China Police Busts Underground Banks Involved in Transactions over US$4.5 Bn

Published By : 26 Nov 2015 | Published By : QYRESEARCH

After months of relentless hunts and efforts, the Chinese police have finally busted an underground network of underground banking that until recently was involved in illegal transactions worth US$4.5 bn at Agricultural Bank of China Ltd. alone. The report of the crackdown was released on Wednesday by the Xinhua News Agency. 

Fourteen suspects who were arrested by the police belonged to four different gangs in the northeastern city of Liaoning province called Dalian. This is the latest crackdown in China, sending strong signals about the start of its fight against illegal outflows of ‘gray capital’. 

As per the initial findings, the daily transaction of these gangs individually exceeded US$100,000. Police source could track down illegal transactions amounting to US$4.51 bn, when over 1.4 mn exchange trading records were scrutinized, and after investing over 2,000 accounts with AgBank, which is known as the third-largest lender in China in terms of asset, the agency reported. 

The economic slowdown in China and the ongoing market volatility have fuelled the already high rate of traffic outflows from the country, which amounted to over hundreds of billions this year. This ongoing situation has triggered alarms for the foreign exchange management system in China, who has to focus their attention towards inhibiting further cash outflows from the country. 

The mission to crackdown underground or ghost banks by Beijing commenced this April, and by far it has been successful to uncover over 170 cases of illegal fund transfer, and money laundering, involving over 800 bn yuan. Until now almost 400 suspects are arrested. 

Earlier this year, the China Central Bank in collaboration with the foreign exchange regulator and Chinese police busted the biggest ever network of underground banking in China. The case involved transactions worth US$64 bn. 

In one of the recently busted cases, called Dalian case, the suspects were working with criminal groups spread across Beijing, Jilin province, and Shandong province.

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