270 people held by Chinese authorities in crackdown on underground banking involving transactions of 900b yuan
Authorities in China’s southeastern coastal province of Zhejiang cracked down on 115 cases of underground banking involving transactions totalling more than 900 billion yuan (HK$ 1.07 trillion) in 2015, state media reports.
The success of the campaign underscored the efforts of Beijing to rein in illegal capital outflows, which hit a record high last year.
More than 270 people arrested during the major operation were allegedly members of 127 criminal gangs, the Legal Daily, a Beijing-based newspaper published under the supervision of the nation’s top administrative body overseeing legal and political affairs, reported on Wednesday .
A press conference was held in Beijing on Tuesday to provide details about the crackdown.
The joint crackdown by five government agencies, including the Ministry of Public Security and the People’s Bank of China, started investigating money laundering and illegal offshore money transfers in 2014.
Suspects detained by the authorities were allegedly all members of underground banking rings that handled cross-border foreign exchange transactions and money transfers without any legal authorisation.
Some of money channelled across the border had been earned through criminal activities, the newspaper quoted police as saying.
In the latest case to be made public, a money-laundering gang successfully transferred 200 million yuan offshore while allegedly using the cover of a Shanghai-based trading company named Yishidun. The company had been placed under investigation on suspicion of manipulating the futures market.
“These underground banks were just the tip of the iceberg,” Li Mingzhao, an official at the Ministry of Public Security who heads the anti-money laundry team, told Tuesday’s press conference, the Legal Daily reported.
China started the raids on the underground banks last April after Beijing launched measures to tackle illegal money flows and crack down on corruption as stock market turmoil and a weakening yuan fuelled concerns over capital flight.
The Legal Daily reported in January that at least 207 billion yuan was channelled out of Guangdong last year through illegal money transfers – seven times as much as in 2014.
The funds were moved in 83 separate illegal money transfers uncovered by Guangdong security officials, with some of the money sent to Hong Kong and Macau.
In one case a wanted corrupt official had sent 12 million yuan to Macau to use as funds for gambling, Xinhua reported.
