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China Sees Rise in Suspect FX Dealings

China’s central bank, the People’s Bank of China, recorded a 12-fold surge in the number of reported suspicious foreign exchange dealings, according to its latest report on money laundering.

Financial institutions reported almost 12 times as many suspect international transactions in 2005 as in the year before – a total of 1.99 million – according to the report by the China Anti-Money Laundering Monitoring and Analysis Centre. The number of reported suspicious domestic currency transactions jumped seven fold to 283,400, it says.

The report reflects a closer monitoring by a higher number of staff in banks and other financial institutions. Reported cases included more than 50 major incidents of money laundering in 2005 – about the same as in 2004 – but the total amount of money involved more than doubled to 10 billion renminbi ($1.25 billion) from 4 billion renminbi ($500 million) in 2004.

Just over 60% of the suspicious transactions came from the eastern province of Zhejiang and Guangdong in the south, where irregular transactions through trafficking goods, underground money changing and border trades were frequent, the People’s Bank of China says.

The central bank and State Administration of Foreign Exchange handed over 3,195 cases of suspected money laundering to police for further investigation last year. China is stepping up the monitoring of illegal transactions to stem the inflows that are making it more difficult for the central bank to control inflation.

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