China cracks down on 'black banks' stashing ill-gotten wealth

Chinese police have intensified efforts to crack down on underground banks or "black banks" to prevent suspected corrupt officials from transferring their ill-gotten assets abroad through money laundering, as part of the ongoing anti-corruption campaign.

PTI| Updated: Oct 16, 2015, 16:03 PM IST

Beijing: Chinese police have intensified efforts to crack down on underground banks or "black banks" to prevent suspected corrupt officials from transferring their ill-gotten assets abroad through money laundering, as part of the ongoing anti-corruption campaign.

Crimes related to underground banks have become increasingly severe and complex, a senior Ministry of Public Security official told state-run China Daily.

Apart from some of the worst-hit places, such as Guangdong province, such crimes have spread to other areas of the country, Meng Qingfeng, vice-minister of public security said.
From the end of August to the end of September, police smashed 37 underground banks and captured 75 suspects.

They have also uncovered dozens of major cases involving a total of 240 billion yuan (USD 37.8 billion), the Ministry of Public Security said.

These crimes not only involve financial and securities offences, but have also become an underground route and method of money laundering for many suspected corrupt officials and terrorist suspects to illegally transfer their money overseas, he said.

"A large number of ill-gotten gains flowing in and out of China through underground banks have had a serious impact on foreign exchange management and seriously disturbed order in the financial capital market, posing a serious threat to financial security," Meng said.
In recent years, many suspected corrupt officials have fled overseas to escape punishment.

The US, Canada, Australia and Singapore are among the popular destinations for fugitives due to a lack of extradition treaties and legal differences between China and these countries, the Public Security Ministry said.

Several of them have been repatriated back under pressure from China.

A number of suspected corrupt officials, mostly government employees or senior managers of state-owned enterprises, have illegally transferred millions of dollars overseas through money laundering at underground banks, the ministry said.

The ministry has also tightened supervision of offshore companies and targeted underground banks to prevent suspects from sending proceeds abroad.

"Cracking down on underground banks is an issue closely related to national economic safety, as well as overall economic and social development," Meng said.

He added that the ministry launched a three-month special campaign at the end of August to target underground banks and money laundering crimes.

Special police will also probe major underground bank crimes and clues involving other economic crimes, Meng said.

They will regularly publicise these crimes and the danger they pose to the public.

Zhang Xiaoming, deputy direct-or-general of the ministry's Legal Assistance and Foreign Affairs Department, said financial intelligence exchanges with the US and Australia will be strengthened to trace and confiscate illegally acquired assets transferred by suspected corrupt officials.