Wed, Nov 10, 2004 - Page 10 News List

China targets illicit foreign currency


Chinese regulators have uncovered billions of dollars in illicit foreign currency holdings, much of it brought in by speculators betting on a rise in the value of the Chinese currency, state media said yesterday.

Between March and December of last year, US$2.25 billion in undeclared funds entered the country, adding to an estimated pool of US$25 billion in "hot money," or unauthorized foreign currency, the Beijing Youth Daily and other newspapers reported.

The newspapers cited a report by the State Administration for Foreign Exchange, or SAFE, which they said was China's first official study on money laundering. SAFE has not yet publicly released the report.

China recently ordered banks to begin regular reporting of large foreign currency dealings as part of a crackdown on money laundering. It also has set up the China Financial Reporting Center to analyze and control such dealings.

During the period covered by the report, authorities discovered 36 money laundering cases involving funds worth US$20.5 million. Accounts holding US$4.4 million were frozen and funds in various currencies totaling US$1.1 million were confiscated, the reports said.

The Chinese government has complained that companies and banks have been repatriating billions of US dollars and other hard currencies, partly because of speculation the government might allow the value of the yuan to rise.

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