China flags US$326mln Macau-funds gang jailing as warning

Carolynmary

Chinese authorities have flagged eight “classic” finance-related criminal prosecutions on the mainland, one of them involving up to CNY2.3 billion (US$325.6 million currently) 

being exchanged in Macau, including for Hong Kong dollars.

That case saw alleged misuse within Macau of point-of-sale (POS) terminals to evade cross-border currency exchange limits.

The information was in a joint press release by China’s State Administration of Foreign Exchange, and the country’s Supreme People’s Procuratorate.

The release, addressed to all mainland public-prosecutor offices and regulatory bodies dealing with foreign exchange, was described as a “reference” for law-enforcement work aimed at maintaining the “order” of China’s foreign 

exchange market, and protecting the country’s “financial security”.

Defendants in the POS case were sentenced in 2022, after being found guilty of “illegal business operations”, under a provision of China’s criminal code.

The POS case involved a 20-strong “criminal group” using terminals that appeared to show transactions happening on the mainland – where they were less likely to be barred or flagged as suspicious – instead of Macau, where the transactions were actually taking place.

The scam allegedly ran from February 2016 to January 2019, enabling currency transactions with an aggregate worth of up to CNY2.3 billion. The group had Hong Kong dollars that were held in accounts at “Macau casinos” for facilitating the money trading.

The group had charged patrons a “5-percent service fee” per the value of each money-exchange transaction, the 

authorities said. Hong Kong dollars could also be changed back into Chinese yuan, and the value remitted to a user’s mainland bank account.

Prosecution of the case was assisted by the confiscation by the Macau police of the POS terminals used by the group, the release noted.

On May 23, 2022, a Beijing court issued sentences for the offences. The heaviest penalty went to the group’s alleged founder – identified as a 

 person with the surname ‘Xu’ – via a 10-year jail term, plus a fine of CNY1.5 million. The rest of the defendants were jailed and fined, with the second-

heaviest penalty being seven-and-a-half years in prison and a CNY1-million fine.

A second case flagged by the Chinese authorities among the eight “classic” finance-related criminal prosecutions on the mainland involved CNY15.14 million in illicit exchanges by a group led by two individuals respectively surnamed ‘Li’ and ‘Yu’, for a period from November 2020 to June 2021. 

They had allegedly targeted patrons of “Macau’s casinos and hotels” for the unauthorised money changing.

Members of the group had opened more than 10 bank accounts in Shenyang city, in China’s northeastern Liaoning province, to receive and transfer capital for the currency-exchange operation , the release noted.

On February 9, a Shenyang court gave Li two-and-a-half years in prison for “illegal business operations”, plus a fine of CNY40,000. Yu was dealt with in a process relating to other criminal charges, the release said.

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