Bank of China (BOC) denied helping to launder money for people planning to emigrate by ignoring the annual cap on foreign exchange for individuals. According to a report by China Central Television (CCTV), the country’s largest foreign exchange bank has frequently allowed wealthy customers to transfer as much money as they want overseas. Under current regulations, individuals can convert yuan into a maximum of USD50,000 worth of foreign currency per year. BOC also failed to determine the source of the money and did not question what it would be used for, the report said. The CCTV report alleged that Bank of China opens accounts for customers seeking to move large sums overseas at its branches in Guangdong province and in the relevant foreign country. The money is then transferred across the border as a yuan-denominated transaction, but settled in the foreign currency at the overseas branch. This technique makes it impossible for the State Administration of Foreign Exchange (SAFE) to detect the deals as foreign exchange transactions. A government scheme that allows individuals to make cross-border yuan transfers of up to CNY300,000 without administrative approval is currently on trial in Guangdong.

In the past three years, almost 600,000 people have emigrated from China, prompting a spike in demand for money transfers. The accusations may lead to tighter control of the finance and banking sectors. An employee of a major state-owned bank, speaking on condition of anonymity, quoted by the South China Morning Post, said: “BOC is not the only bank providing these kinds of services. All major banks do. Many banks received directives from the government discouraging them from running the service. But this is a growth area and demand is huge.” A branch employee at BOC in Guangzhou said the service has been suspended and there is no timetable for its resumption. Zhou Xiaochuan, Governor of the People’s Bank of China (PBOC), said more time is needed to investigate alleged money laundering by the Bank of China (BOC). “The priority at the moment is to find out what’s going on,” he said at a media briefing on the sidelines of the sixth round of the China-U.S. Strategic and Economic Dialogue in Beijing.