World | Chinese banks, HSBC caught up in huge money laundering scam

Chinese banks, HSBC caught up in huge money laundering scam

News about the so-called Global Laundromat scandal not to be found, as yet, in China's media

Photo: Reuters
Photo: Reuters

Several of China’s state-controlled banks, as well as HSBC’s Hong Kong branch, have allegedly processed hundreds of millions of US dollars from a vast money-laundering operation run by Russian criminals with links to the Russian government and the spy agency FSB.

Documents obtained by the Organized Crime and Corruption Reporting Project show that at least US$20 billion was moved out of Russia between 2010 and 2014 in a vast criminal operation called “The Global Laundromat”.

Over that period, Bank of China – one of the biggest state-owned commercial banks in China – processed a total of US$716 million of the Laundromat cash via branches in mainland China, Hong Kong and Macau, making it the fourth most active bank in the plot, as shown by the documents.

Several other Chinese banks, including China Constriction Bank Corporation, Industrial and Commercial Bank of China (ICBC), Bank of Communication and Agriculture Bank of China, also ended up with tainted money.

According to Asia Times’ calculations, the five largest Chinese banks processed more than US$1 billion. The OCCRP investigation shows that the US$20 billion found its way to 96 countries, with about US$915 million ending up in mainland China, and US$927 million in Hong Kong.

HSBC, which is headquartered in London, processed US$545.3m in Laundromat cash, mostly routed through its Hong Kong branch, according to the Guardian newspaper. HSBC, headquartered in Hong Kong up until 1993, is by far the city’s biggest bank.

HSBC responded to the allegations by saying: “This case highlights the need for greater information sharing between the public and private sectors, each of whom holds important information the other does not.”

“The bank has systems and processes in place to identify suspicious activity and report it to the appropriate government authorities.”

Hong Kong’s Hang Seng Bank is also implicated.

The scam is believed to have involved over 500 people, including oligarchs and Russian criminals with links to the government and the FSB. Investigators are now trying to identify some of the wealthy and politically influential Russians behind the operation.

Besides the Chinese banks, Credit Suisse, Citibank and Falcon Private Bank are also alleged to have processed soiled capital via their Chinese branches.

“The bank has systems and processes in place to identify suspicious activity and report it to the appropriate government authorities”

The scheme brings to mind the scandal surrounding the leaked “Panama Papers”, an unprecedented leak of 11.5 million files from the database of the world’s fourth biggest offshore law firm, Mossack Fonseca.

The documents found the biggest proportion of its offshore company owners came from mainland China, followed by Hong Kong.

At least eight current or former members of China’s Politburo Standing Committee, the ruling Communist party’s most powerful body, have been implicated, according to reports.

In response, a Communist party censorship directive instructed news organizations to purge all reports, blogs, bulletin boards and comments relating to the highly sensitive revelations.

News relating to the Global Laundromat could not be found on any of China’s leading media websites searched by Asia Times.

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