THE RISING THREAT OF CHINESE UNDERGROUND BANKING

On 30 April, Accountancy Age published a report saying that accountants and agents dealing with Chinese clients should be aware of the risk of Chinese Underground Banking to their business and mitigate this risk by conducting client due diligence procedures and identifying sources of funds and wealth.  It says that Chinese underground banking is commonplace within the Chinese community. Involving the transfer of value between countries without actually moving any funds, the informal value transfer system (IVTS) pre-dates Chinese commercial banking and postal systems, but is now being misused by criminals for commodity-based money laundering such as trafficking drugs and humans in the UK and in many other countries.  The problem, and reason for the rise in use of IVTS is that moving money out of China is very difficult and there are significant restrictions on what money leaving the country can be spent on; Chinese law has a strict control on the purposes for which citizens can obtain foreign currency, ordinarily with a $50,000 annual limit for individuals – additionally, since 2017, the maximum allowed value of overseas withdrawals by a private individual using a Chinese bank card is around $14,000.

https://www.accountancyage.com/2021/04/30/dirty-cash-the-rising-threat-of-chinese-underground-banking/

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Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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