China Busts a $3 Billion Underground Bank as It Tightens Its Grip on Money
- 6 years ago
China Busts a $3 Billion Underground Bank as It Tightens Its Grip on Money
Those limits help the government keep a firm hand on the value of its currency,
and the Chinese authorities credit the limits with helping keep its financial system steady during emergencies like the 1997 Asian financial crisis and the global crisis that began in 2008.
In the end, more than 10,000 people had used an underground bank to effectively funnel $3 billion out of the country
before the authorities put a stop to it, Xinhua, China’s state-run news agency, reported on Thursday.
Ultimately, the Xinhua report said, the authorities discovered
that the people running the underground bank had illegally bought and stole the identity documents of more than 200 people to open the fake accounts that underpinned the enterprise.
The discovery of the underground bank in Shaoguan, in the southern province of Guangdong, offers a
glimpse into how Chinese citizens skirt government limits to get their money out of the country.
Their efforts took on global significance two years ago, when a loss of confidence in China’s outlook led many of its people to send their money abroad, a flow
that helped drive a remarkable $1 trillion drop in China’s stash of surplus foreign money.
Other ways in which people circumvent government limits include directing money to casinos in Macau, the only Chinese territory where gambling is legal, as well as using credit cards to buy luxury goods abroad
and buying insurance policies that can be cashed out overseas.
Those limits help the government keep a firm hand on the value of its currency,
and the Chinese authorities credit the limits with helping keep its financial system steady during emergencies like the 1997 Asian financial crisis and the global crisis that began in 2008.
In the end, more than 10,000 people had used an underground bank to effectively funnel $3 billion out of the country
before the authorities put a stop to it, Xinhua, China’s state-run news agency, reported on Thursday.
Ultimately, the Xinhua report said, the authorities discovered
that the people running the underground bank had illegally bought and stole the identity documents of more than 200 people to open the fake accounts that underpinned the enterprise.
The discovery of the underground bank in Shaoguan, in the southern province of Guangdong, offers a
glimpse into how Chinese citizens skirt government limits to get their money out of the country.
Their efforts took on global significance two years ago, when a loss of confidence in China’s outlook led many of its people to send their money abroad, a flow
that helped drive a remarkable $1 trillion drop in China’s stash of surplus foreign money.
Other ways in which people circumvent government limits include directing money to casinos in Macau, the only Chinese territory where gambling is legal, as well as using credit cards to buy luxury goods abroad
and buying insurance policies that can be cashed out overseas.