Top bank denies money laundering
Print Edition
BANK of China yesterday denied helping to launder money for people planning to emigrate by ignoring the annual cap on foreign exchange for individuals.
According to a report by broadcaster China Central Television yesterday, the country’s largest foreign exchange bank has frequently allowed wealthy customers to transfer as much money as they want overseas.
Under current regulations, individuals can convert yuan into a maximum of US$50,000 worth of foreign currency per year.
In doing so they are required to explain the purposes for which the money is required.
However, according to the CCTV report, Bank of China “evaded” the rules by helping people who were planning to relocate overseas to transfer unlimited funds to foreign accounts.
The lender also failed to determine the source of the money and did not question what it would be used for, the report said.
It did, however, charge a fee of between 0.3 and 0.4 percent of the value of the deal.
Bank of China dismissed the allegations as “untrue” in an online statement.
It claimed there were “discrepancies between the facts and the report,” which stemmed from the “misunderstanding” of reporters.
The CCTV claims of “money laundering” and the bank operating an “underground money shop” are untrue, it said.
However, a Bank of China employee was quoted in the program as saying: “Wherever the customers’ money is from or however it is obtained, (we can) help them move it abroad.
“To make it plain, we help them to launder their money.”
The Bank of China statement said that in all foreign exchange transactions, staff always ask for proof of both the source and use of the capital, it said.
Shortly after its release, the lender’s statement disappeared from its website and Weibo account, only to reappear without the direct reference to CCTV.
According to the television report, Bank of China opens accounts for customers seeking to move large sums overseas at its branches in Guangdong Province and in the relevant foreign country.
The money is then transferred across the border as a yuan-denominated transaction, but settled in the foreign currency at the overseas branch.
This technique makes it impossible for the State Administration of Foreign Exchange to detect the deals as foreign exchange transactions, the report said.
A government scheme that allows individuals to make cross-border yuan transfers of up to 300,000 yuan without administrative approval is currently being trialed in Guangdong.
In the past three years, almost 600,000 people have emigrated from China, prompting a spike in demand for money transfers, according to a report by government think tank the Chinese Academy of Social Sciences.
Though Chinese banks are among the world’s biggest in terms of assets, they have little international presence. As foreign players in overseas markets they have had to rely heavily on deposits by Chinese companies and immigrants.
The CCTV allegations weighed on Bank of China’s stock yesterday. In Shanghai it fell 0.8 percent to 2.56 yuan (41 US cents), while in Hong Kong it slid 2.8 percent at HK$3.49 (45 US cents).
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