China laundering hotspot pushes 200bn yuan in transfers

At least RMB207 billion was channeled out of Guangdong Province last year in illegal transfers, with some if it transiting through Hong Kong and Macau.
According to media reports, a total of 83 cases were discovered by security officials from the mainland, involving sums that collectively exceeded RMB207 billion. Many more incidents are believed to have occurred, meaning that the total amount laundered could be much higher than official figures.
Up to 231 suspects have been implicated in current investigations.  Some of these people have been implicated for the laundering of illegal funds, while others as those who solicited such services.
According to a recent report from the U.S. State Department’s Bureau of International Narcotics and Law Enforcement Affairs, responsible for monitoring international money laundering, “China leads the world in illicit capital flows.”
Within China, Guangdong has long been regarded as a national hotspot for illegal money transfers out of mainland jurisdiction – especially in the border cities of Shenzhen and Zhuhai.
Equally Macau has earned a reputation for being a recipient of illegal transfers. For high rollers, it is one way to bypass China’s currency controls and circumvent the watchful eyes of Xi’s anti-corruption bureaucrats.
One case last year involved a mainland official who had attempted to siphon around RMB12 million into Macau to use for gambling purposes, the SCMP reports.
In August last year, police in Macau arrested 17 people after a crackdown on pawn shops that were suspected of aiding the illicit flow of currency into the MSAR.
This kind of illegal activity has persisted for years in China’s southern Guangdong Province, but it may have intensified of late due to a weakening yuan, which is creating strong demand for other currencies.
The HKD and MOP are directly and indirectly pegged to the USD respectively, and this has sheltered them somewhat from the recent turbulence of the RMB and the turmoil of the Chinese stock markets in recent weeks.
Chinese efforts to tackle money laundering have increased in recent years, partially in reaction to the mainland economy becoming more globally connected.
In 2013, the central government intensified its enforcement of anti-money laundering operations and promised that incidents of non-compliance would be taken more seriously. Chinese banks were subsequently required to monitor the transactions of their clients and to rate the risk of such transactions being used for criminal purposes.
However, there remain concerns about China’s willingness to cooperate in the prevention of cross-
border money laundering. For example, in June last year, Chinese authorities refused to assist with an Italian investigation that alleged that Bank of China operations in the Mediterranean country had been complicit in money laundering and had profited from it. Staff reporter