Beijing targets China’s vast web of underground banks in crackdown on corruption
Police claim success against one massive illegal network but a researcher says this could be just the tip of the iceberg
Beijing is training its anti-corruption sights on the country’s vast “underground” banking system, with police busting one record-breaking network in Zhejiang, state media reported on Friday.
People’s Daily reported that the Zhejiang network was the biggest of its kind, carrying out 410 billion yuan (US$64 billion) in illegal foreign exchangetransactions.
Since April, police had uncovered 170 cases of illegal money transfers involving a total of 800 billion yuan of transactions, the Communist Party’s flagship newspaper added.
But Guangdong Academy of Social Sciences professor Li Youhuan, who researches fund flows, said the amount was just a “tip of the iceberg” and warned that it would be difficult to quickly close regulatory loopholes in the system.
Money laundering appears to be rampant as corrupt officials and unethical stock traders race to transfer their dirty money abroad
“China has to deal a heavy-handed blow to underground banks to maintain financial stability,” Li said.