Five foreigners were among 41 suspects detained for illegally
dealing in vast amounts of foreign exchange (forex), Beijing police
said yesterday.
It is the first time that so many foreigners, all of whom were
from Libya, have been caught in a crackdown on underground banks;
and police said that many more, not necessarily from the same
country, were involved.
More than 35 million yuan (US$4.3 million) of illicit money was
seized in the raids, which were described as "recent." But police
said the amount is only a small part of forex handled by the three
underground banks, each of which allegedly transferred nearly 1
million yuan (US$123,000) in and out of China each day.
Among the services offered by the illegal banks was money
laundering, reportedly enabling corrupt officials or tax evaders to
convert their renminbi into hard currencies and keep it abroad or
have it sent back as gifts.
The Beijing Municipal Public Security Bureau said yesterday that
investigations found that a number of foreigners had direct or
indirect connections with illegal forex dealings as they are not
subject to as many restrictions as Chinese in forex
transactions.
According to regulations, Chinese citizens may not remit more
than US$10,000 per time and may only convert up to US$8,000 a year
for personal use.
All three underground banks were located in the Yabaolu area of
east central Beijing, said Zhu Guoyou, a senior official with the
bureau's economic crime investigation division.
Zhu said Yabaolu has become a hub for illegal forex dealings in
the capital, where scalpers (or "Huangniu" in Chinese) openly ply
their trade.
Fu Zhenghua, deputy director of the public security bureau, said
the crackdown on the three underground banks heralded a massive
sweep against illegal forex services, which was a "quite serious"
problem in Beijing.
Fu said all the information that led to the operation was
provided by the Beijing Administration of Foreign Exchange. "We
also have many other clues about the illegal dealings of other
underground banks."
Liu Chunming, deputy head of the administration, said: "Most of
the large forex dealings handled by underground banks have close
connections with money laundering."
Beijing's effort against illegal forex services is part of a
national campaign started last year.
In February, the Ministry of Public Security said it had busted
155 underground banks dealing in 12.5 billion yuan (US$1.5 billion)
nationwide.
(China Daily October 25, 2005)