China's Biggest Underground Banking Case Cracked

Police in eastern China have exposed the biggest illegal banking case in the country, a scheme involving eight gangs responsible for transactions worth RMB 410 billion ($64.2 bln). The scheme used scores of shell companies based in Hong Kong, through which more than a million foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term transactions were carried out aiming to move money out of mainland China, local media report.

Investigations started in September 2014, focusing on the eastern Chinese province of Zhejiang, and so far 100 people suspected of taking part in the scheme have been detained by the authorities. One of the leaders of the criminal group told China's state information agency Xinhua that a lot of investors wanted to circumvent the strict rules governing Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term trade in the country, which earned one of the gangs involved in the group more than RMB 50,000 ($7,829) a day at times.

Money Laundering

According to Chinese media cited by Reuters, the group used non-resident accounts to channel money offshore mainland China, where its tracks would be all but lost. The scheme involved clients depositing renminbi in local resident accounts, the money was then transferred to the non-resident accounts and used to buy foreign currency through fake trade transactions. The actual money was directly sent to banks in Hong Kong and abroad.

China is having to deal with a lot of suspicious financial service providers and this case is the latest move in an orchestrated clamp-down on such organizations that are often involved in money laundering, gambling and fraud, according to the Chinese Ministry of Public Security. The authority added that since August this year, 37 illegal banks have been exposed.