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- Index number:
- 000014453-2019-0040
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- Dispatch date:
- 2010-11-05
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- Publish organization:
- State Administration of Foreign Exchange
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- Exchange Reference number：
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- Name：
- Circular of the SAFE on Penalties Imposed on Underground Money Shops, Online Foreign Exchange Speculation, and Other Kinds of Illegal Foreign Exchange Transactions
To ensure the economic and financial security of the state, safeguard normal order in the foreign exchange market, and block the major channels for cross-border flows of hot money,the State Administration of Foreign Exchange (SAFE) is collaborating closely with the public security organs to intensify efforts to crack down on illegal foreign exchange transactions, including underground money shops and online foreign exchange speculation. A number of cases involving underground money shops and online foreign exchange speculation have been discovered. The cases that have been investigated and resolved as follows:
On June 16, 2009, the Shenzhen Branch of the State Administration of Foreign Exchange collaborated with the public security organs in ferreting out an underground money shop operated by the Wu brothers under the fraudulent name of the Wuji Dongcheng Shop.A total amount of RMB1.1 million in cash was seized on site, and 370 bank accounts in an amount of over RMB30 million were frozen. On August 3, 2010, the Wu brothers were sentenced to fixed prison terms and fined by the local Peoples Court for the crime of illegal operations.
AFG Investment Management (Shanghai) Co., Ltd., established by Lü, carried out financial business such as foreign exchange transactions, the taking of deposits, loan extensions, and credit card agency without approval from the relevant authorities, involving a combined transaction value of RMB11.1 billion. On May 12, 2010, the local Peoples Court imposed fines on the company for the crime of illegal operations, and Lü was sentenced to a fix prison term and fined for the crime of illegal operations and illegal cross-border transactions. Lüs illegal income of more than RMB50 million was confiscated.
On March 18, 2009, a case of illegal foreign exchange transactions was ferreted out in Zhuhai city, involving the criminals Chen and Lin and their associates. The amount of HKD1.3 million and RMB30,000 in illegal transactions was seized, and a total of RMB2.29 million of illegal foreign exchange transactions in bank accounts was frozen. On June 8, 2010, Chen was sentenced to a fixed prison term and fined by the local Peoples Court for the crime of illegal operations. The cash seized on site and the funds deposited in the frozen accounts were confiscated and turned over to the national treasury.
During the period from January to May 2009, Wu carried out illegal foreign exchange transactions in a teahouse located in Dongcheng District of Dongguan city, and collected service charges from his customers. On May 21, 2009, the den was discovered out and destroyed. The police captured 19 passbooks, 36 bankcards, laptops, and other tools for illegal foreign exchange transactions. In July 2010, Wu was condemned to a fixed prison term and fined by the local Peoples Court for the crime of illegal operations.
On April 23, 2010, the Foreign Exchange Administration in Jiangmen city, in collaboration with the public security organs, cracked down on an underground money shop operated by Huang from Enping city. A total of USD110,000 was seized on site. In September 2010, the Foreign Exchange Administration in Jiangmen city imposed administrative penalties on Huang and Zhou in the form of fines in accordance with the Regulations of the Peoples Republic of China on Foreign Exchange Administration.
In March 2009, Liu and his associate investors collaborated in registering and establishing UBS International Holdings Co., Ltd. in Hong Kong through Hong Kong United Accounting & Secretarial Limited. They rented a place on West Zhongshan Road in Shanghai and engaged in illegal gold business including foreign exchange and gold transactions. On January 15, 2010, Liu and the other two associated were sentenced to fixed prison terms and fined by the local Peoples Court for the crime of illegal operations.
In June 2007, Li cooperated with his associate sin establishing the Shanghai Mobijet Enterprise Investment Management Co., Ltd. and engaged in illegal gold business including foreign exchange and gold transactions. On May 31, 2010, the local Peoples Court imposed fines on Shanghai Mobijet Enterprise Investment Management Co., Ltd. for the crime of illegal operations, and Li and the other two associates were sentenced to fixed prison terms and fined for the crime of illegal operations.
Kunming Xinghui Economic Information Consulting Co., Ltd. illegally introduced clients to become involved in the online foreign exchange margin trading operated by the overseas GFX Capital Markets Ltd. In 2008, the Foreign Exchange Administration of Yunnan province, collaborating with the public security organs, captured 41 pieces of computer equipment used for criminal purposes and relevant evidence, and arrested 28 suspects. On February 9, 2010, Xu and nine other major suspects were sentenced to fixed prison terms and fined by the local Peoples Court for the crime of illegal operations. The equipment and illegal gains involved in the crime were confiscated as required by law.
During the period from December 2007 to October 2008, Xiamen Baochangxing Investment Consulting Co., Ltd. and its branch in Zhangzhou city engaged in illegal foreign exchange margin trading without a license to engage in related financial business. The case involved a total sum of USD2.44 million from illegal operations and USD390,000 from illegal income. On May 10, 2010, Li and his associates were sentenced to fixed prison terms and fined by the local Peoples Court for the crime of illegal operations.
Between May 2007 and 2009, He and Cui used Baijiaxin Investment Consulting Management Co., Ltd. as the agent for Shanghai Baifujin Company in Taizhou city of Zhejiang province and accepted 20 clients and an amount of over RMB5 million to carry out online foreign exchange speculation. By paying and collecting funds in RMB within the territory of China while collecting and paying corresponding foreign exchange funds outside the territory of China, the two received illegal service charges of more than USD40,000. On September 13, 2010, He was sentenced to a fixed prison term and fined for the crime of illegal operations and Cui was detained and fined by the local Peoples Court.
All market entities shall firmly establish a sense of legal governance, and earnestly comply with the regulations on foreign exchange administration. Carrying out business at illegal places and through illegal channels for transactions such as underground money shops and online foreign exchange speculation is strictly prohibited. The foreign exchange administration departments shall continue to strengthen cooperation with the public security organs and play an active role in cracking down on underground money shops, online foreign exchange speculation, and other kinds of illegal foreign exchange activities. In addition, intensified efforts shall be made to combat foreign exchange-related criminal activities and stiff penalties shall be imposed on cross-border flows of hot money so as to conscientiously safeguard the foreign-related economic and financial security of the state.
November 5, 2010
