China's Suspected Money Laundering Cases Rise 12-Fold

Business Materials 7 November 2007 07:15 (UTC +04:00)

China's central bank said suspected cases of money laundering jumped 12-fold to 387 billion yuan ($52 billion) last year as measures to monitor currency flows in the booming economy were tightened.

Police resolved more than 100 of 1,239 cases referred to them, involving 40 billion yuan, the People's Bank of China said in a report posted on its Web site yesterday. In 2005, the central bank reported 32.8 billion yuan of suspect transactions to police.

The jump in suspicious movements reflects China's efforts to prevent money laundering from undermining an economy that grew 11.5 percent in the first nine months of this year. The government is cleaning up the banking industry after spending almost $500 billion bailing out China's four biggest state-owned lenders hurt by bad loans, according to an estimate by Moody's Investors Service.

`` China is improving its monitoring system,'' said Qu Qing, an analyst at Shenyin Wanguo Research and Consulting Co. in Shanghai. ``Better monitoring means more money laundering can be detected.''

Ten foreign lenders were among 662 banks fined a total of 40.5 million yuan for violating money laundering rules last year, the bank said, without identifying them.

The bank took enforcement action against more than 70 underground money exchange and laundering units involving $3 billion in 2006, the bank said.

Suspicious Transactions

The number of ``suspicious'' foreign currency transactions reported to the bank rose 112 percent to 4.22 million from a year earlier, the bank said, without giving a value.

China's central bank issued the nation's first anti-money laundering regulations in 2003 and formed a joint group to tackle the problem in 2004.

The country's first anti-money laundering law came into effect on Jan. 1. It requires financial institutions to inform the central bank of any cash transaction of more than 200,000 yuan, or $10,000 in foreign currency.

The places where the central bank found suspected money laundering included Shanghai and the provinces of Shandong, Guangdong and Yunnan, it said. ( Bloomberg )