China steps up crackdown on illegal forex transactions

Updated 2017-06-08 15:22:56 Global Times

Chinese regulators have stepped up efforts to crack down on illegal activities in the foreign exchange market since the beginning of 2017 by launching hundreds of investigations and hitting violators with large fines.

In 2017, the State Administration of Foreign Exchange (SAFE) has completed 822 investigations into illegal foreign exchange transactions and issued 135 million yuan (.87 million) in fines, according to a report Thursday on financialnews.com.

The agency has also shut down more than 30 underground banks in 2017 that involved over 300 billion yuan, the report said, citing SAFE.

The investigations and fines signaled that the country's top foreign exchange watchdog is going to greater lengths to crack down on illegal transactions and ensure an orderly foreign exchange market, the report said.

"(We will) increase the cost of illegal transactions, strictly enforce laws and regulations and further ensure that companies, investors and banks will follow the rules," a unnamed SAFE official was quoted as saying in the report.

SAFE did not release comprehensive data on its investigations for the past few months, but in a statement posted on its website on May 25, it announced investigations into 10 companies for illegal foreign exchange transactions.

Almost all of the companies were engaged in illegal transactions to avoid taxes or China's foreign exchange quota, according to the SAFE statement. Some of the illegal transactions were made through underground banks that helped companies put their money in numerous accounts under different names to sidestep the quota, the statement said.

Over the last few months, SAFE has intensified scrutiny over foreign exchange transactions with measures such as requiring detailed disclosures for the purpose for buying foreign currency and strictly enforcing the quota of ,000 per person per year.

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