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31 held for running money-laundering racket in Shanghai
Online Edition
POLICE have detained 31 suspects for running an illegal money-laundering scheme in Shanghai involving foreign currencies worth over 2 billion yuan (US$300 million) in the past three years.
The gang, led by a 60-year-old local woman surnamed Sun, provided the service to about 100 people. Most of them exchanged Chinese yuan for foreign currencies to purchase real estate or pay for their children’s tuition in foreign countries.
Police said this was the largest illegal banking in Shanghai in recent years.
Sun had contacts in provinces, including Zhejiang and Sichuan, who helped with the money transfers. The total amount of illegal transactions through the network could exceed 10 billion yuan, police said.
The modus operandi involved clients transferring yuan into domestic accounts set up by the gang. The corresponding amount in foreign currencies was then deposited into foreign accounts of the clients through a remittance channel that worked outside the traditional banking systems. In short, money was transferred without any actual movement.
Police said the clients were hooked into the scheme by scalpers with links to the gang. In some instances, bank clerks provided the information about prospective clients but in most cases scalpers approached them when they went to the bank to exchange currencies.
The scalpers then served as agents between the clients and Sun for negotiating the exchange rates and verification of the transactions during the process.
Deals were also done with banknotes exchanged offline.
The cap for foreign currency purchasing for individuals in China is US$50,000 per year.
Wang Xiaowen, the police officer who handled the case, said the single largest transaction was about 10 million yuan.
“The gang profited between 30 to 50 cents for every US$100 worth of money exchanged,” he said.
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