The most internationally oriented Chinese bank, Bank of China, has been accused of "money laundering." Yesterday, CCTV reported that Bank of China's "YouHuiTong" business is involved in "money laundering" and similar underground banking activities. Bank of China responded with a denial, stating that the "money laundering" and "underground banking" situations mentioned in the report are inconsistent with the facts, and that the "YouHuiTong" business has also been reported to regulatory authorities.

Accused of "laundering even the dirtiest money"

In the CCTV report, when a reporter conducted an undercover interview with a staff member of a Bank of China branch, the person said, "We don't care where your money comes from or how it came, we can help you get it out." The staff member said, "No matter how dirty your money is, how unseemly, the bank has a way to launder it for you and safely get it abroad."

According to China's foreign exchange management regulations, each person can exchange at most 50,000 US dollars per year, but Bank of China has broken this rule through a "YouHuiTong" business at its Guangdong branch. It is said that through this business, RMB is first transferred to the Guangdong branch, then exchanged, and can flow abroad through cooperation with immigration agencies.

The specific practice is that Bank of China first remits RMB abroad, and then the bank's overseas branches exchange it into foreign currency. Using Bank of China's overseas branches to exchange foreign currency is to avoid national foreign exchange controls, so that any amount of foreign currency can be exchanged. Relevant Bank of China personnel said in the undercover interview that this business actually does not comply with national foreign exchange management regulations.

Bank of China says business has been reported

Bank of China is the most internationally oriented Chinese bank, and being accused of possible money laundering directly affects its stock price. Yesterday, Bank of China's A-shares and H-shares fell by 0.78% and 2.8% respectively. But Bank of China's official response said that the YouHuiTong business has been reported to regulatory authorities, and strict business operation procedures have been formulated during the business process.

Bank of China said yesterday that the media report on the "YouHuiTong" business is inconsistent with the facts and has deviations in understanding. The business "under the premise of complying with regulatory principles, was piloted in 2011 as a RMB cross-border transfer business, limited to two purposes: investment immigration and overseas property purchase. Up to now, many commercial banks in Guangdong have piloted such business." The reporter consulted the central bank on this issue yesterday, but as of press time, the central bank has not responded.

Regarding the accusation of "money laundering," Bank of China denied it and stated that during the business process, relevant branches of Bank of China have formulated strict business operation procedures in accordance with relevant regulatory provisions and anti-money laundering requirements, with unified and clear handling standards for proof of fund use and proof of fund source. The business measures and operation procedures have been reported in advance. During processing, business materials are reviewed one by one, and each transaction is entered into the regulatory business system, which better prevents business risks. The "underground banking" and "money laundering" situations mentioned in the report are inconsistent with the facts.

Related

Ping An Securities accused of inadequate anti-money laundering, fined 6 million

The Hong Kong Securities and Futures Commission issued a statement on July 9 saying that Ping An Securities (Hong Kong) Co., Ltd., the Hong Kong business branch of Ping An of China, was censured and fined HK$6 million for serious internal control deficiencies and other matters.

The Hong Kong Securities and Futures Commission said that an investigation found that from August 1, 2010 to April 30, 2011, Ping An Securities Hong Kong failed to implement multiple internal control provisions on preventing money laundering. This includes failing to establish internal monitoring procedures to prevent money laundering activities; failing to proactively identify and promptly report suspicious transactions to the Securities and Futures Commission and the Joint Financial Intelligence Unit; and failing to provide anti-money laundering training to employees.

The Hong Kong Securities and Futures Commission gave an example, saying that despite multiple obvious warning signs, Ping An did not identify and follow up on a series of suspicious transactions conducted by its client between October and November 2010. The relevant reports were not made promptly as required.