Laundering ‘underground bank’ busted in China
Police in south China say they have broken up an underground bank that illegally sent 10 billion yuan (1.46 billion U.S. dollars) of laundered criminal cash abroad since 2004. Around 200 police officers raided the underground bank in Fangchenggang in May this year and seized 70 deposit books, 590 bank cards, two cars, six computers and 680,000 yuan of cash. They also froze 327 banking accounts involved in the money-laundering case with book value of 47.5 million yuan. Chinese police arrested 11 individuals, of which 8 had the Vietnamese nationality.
The group acted as a bank and offered financial services to criminals that wanted to move their money out of the China. Since the group had no real financial network, they had to rely on the infrastructure of other banks to wire transfer funds. All they did is open accounts and use these to funnel criminal funds for third (criminal) parties.
Some Chinese investors who want to speculate in foreign real estate and other markets have turned to underground banks, such as the one run by the alleged gang, to evade government restrictions on money transfers. But such limits have been eased in recent years. Criminals have always been drawn to similar setups since they allow for a anonymous shell that hides their own identities.
The gang opened accounts at legitimate banks in China and used these accounts to move criminal funds abroad, most of it to Vietnam. One of the arrested was particularly busy with these activities. Records show he used 77 of the accounts opened to illegally transfer 7.2 billion yuan on more than 10,000 occasions from November 2004 to March 2008. The money laundering gang made money by charging for every transfer they facilitated.
This MO is very common but we do not see it often at such a scale. More laundering news from China to follow?
