Canadian banks helping clients bend rules to move money out of China

A new article from the Globe & Mail highlights a disturbing trend amongst Canadian banks of facilitating the transfer of money out of China, potentially against Chinese law.

Here’s the Situation

  • By-law, Chinese citizens are not allowed to move more than $50,000 USD per year out of the country. As a work around, some have pulled their money out through a number of smaller transactions that use other parties
  • Canadian banks are legally obligated to report any transaction that is deemed suspicious (such as these) to FinTRAC, but they are still allowed to facilitate the transaction
  • FinTRAC reviews the transactions and passes on any it feels are illegal to the police

What we Know and What We Don’t Know

  • Since January 2012 there have been 8,200 such suspicious transactions flagged
  • The agency does not report how many of these transactions involve foreign money
  • We also do not know the volume of these transactions
  • This practice has been used to buy real estate in Vancouver. This was testified to by a former CIBC employee in a court case in 2012