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China Releases Typical Cases of Illegal Forex Activities

Wed, 22 May 2024
Categories: China Legal Trends



On 27 Dec. 2023, China’s Supreme People’s Procuratorate (SPP) and the State Administration of Foreign Exchange (SAFE) jointly released typical cases of cracking down on illegal foreign exchange crimes.

This batch consists of eight cases, mainly involving cross-border forex arbitrage.

The SPP and SAFE stated that the characteristics of current illegal forex crimes are as follows.

I. Concealment of cross-border fund transfers

For instance, underground banks engaged in illegal forex trading mainly adopt a cross-border “arbitrage” model, where RMB is transferred domestically and foreign exchange is transferred overseas, forming an independent cycle of funds between domestic and overseas locations, thus evading regulatory scrutiny.

II. Rapid and complex fund transactions

Perpetrators take advantage of the convenience and efficiency of payment and settlement tools such as bank cards, POS machines, and online payments to launder, disperse, and aggregate funds across multiple banks and layers of accounts nationwide. Additionally, they use new payment methods, such as virtual currencies, to further conceal fund transfers.

III. Dissemination of illegal information on social media

Perpetrators disseminate large amounts of information on social media and live-streaming platforms, and engage in private communication via overseas websites and messaging apps. These actions enable them to solicit advertisements for illegal forex exchanges through public and private contacts, thereby facilitating illegal transactions. Moreover, once these communication channels have been cracked down and blocked, perpetrators can quickly change web addresses and resume their activities.

The SPP and SAFE have stated that they will maintain a strong stance in cracking down on illegal cross-border financial activities.



Photo by Jason Leung on Unsplash


Contributors: CJO Staff Contributors Team

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