Jointly Combat ‘Underground Banks’

Recently, Beijing Public Security Bureau and Beijing Foreign Exchange Administrative Department of State Administration of Foreign Exchange (hereinafter referred to as <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Beijing foreign exchange administrative department) jointly conduct a special action of combating ‘underground banks’. Key work of this special action is to crack down on underground banks which are engaged in illegal foreign exchange transactions. Three criminal gangs have been torn down and 41 suspects have been arrested. Illicit money that has been withhold on-site amounted to RMB7.6 million and RMB28 million were frozen. The joining force of combating ‘underground banks’ has achieved great success. In order to mobilize the masses and all social classes to struggle against illegal foreign exchange transactions which exert negative influences on national financial order and meanwhile indicate the dynamism and determination against the criminal offenses, Beijing Public Security Bureau and Beijing Foreign Exchange Administrative Department jointly held a press conference. The aim of the press conference is bi-fold. Firstly, publishing the cooperation system between Beijing Public Security Bureau and Beijing Foreign Exchange Administrative Department and achievements that have made. The other aim is to release the current situation on cracking down Yabao Road illicit trade gang in foreign exchange transactions. The specific situation is as followed.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The central government has explicitly demanded that we should take a strong stance against criminal offenses underground banks, further strengthen the supervision on cross-border capital flow and improve anti-money-laundering coordinating system. In the light of the current situation and features of Beijing criminal offenses, Ma Zhenchuan, a member of the standing committee and chief of Beijing Public Security Bureau, heard reports on the current situation, put forward requirements and made arrangements for the following work. Beijing Public Security Bureau has earnestly implemented the policies set by the central government. Under the guidance of Ministry of Public Security and State Administration of Foreign Exchange (SAFE), Beijing Public Security Bureau negotiated with Beijing foreign exchange administration department and co-founded ‘attacking illicit foreign exchange transactions office’ (hereinafter referred to as ‘attacking criminal offenses office) in the June of 2004. Since the establishment of the office, both parties are clear about their own responsibilities, working mechanism are defined, information communication and cooperation have been achieved.

The current situation of illicit foreign exchange trade in Beijing:

At present, Beijing foreign exchange underground banks and crimes of money laundering concentrate in Yabao Road district. The district is surrounded by many garment markets, including Tianya, Jili and Yabao, with Beijing branch of Bank of China in the centre. The number of people who deal with the illicit foreign exchange trade can be varied from ten-ish to tens. The organization can be categorized into two types.

1. On-street illicit foreign exchange gang

The members from this group are generally relatives or friends and mostly they are active around Beijing Branch of Bank of China district. The source foreign currencies are mainly from two ways. One of them is from the daily foreign currency income of Tianya, Jili and Yabao garment markets. The other one is exchanging currencies with foreign community in Beijing.

2. Enterprises that deal with illegal foreign exchange trade

The members of this group are mainly in employment relationships. The one who are in charge of the group founded companies, rent office buildings next to Yabao Road and employ some employees to deal with foreign exchange trade. The source foreign currencies are mainly from Beijing branches of international enterprises which are next to Yabao Road.