the equivalent of $50,000, per year, transferred abroad, but those with illicit cash, from bribes & kickbacks, or money upon which taxes have been evaded, or criminal proceeds, are driven to export their dirty wealth, by any means possible. Beginning early this year, many large, completely legitimate transfers, especially of foreign currency, have been delayed, due to the policy that the government is seeking to reduce the outflow of wealth.

Compliance officers in North America, and in Europe, should carefully examine large funds transfers from China, and demand that their clients provide sufficient documentary evidence of their legitimacy, lest they later receive law enforcement inquiries into transfers believed to be criminal proceeds. Enhanced due diligence is the prudent order of the day in such cases, without exception.

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