Foreign banks to report suspicious transactions

By Zhu Zhe (China Daily)
Updated: 2006-12-20 07:20

Foreign banks have the same obligations as their domestic counterparts in the fight against money laundering, officials said yesterday.

They were responding to concerns that the full opening-up of the banking sector to foreign competition last week could facilitate illegal money flows.

Foreign banks should report large and suspicious transactions, and maintain records on clients and transactions, Cai Yilian, deputy director of the central bank's anti-money laundering bureau, told a news briefing yesterday.

Cai made it clear that foreign financial institutions in the country are under the supervision of Chinese regulatory authorities. "They shoulder the same responsibilities in anti-money laundering as Chinese banks."

Rules released by the central bank last month defined large transactions but did not specify if they applied to foreign banks, which led to confusion in some quarters.

A single transaction exceeding 200,000 yuan (US$25,400) or a transaction with a cumulative value of 200,000 yuan within a day are defined as large. For foreign currencies, the sum is US$10,000 or its equivalent.

Britain's Standard Chartered Bank, one of the eight banks that have applied to become the first foreign institutions licensed for retail business in the Chinese currency, said it would strictly follow the rules.

"We're very supportive and proactive in anti-money laundering," said Eva Chow, head of corporate communications of Standard Chartered China, adding that the bank has developed a compulsory training course for its staff.

Money laundering refers to the activities and financial transactions that are undertaken to hide the illegal source of income.

Han Hao, deputy director of the economic crime investigation bureau under the Ministry of Public Security, said money laundering in China is conducted mainly through financial institutions, underground banks, online banks, cash smuggling, investment, international trade, and securities and futures markets.

She said it is difficult to estimate the volume of the money involved in the country, but globally, the International Monetary Fund estimates it to be between 2 per cent and 5 per cent of global GDP per year.

According to the China Anti-Money Laundering Monitoring and Analysis Centre, an office under the central bank set up in 2004, 683 suspected money laundering cases were reported to the police by the end of 2005. They involved 137.8 billion yuan (US$17.2 billion) and more than US$1 billion in foreign currencies.

The ministry yesterday also reported that seven cases of underground banks were uncovered this year, with a turnover of about 14 billion yuan (US$1.75 billion).

Forty-four suspects have been arrested in Guangdong, Shanghai, Beijing, Inner Mongolia, Liaoning and Heilongjiang, and 58 million yuan (US$7.4 million) has been seized or frozen, said Han.

The case unearthed in Shanghai in April, involving 5 billion yuan (US$630 million), is the biggest ever in China.

A Singaporean is suspected of operating an underground bank and illegally offering services including transfer and foreign exchange between Singapore and 25 Chinese cities.

(China Daily 12/20/2006 page1)

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