20 illegally traded millions in foreign money
By Li Qian |
July 24, 2012, Tuesday
|
Print Edition
Print Edition
SEVERAL former employees of foreign banks are among the 20 suspects who have been arrested for laundering money worth nearly 5 billion yuan (US$783 million) through illegal foreign exchange transactions.
The underground banking network has more than 20 accounts in the business hub of Shanghai, provinces of Zhejiang and Guangdong, and several foreign countries, and profits from higher exchange rates by playing middleman.
Ge Xiaoming, 41, a Shanghai native who has worked in a foreign bank for 16 years, and several other ring members gained many VIP clients in their careers, facilitating the illegal deals, the Beijing Times reported yesterday.
They attracted many domestic and cross-border entrepreneurs in need of foreign currency because strict government rules don't allow foreign exchange of more than US$50,000 per person per year to avoid money laundering.
Using Ge's syndicate, a foreign currency seller would transfer the required money to a domestic buyer's cross-border account, and the buyer remitted the equal sum of Chinese yuan to the seller's domestic account.
But the buyer was required to transfer part to Ge and part to the seller at first for Ge to make his so-called introduction fees, and then Ge returned the remaining sum to the seller.
Both sides got their desired currency and Ge gained 0.1 to 0.3 percent of the total sum, the paper said.
Ge started the illegal business in 2009 after he opened two trading companies. Since many of his clients were domestic, he needed more overseas ones, so he worked with a man called Tang Jie in Shenzhen in south China.
Just one year later, his network has gained a good reputation among small and mid-sized Chinese entrepreneurs who desired a lot of foreign currency while evading taxes, the paper said.
Within the half month before he was arrested in the joint crackdown in May, he had done nearly 100 transactions, each earning him tens of thousands of yuan, police said.
"I didn't know it was illegal," Ge said, stressing that he "just occasionally helped his friends."
"If I had consulted with my lawyer, I wouldn't do it because I don't need it to live," Ge told the newspaper.
Underground banking operations have severely disrupted China's foreign exchange management system and harmed the development of its banks.
Last year, 39 underground banks were busted by police in cases that involved in excess of 70 billion yuan.
The underground banking network has more than 20 accounts in the business hub of Shanghai, provinces of Zhejiang and Guangdong, and several foreign countries, and profits from higher exchange rates by playing middleman.
Ge Xiaoming, 41, a Shanghai native who has worked in a foreign bank for 16 years, and several other ring members gained many VIP clients in their careers, facilitating the illegal deals, the Beijing Times reported yesterday.
They attracted many domestic and cross-border entrepreneurs in need of foreign currency because strict government rules don't allow foreign exchange of more than US$50,000 per person per year to avoid money laundering.
Using Ge's syndicate, a foreign currency seller would transfer the required money to a domestic buyer's cross-border account, and the buyer remitted the equal sum of Chinese yuan to the seller's domestic account.
But the buyer was required to transfer part to Ge and part to the seller at first for Ge to make his so-called introduction fees, and then Ge returned the remaining sum to the seller.
Both sides got their desired currency and Ge gained 0.1 to 0.3 percent of the total sum, the paper said.
Ge started the illegal business in 2009 after he opened two trading companies. Since many of his clients were domestic, he needed more overseas ones, so he worked with a man called Tang Jie in Shenzhen in south China.
Just one year later, his network has gained a good reputation among small and mid-sized Chinese entrepreneurs who desired a lot of foreign currency while evading taxes, the paper said.
Within the half month before he was arrested in the joint crackdown in May, he had done nearly 100 transactions, each earning him tens of thousands of yuan, police said.
"I didn't know it was illegal," Ge said, stressing that he "just occasionally helped his friends."
"If I had consulted with my lawyer, I wouldn't do it because I don't need it to live," Ge told the newspaper.
Underground banking operations have severely disrupted China's foreign exchange management system and harmed the development of its banks.
Last year, 39 underground banks were busted by police in cases that involved in excess of 70 billion yuan.
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