Authorities target increasingly complex money laundering schemes

Detailed summary

Chinese authorities are stepping up efforts to combat increasingly sophisticated money laundering schemes that disguise illicit proceeds through legitimate business operations,…

Chinese authorities are stepping up efforts to combat increasingly sophisticated money laundering schemes that disguise illicit proceeds through legitimate business operations, shell companies and complex financial transactions, according to five cases jointly released by the Supreme People's Procuratorate and the Ministry of Public Security on Wednesday.

The cases highlight the growing complexity of money laundering operations and the authorities' coordinated efforts to trace illicit funds, identify those controlling them and dismantle entire criminal networks.

The cases involve proceeds from crimes including illegal fundraising, fraud, bribery and embezzlement. Some involve substantial sums of money and multiple layers of transactions designed to conceal the origins and ownership of criminal proceeds.

They also illustrate various methods used in money laundering, including the use of financial intelligence, separate prosecution of money laundering offenses, corporate money laundering, underground banking operations and the misuse of shell companies.

In one case in Shanghai, a financial services company illegally raised more than 1.9 billion yuan ($285 million) from the public through investment products promising high returns, leaving more than 41 million yuan unpaid.

Investigators found that the company's controller, surnamed Song, had directed the transfer of more than 6.3 million yuan in illegally raised funds to a separate factoring company that was conducting legitimate business.

The funds were mixed with the factoring company's lawful business proceeds and repeatedly used in receivables-financing transactions, thereby concealing their illicit origins. The factoring company had not participated in the original illegal fundraising activities.

Prosecutors determined that both the fundraising fraud and money laundering had been committed in the name of the financial services company and for its benefit, making both the company and Song subject to criminal prosecution.

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