The law-breaking ways by which some individuals and firms are moving money across China’s borders were exposed by the country’s foreign currency regulator, which even listed their top cases.
As the State Administration of Foreign Exchange (SAFE) found, the most common methods of illegal money transfer were fake invoices, false trade records and invalid custom clearance forms, South China Morning Post
identified and shamed five companies in their list, including Ningbo Big Fortune International Trade, which moved $119 million overseas by colluding with “several overseas companies,” forging trade contracts and inflating costs by up to 20 times their market prices just between August and September 2015. As a result, it was fined $3.3 million for “seriously disturbing foreign exchange market order.”
The other four companies — Daming Electron, Hangzhou Zhiyu (an IT firm), Harbin Goldenway Wooden Products and Shanghai Daxinhua Logistic — illegally moved $107 million overseas between 2015 and 2016.
The regulator also named five individuals involved in unlawful transfers, including a Guangdong resident who remitted $4.35 million to his personal accounts in Hong Kong and Australia by sneakily using the $50,000 annual foreign exchange purchase limits of 84 other people. For the transfers that took place between December 2015 and January 2017, the person was penalized 1 million yuan (around $145,700).
Other ways of moving money out include faking transaction amounts for customs, placing money into the accounts of other people or employees for installment transfers later, transacting with underground banks and fabricating reasons for fund transfers to legitimate banks. One individual was caught using 31 different bank accounts to move their money to Hong Kong.
SAFE promised to ramp up its efforts in checking the authenticity of foreign exchange businesses of banks this year, Xinhua
Zhao Xijun, finance professor at Renmin University, acknowledged the regulator’s move, “SAFE is sending a message that punishment will continue. Financial institutions will be held responsible if they collude.”