31 Mar 2016
China is emerging as a global hub for money laundering, according to a report published by Associated Press this week. The newswire reviewed intelligence documents and court filings, and found that weaknesses in the Chinese financial system have been exploited by criminal gangs, drug cartels, and fraudsters.
Commentators say that money is being laundered via trade-based schemes, informal money transfer systems such as fei qian (literally, ‘flying money’), ‘underground’ banks, and through large state-owned financial institutions.
Israel resident Gilbert Chikli admitted defrauding major global brands, including Disney and American Express, telling AP that he channeled around 90% of his illicitly gained funds through China and Hong Kong. He claims that “China has become a universal, international gateway for all manner of scams”.
A former financial intelligence agent at the US Treasury department expressed concerns, saying that money laundering in China is currently “completely off the radar screen”.
The results of AP’s recent investigation contribute to a growing number of studies in this area. In 2015 Washington-based group Global Financial Integrity estimated that $1.4 trillion of illicit money left China between 2004 and 2013. China was ranked first among 149 countries for the highest average illicit financial flows over the course of the decade.
Chinese officials have denied that the country is, or will be, a centre for money laundering.
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