Last updated at: (Beijing Time) Saturday, February 28, 2004

Illicit money mobsters prey on migrants

The drowning of 20 Chinese workers as they collected shellfish on an English beach earlier this month has exposed clues of huge illegal immigration networks, from human smuggling to wiring underground money.


The drowning of 20 Chinese workers as they collected shellfish on an English beach earlier this month has exposed clues of huge illegal immigration networks, from human smuggling to wiring underground money.

Some family members of the deceased illegal immigrants, most of them from Fuqing in East China's Fujian Province, acknowledged that their relatives transmitted money back via some underground "money shops.''

Police believe that an illicit financial network of "money shops'' linking China and other countries and regions have helped immigrants transfer money.

It is estimated that more than US$8.2 billion in foreign currencies entered China in 2002 through underground sources, most of which are in Fuqing.

According to a former human smuggler, or "snakehead" as locals call them, some 30 per cent of able-bodied labourers who once lived in Fuqing are believed to be working abroad now.

A famous hometown for ex-pat Chinese, Fuqing saw a travel-abroad craze in the early-1990s when some stowaways could earned a fortune overseas..

Fuqing money launderers handled billions of dollars every year to meet the needs of tens of thousands of Fuqing businessmen and labourers abroad, according to police estimates.

The underground sources transported foreign currencies earned by Chinese overseas back to their hometowns, thereby avoiding taxation and foreign currency supervision departments.

And some foreign-related enterprises in China that wanted to change foreign currencies at a favourable exchange rates used the underground "money shops.''

Local police cracked down on one of the largest underground banks in the city late last year and arrested its boss, Zheng Yiximing.

Under the cover of a common business room in a commercial plaza in the town of Longtian of Fuqing, Zheng's underground bank dealt cash worth of tens of millions of yuan daily, much more than the daily transactions of branches of national large banks.

Police seized 27.5 million yen (US$254,000) and other foreign currencies when they raided the place in late August last year.

Zheng, a 55-year-old Fuqing native, was an illegal migrant worker in Japan years ago. He became a foreign currency agent back in China later and organized an underground bank which had many foreign offices.

Since Zheng had close connections with his clients, foreign currencies coming from abroad could reach their home destination within one day after several phone calls were made, police officer Wu Rong told China Daily.

Due to high efficiency, the underground bank did not need to turn over much capital. Surrounded by dozens of small "money shops'' it served as a "central bank,'' controlling the flow of money and the ups and downs of black market foreign exchange rates, Wu said.

Zheng's case is still under court procedure and evidence of money flow of his underground bank is hard to get.

Punishment for illegally trading foreign currencies are relatively modest. One who illegally trades US$200,000 only gets up to one or two years imprisonment, said Wu, who has called for a tougher approach against such dealers.

China's State Administration of Foreign Exchange and public security departments cracked down on hosts of underground "money shops'' in the provinces of Guangdong, Fujian, Zhejiang and Heilongjiang in early February this year.

A total of 79 people werearrested and an equivalent of US$2.17 million in Chinese and foreign currencies -- used for illegal money transactions -- were seized.

Authorities have frozen 756 bank accounts involving more than 70 million yuan (US$8.43 million), as well as a large number of computers, fax machines and cars.

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