Biggest Underground Banking Case: Trillions of Corruption, Fraud and Black Gold Washed Out of the Country

 Biggest Underground Banking Case: Trillions of Corruption, Fraud and Black Gold Washed Out of the Country

Fraudulent export tax rebates and government incentives, transfer of illegal funds overseas, and provide financial turnover channels for online gambling, telecommunications fraud and other crimes... Are underground banks involved in all these illegal acts?

It can be seen from the recent series of extraordinary underground banking cases investigated by public security organs that the criminal means of underground banking are specialized, intelligent and concealed, and the subject of crime is familiarized, circled and creditable. All these trends deserve vigilance, and the punishment should be strengthened to cut off the undercurrent of underground black gold.

One Pot End Xinhua News Agency Fa Zhai Guixi

A few years ago, the police of Qitaihe City, Heilongjiang Province, found in the investigation of a case of a leather sales limited liability company falsely issuing special invoices for VAT, that the companys capital flow and actual production capacity were seriously inconsistent, and tens of millions of unknown foreign exchange were imported into the company.

Continuing investigation found that these fur goods from South Korea, Italy and other countries were imported from an underground money bank in Shandong Province across the border, suspected of illegal foreign exchange purchase. The investigation of the case filed by the police found that the circulation funds of the relevant banks involved in the case amounted to more than 100 billion yuan.

On September 8, 2015, the case of underground money banks investigated by Qitaihe Public Security Department was listed as the case of the Ministry of Public Security, codenamed 9.8 special series of underground money banks.

Recently, great progress has been made in this huge series of underground banking cases in China. Now only 13 underground banks have been destroyed, 117 suspects have been captured, and trillions of yuan have been involved in the transaction. According to the investigators of Qitaihe Public Security Bureau, the 9.8 large series of underground banking cases have become the largest underground banking cases in China so far.

A terrible case! _____________ Floating water trillion

Serving for Various Financial Crimes

Relevant persons said that underground banking is a general term for a class of illegal financial institutions established without the approval of the competent financial authorities of the state. It is also called underground banking that illegally engages in foreign exchange business, capital business and loan business.

As an important tool for transferring stolen money and money laundering, underground money banks directly serve criminal activities such as illegal fund-raising, which infringe on the property interests of the people. As a result, a large number of funds from unknown sources are placed outside the national regulatory system, and there are enormous economic and social risks.

At the beginning of this year, the Supreme Peoples Court and the Supreme Peoples Procuratorate jointly issued the Interpretation on Several Questions Concerning the Application of Law in Criminal Cases of Illegal Fund Payment and Settlement and Illegal Foreign Exchange Trading, which clarifies that transnational (border) cash-paying underground banking mainly refers to the collaboration of illegal elements with foreign personnel, enterprises and institutions or the opening of bank accounts abroad to assist them. Others carry out cross-border remittance and transfer of funds.

In the 9.8 large series of underground banking cases, the suspects use accounts at home and abroad to transfer domestic RMB to foreign countries according to customer needs and convert it into US dollars. Or we can transfer foreign dollars to China and convert them into Renminbi. During these two processes, exchange rate differentials and handling fees are earned respectively.

Because there is such demand for transfer of funds both at home and abroad, sometimes there is no need for real exchange. Just knock on the demand for transfer of funds both at home and abroad, and you can earn the exchange rate difference and handling fee directly. 9.8 project team member said.

Last year, the State Administration of Foreign Exchange notified the public that in cases involving violations of individual foreign exchange regulations, there were violations of the regulations in order to transfer assets abroad, or to use the annual foreign exchange purchase quota of others to separate and purchase individual funds and remit them to overseas accounts, or to exchange and transfer property through underground banks.

In addition to illegal foreign exchange trading, underground banks also provide financial channels for other criminal acts and become accomplices. In the Qiumou fraud case, Dingmou illegal business case and Dingmou export tax rebate case, underground banking plays an important role in the process of false trade and capital flow. In more than three years, the suspect, Ding Mou-mou, applied for export tax rebate from a certain place in the south through an underground banking house, defrauding 7.33 million yuan. The suspect Qiu Mou and other fraudulent groups used underground banks to defraud the government for rewarding hundreds of millions of yuan.

In addition, underground banking provides black support for telecommunications fraud, cult organizations and other crimes, and promotes and breeds other criminal acts. In a cross-border online gambling case investigated by Qitaihe police in the past few years, it was found that more than 70% of the over 200 billion yuan of gambling capital involved was transferred through underground banks both inside and outside China. Earlier, Jiangsu police uncovered a transnational online gambling case involving 7.8 billion yuan in funds. In the course of investigation, it is found that the huge amount of money involved in the case is also flowing overseas through underground banks.

Professor Wu Dan of China Criminal Police Academy believes that underground money banks have made a large number of funds of unknown nature dissociate from the national financial supervision system, seriously destroyed and disrupted the national foreign exchange management system and financial order, and affected the progress of anti-money laundering work in China.

Concealment! Circle! Flood!

A variety of criminal acts intertwined

9.8 series of cases involving fraud, falsely issuing special invoices for value-added tax, fraudulent export tax rebates and other criminal acts. It is because of the interweaving of many kinds of cases and the specialization and chain of criminal links that the cases cover a wide range and involve a large number of people, presenting many new characteristics.

Criminal means are specialized, intellectualized and concealed.

In the 9.8 large series of underground banking cases, criminal suspects are familiar with the capital operation of underground banking, understand the latest changes in the international trade system, and are familiar with the laws and regulations of export tax rebate and other related fields, reflecting the special specialty of economic crime.

In order to evade the attack of public security organs and the state financial supervision, underground banks often take a very covert way to engage in illegal financial activities. With the development of society, underground banks seldom use counter-top forms, and more use electronic payment tools such as telephone bank and electronic bank as carriers. With only one computer connected to the Internet, basic business can be accomplished by a computer system. This kind of illegal transaction completed on the network has brought great difficulties to the collection and extraction of evidence by public security organs.

When investigating an underground bank, the police collected more than 12,000 bank card transaction bills, 350 million data and 15,000 IP data for online banking. Finally, 10 offshore companies and more than 200 personal accounts of the underground bank were locked in and the organizational structure of the underground bank was basically drawn.

Criminal gangs are familiarized, circled and creditable.

When Qitaihe police investigated underground money banks in Heilongjiang, Fujian and Guangdong, they found that many underground money banks have family characteristics. Some are father-son cooperation, some are brothers and sisters partnership, some are cousins and relatives help each other. This feature is particularly evident in some areas where clan relations are more obvious in the south.

Wu Dan and other experts introduced that the modern economic development and the convenience of network operation make the transfer of funds very fast and the coverage is quite wide, which makes the operation scope of Underground Money Banks in constant expansion. Underground banks are interconnected with each other and borrow from each other, forming a huge interconnected network.

The credit characteristics of underground banks are obvious. Police smashed a money bank in 2015, and Zhang Mou, the principal criminal, was wanted online. But when another bank was knocked down in 2017, Zhang was found to have paid 120 million yuan in arrears from another company during his wanted period. According to the police, when borrowing money between underground banks in Shenzhen, sometimes only one phone call is needed without any mortgage.

Crime trends are regionalized, internationalized and diversified.

The reporter met Wang Mou, a criminal suspect captured by the police from Quanzhou, Fujian Province, in the Qitaihe detention center. He said that there are many people doing business in the Philippines, Vietnam and other places along the coast. They want to bring the money back to China, and there are many people in China who want to take the money out. Theres a lot of demand, Theres a lot of underground money banks like ours.

According to the police, there are more foreign trade enterprises in developed coastal areas such as Fujian and Guangdong, which have been the high incidence areas of underground banking cases, and relatively few inland provinces. But in recent years, the criminal tentacles of these underground banks have extended to Qinghai, Liaoning, Heilongjiang and other provinces, and the criminal field has also spread to financial securities, foreign trade exports, sports and culture and other industries.

Expert analysis shows that transregional or even transnational crime is a new trend of underground banking in recent years. Generally, the number of offshore companies controlled by suspects is large, and different offshore companies also open accounts in many banks. Capital flows frequently between different offshore companies and domestic companies and individual accounts. Organizers generally coordinate the exchange of funds between customers and peers, and the operation of funds from abroad and from home is operated by specific personnel. Each link will involve different personnel participation, cross-regional characteristics are obvious.

It is reported that the 9.8 large series of underground banking cases involving Russia, Singapore and other countries and regions, as well as Fujian, Guangdong, Shandong, Liaoning, Hebei, Xinjiang, Jilin, Heilongjiang, Henan and other 20 provinces, regions and cities, 68 criminal gangs of underground banking, more than 300 customs brokers and more than 1300 companies and enterprises, involving hundreds of people, have extremely bad social impact.

Underground money banks become white washing tools

Judicial interpretation is urgently needed to support sentencing

According to the central plan, the Peoples Bank of China, the Ministry of Public Security and other departments play an active role in cracking down on illegal and criminal activities of underground money banks, with initial results. Relevant departments have actively participated in the special rectification of financial risks on the Internet, severely punished illegal fund-raising and crimes involving underground banks that undermine financial order, and safeguarded the order of financial markets.

Despite the high-pressure attacks, underground banking cases are still frequent in recent years. Underground banking is not only the accomplice of criminals who cheat the national government rewards, export tax rebates and other criminal activities, but also the white tool of corrupt funds, which is extremely harmful to society.

Previously, Beijing and Macao police uncovered a cross-border underground banking case involving more than 30 billion yuan. The gang involved used underground banking to illegally cash in Macau casinos for gamblers who needed Hong Kong and Macau dollars.

Expert analysis shows that compared with the underground banking ten years ago, the crime of underground banking has become a service-oriented crime, serving the illegal fund-raising, telecommunication fraud and other criminal activities that infringe on the property interests of the people directly, directly impacting the financial order of our country and forming financial risks.

At the beginning of this year, the judicial interpretation focusing on punishing the crime of underground banking and maintaining the stability of the financial market clearly defined the punishment principle when the crime of illegal business operation coincides with the crime of money laundering or the crime of helping terrorist activities, which demonstrates the attitude and determination of our country to crack down on money laundering and help terrorist activities in accordance with the law.

However, some police officers who have dealt with underground banking cases still lack the effective support of relevant laws and regulations in identifying the crime of providing false data and falsely issuing special invoices for VAT. For example, customs brokers provide false data, such as forgery of official documents, and the penalty is very light. If convicted as a fraud accomplice, the maximum sentence can be indefinite, but lack of support for judicial interpretation.

Reporters learned that in order to escape the attack, some suspects in underground banking will regularly cancel some companies under their control. In addition, some companies are shell companies, sometimes it is difficult for the public security organs to verify one by one within the statutory time limit for handling cases. This leads to a large amount of crime confessed by the defendant, a small amount of crime confirmed by the investigation and evidence collection by the public security organs, and the defendant can not be punished properly.

In addition, some foreign-related factors lead to difficulties in obtaining evidence abroad. Many underground banks are involved in false international trade or have revenue and expenditure behavior in overseas banks. However, due to the different management systems of transnational banks, there are some problems such as difficulties in obtaining evidence.

Relevant experts suggest that we should further enhance the joint efforts of the underground banking industry to prevent and control the risks of underground banking industry. On the one hand, we will continue to improve the laws and regulations on underground banking to guarantee sentencing and conviction; on the other hand, we will strengthen the improvement and implementation of the internal control system in financial institutions and strengthen the monitoring of money laundering in non-traditional banking business.

Source: Xinhua Daily Telecom Responsible Editor: Yang Yi_NBJ10647