Secret Guangzhou bank used to transfer assets abroad busted, East Asia News & Top Stories

SHANGHAI • The Chinese police have broken up a secret banking operation used to transfer assets abroad, the official China Daily reported yesterday.

The underground bank, hidden in a food market in the southern city of Guangzhou, is suspected of being involved in cross-border transactions worth more than US$70 million (S$95 million) in the past month alone, the paper said, citing a statement from the city’s public security bureau.

China is cracking down on underground banks and other foreign exchange violations in a bid to “prevent and resolve risks from cross-border capital flows” and bolster the yuan, the country’s forex regulator said in July.

Last year, Chinese police busted more than 380 underground banks, involving more than 900 billion yuan (S$184 billion), and arrested more than 800 suspects, according to the Ministry of Public Security, Reuters reported.

Guangdong province busted three large underground banks earlier this year involving cross-border transactions worth three billion yuan and resulting in the detention of 30 suspects, China Daily said.

A senior police officer said Guangdong police would extend cooperation with their counterparts in Hong Kong and Macau and with departments in China such as the People’s Bank of China, to crack down on these illegal banks.

  • $95m

    Value of the cross-border transactions in the past month that the underground bank is suspected of being involved in.

Transactions with such underground banks are seen as serious economic crimes in China that undermine the country’s financial stability, reported the paper.

Private banks usually charge a fee of 0.3 to 0.7 per cent per transaction for helping clients transfer money abroad, it added.

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More than 10 bank accounts were frozen after the police operation in Guangzhou, the paper reported.

A female suspect surnamed Ai, was arrested for allegedly operating the underground bank.

The police were led to her after busting another such bank in July. The suspect in the case, a 19-year-old man, had provided information about Ai.

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