China attacks banks for Oz money laundering

The first large crack just appeared the great Australian dream of laundering Chinese money through our property market. From the SCMP:

State broadcaster CCTV yesterday accused the Bank of China of offering a money laundering service to wealthy mainlanders and helping them to siphon cash out of the country.

The accusations against one of the country’s five biggest state-owned commercial banks led to speculation that the leadership may be preparing to shake up the financial and banking sectors.

…Under Chinese law, citizens are allowed take only the equivalent of US$50,000 out of the country each year.

CCTV accused the bank of “blatantly offering money laundering services” and fabricating information through its money transfer platform Youhuitong.

It said BOC teamed up with immigration agencies to disguise the origin of clients’ money and helped them send funds overseas for investment immigration.

…CCTV’s attack on BOC came as a surprise to analysts. Just last month, the State General Administration of Press, Publication, Radio, Film and Television issued a directive banning media outlets from making “critical reports” against major government institutions without approval.

BOC, like CCTV, is one of the so-called central enterprises directly supervised by the State Council. To release such detailed and serious accusations against the bank suggests CCTV acquired approval in advance.

Wei Wuhui, a Shanghai-based media researcher, said: “It’s rare to see CCTV going after a state-owned enterprise like the Bank of China.

“And it is not just targeting one branch, but the whole BOC. The accusation of money laundering is also a serious charge. This is so rare and so severe.”

Business Spectator is reporting that the inquiry focuses specifically upon Australia:

China’s state broadcaster CCTV has launched an extraordinary attack on one of the country’s most powerful government controlled financial institutions – the Bank of China, accusing it of money laundering in Australia, via the country’s Significant Investor Visa Program.

…Australia is a centrepiece of the investigation due to the country’s Significant Investor Visa program, which offers an accelerated pathway for wealthy investors to gain permanent residency by investing $5 million in Australian bonds, funds or a small business.  Chinese nationals account for nine out of 10 applicants since the program was introduced under the former Labor government.

I can’t find that corroborated in the Chinese media, but I guess it’s legit. As Jim Chanos advised Australia’s property moguls recently, “hit the bid”, the flood won’t last.


  1. But how could any grubby money from China be getting to Australia?

    Our borders are carefully guarded by a battalion (8 in fact) of highly trained operatives of the FIRB administering procedures more finely honed than the workings of a Swiss watch.

    All those first home buyers must delighted to know that part of the reason they remain priced out of the market is that the Australian govt has made hiding grubby Chinese money part of its ‘Open for Business’ strategy.

    • Thought the AFP would’ve been involved too if it’s laundering, just like the great job they did on RBA/securency.

      Anyway, this is amazing news. Looking forward to whatever comes of this.

    • casewithscience

      Agree with the sentiments above.

      I don’t know if “open for business” is just a euphemism for “bent over for business”, but Australia’s long history as the economic whore of foreign powers seems to be settled in place. Same transaction, just a different John leaving it on the bedside table.

    • Well it is not just our housing stock being bid up by all that grubby chinese money. it should be common knowledge to most that it is flowing all around the world looking for a suitable washing machine….

      Bubbles everywhere you look these days, no wonder really seeing that the worlds debt load has increased 40% since the start of the GFC.

      Gotta find a home somewhere.

      • Jimbo,

        “..In the first three months of this year, prosecutors investigated 8,222 cases — up 24% compared with the same period last year, the Supreme People’s Procuratorate said this week…”

        Sounds like the economic rebalancing is to the Public Procuratorate’s office. A real growth area.

        It would be quite remarkable if what we are seeing is a serious attempt to develop the rule of law by first enforcing the law.

        That would suggest that the Chinese have been studying very seriously the fundamental structures of a successful society.

        3d1k will embrace this development as a healthy China is bound to be better for business than the currently graft ridden affair our miners have to deal with.

      • migtronixMEMBER

        @Pfh yes its very tough the miners, those officials don’t just bribe themselves you know? Oh watt.

      • OMG 22 billion ????
        Are you F***ing kidding me !!!
        Thats insane.

        Can you imagine how much is being poured into this country ??
        This could be the only thing keeping the damm ponzi floating.

  2. I imagine that Canada’s similar ‘millionaire’ visa program would’ve also been a dramatic incentive as well before they cancelled it.

    • Uranium GeoMEMBER

      Canada was reasonable proactive given the program was suspended around 12 months prior to cancellation.
      Unlike us who are being pimped out on cents to the dollar for the benefit of the FIRE sector.

  3. I wonder how this might affect the off shore lending for residential real estate strategies of our Big 4 Banks.

    There were stories some weeks ago that a substantial number of off shore buyer are actually borrowing money from Australian Banks to participate in the great Aussie debt /house price Ponzi scheme.

    Now according to those stories our banks are being very sober and only lending up to 70% of the value of the property.

    For example:

    Man X wishes to buy a $1M existing house in Sydney.

    He visits the Hong Kong Branch of an Australian Bank with $AUS300K in his suitcase that he managed to remove from China with the assistance of a major Chinese Bank.

    Australian Bank minion says “Pleased to meet you” and provides a loan in $AUS of $700K.

    Man X then flies to Australia and buys an existing house for $1M, leaves it empty and flies home. On the way to the airport he notices a man in a suit sleeping under a bush wearing a FIRB name tag.

    His plan is that he will continue to remove quantities of cash with the assistance of that Chinese Bank to pay down the mortgage with the Australian Bank.

    But now the Chinese Government is getting cranky and threatening Chinese Banks with the Gulag if they continue to assist Man X.

    Man X cannot pay mortgage with Australian Bank.

    Australian Bank forecloses and decides whether it prefers to sell the $1M property or become a landlord.

    Just as well the impact of foreign buyers on the local property market has been minimal over the few years or there might a few problems arising from the reported actions of the Chinese government :).

  4. moderate mouse

    Don’t expect any Australian agency to bat an eyelid at this.

    “Money’s money boys.”

    • migtronixMEMBER

      Yup Pecunia non olet, unless it comes from unions then it stinks pretty bad apparently.

  5. migtronixMEMBER

    Peter Fraser aren’t you the resident cctv afficionado? This would also seem to be a story up your alley… What’s up?

  6. Very predictable. As soon as the economic excrement made contact with the air circulation device in China, the Government finds a way to haul all that black money back to its own shores. Good on them. One thing you wouldn’t want to be in China at the moment is a senior Bank of China official. There’s either a bullet or a noose with your name on it.

    • drsmithyMEMBER

      Anyone from our current Government standing up to “defend peace, liberal values and the rule of law” would be a bit like someone from FIFA standing up to defend honesty, integrity and the fight against corruption in sport.

  7. Funny how The Chinese Government can point out the money laundering going on but Australian officials, regulatory bodies, banks and real estate industry can’t or ignore it like it doesn’t exist. How many times have I read people stating money laundering was a big reason why so many Chinese are able to buy property here but these people get shouted down and told they are racist and have no proof.

    I have worked for a couple of institutional banks and it is drilled in to us often about keeping a look out for money laundering. It is actually a compliance mandate that staff must be trained yearly on spotting money laundering activities and reporting it to compliance teams and AUSTRAC. A lot of good that is when billions of dollars get washed through our system to buy property.

    Money laundering to buy Aussie property = good
    Money laundering to fund criminal activities and terrorism = bad

    Got it.

    A new wave of Chinese asylum seekers on the way? Falun Gong affiliation is really going to be strong in the months ahead.

    • They don’t need to apply for asylum, they can easily get a business visa and apply for PR sponsorship through a sham company.

      • True, the corruption cycle complete with platitudes from our elected officials and media personalities.

    • As far as the Chinese government is concerned, the money being laundered has been stolen from them, so not that funny that they’re very keen to get it back. On the other hand, for an Aussie real estate agent, that money is their commission, so very motivated to ignore it I guess.

  8. As an aside, with Jokowi getting up in Indonesia, expect to see a flood of money out of Indonesia in period before October 22 when he takes over. There are going to a lot of corrupt officials who are very nervous and need to hide their ill gotten gains (so that’s about all 80% of officials).

    • So that’s what it’s come to – Australia to be the Bermuda of the South Pacific, hiding dirty money for a commission our number one export industry (it is that rare beast – an exportable service, after all)

      • I am not suggesting it will all come Australia’s way but as Australia does have some of the most liberal foreign investment rules for a stable first world country, I suspect it is the number one option.

  9. If the CCTV is allowed to open fire on the BOC, this suggests that permission has come from very high up in the CCP leadership (probably even from the very top). Things might get interesting in terms of internal Chinese politics fairly quickly.

    • CCTV itself has recently experienced close government attention (with allegations of corruption/bribery) and several key players hauled away…China’s internal politics have been fascinating particularly since change of leadership and the implementation of the ongoing highly selective purge.

      (What an acronym for a State owned media outfit 😉 )

      • Internal CCP politics…. it is like the old joke about Soviet Union politics…. which was described as watching cats fighting under a rug… you know something is going on but you can’t tell exactly what and who is winning.

  10. johnathonbbbrown

    Don’t worry white man, the yellow Chink man is coming. Crime gangs (drugs of all sorts), mass immigration, cities with 20 million people. Its all good stuff. We will be decimated by them.
    Don’t complain though, just let them fuck us over, and over and over. And by the way, the Greens will back the invasion.

    • migtronixMEMBER

      Yes… Just like when that happened in the 70s… And the 80s…. And the 90s… And…

      • General Disarray

        Do us a favour Mav, take the picture of your kid down.

        No, Mav. Leave the picture up and make sure to post on every Bluebird comment just to hammer home the fact that no women will ever touch his junk.

        And the gene pool sighs with relief.

      • Ooo a dick joke GD, still year 7 level. The way you’re going your kids will be slaves to the Chinese.

        You know you lot are probably the reason why MB struggles to get subscribers. No one wants to pay to speak with stupid pretentious charddies.

  11. GunnamattaMEMBER

    Further links on this subject

    What About China’s Selfless Officials? (The Diplomat)

    CCTV Accuses Bank of China of Money Laundering

    Broadcast Claims Bank Helps Clients Skirt the Controls on Cross-Border Fund Transfers

    • Here is a post I made here on Macro on 18th March about this issue.

      I understand that PRC Chinese Citizens can only Legally export/send O/S a Maximum of $50K per year.

      If Mum, Dad and their single child all send $50K a year it would take them 20 years to transfer $3.0 Million to Australia to buy property.

      The PRC Government knows this, the Australian Government should be aware of it and the REA Industry involved in promoting and selling Australian Real Estate to Mainland PRC Buyers would certainly be aware of it.

      And yet hundreds if not thousands of Australian Properties have been sold to PRC Mainland Chinese who seem to arrive with Millions in Foreign Currencies to buy property.

      The money is clearly here Illegally and yet nobody gives a brass razoo. FIRB doesn’t even bother to ask apparently and you would think that they should be aware of the PRC Foreign Currency Regulations.

      Australian Real Estate is being used to Launder Illegally Exported Foreign Currency out of the PRC.

      Where the money came from in the first place is a whole other issue. Some I would agree has been hard earned totally legally in the PRC, the rest has come from “The State” via a myriad of different and Illegal means.

      However regardless of its source it has all been exported Illegally and Laundered through Australian Real Estate.

      Really doesn’t matter if it is new or used the properties are being bought, largely with PRC “funny money”.

      “Regarding the latter, citizens are allowed to send $50,000 a year out of China for “current account transactions” such as tourism, but not for “capital account transactions” like most types of investment.”

      Obviously took a while for the “herd” to catch up.

      • coolnikMEMBER

        greatwall, This is really important: “Really doesn’t matter if it is new or used the properties are being bought”

        I used to think that a foreign purchase of a new build is legal. It seems it is legal as per Australian laws, but still illegal per PRC laws.

      • Ronin8317MEMBER

        Australian Real Estate agents helps the Chinese get around the issue by allowing buyers to settle their purchase in RMB in China.

      • The Diplomat piece is very interesting. It suggests that Chinese officials have KPIs very similar to the Made Men on the Sopranos – each level is evaluated on how much revenue is kicked upstairs to the next level. Which leads to an unfortunate conclusion for the lower level officials in the event of trouble – ‘Money rolls uphill, sh_t rolls downhill’ as Tony used to say.

  12. Is this issue now going to receive more attention from the Chinese govt after our illustrious leader praised Japanese war time honor and skill ?

    • Angry Man, I was just about to mention the timing as well.
      Abe visits and announces with Abbott the enhanced alliance with Japan including military JV’s and China goes on the offensive, aiming squarely at what it perceives as maybe an Achilles Heel – the housing floor price via Chinese investment. Again its the timing, aside of Chinese domestic concerns.

    • Could be something in it. Hector I reckon they’d be better off with the status quo – crank up the presses, acquire more of our hard assets and generally inflate the hell out of our economy like they have been. Dollar keeps rising, manufacturing crumbles, we slowly lose ownership of our own food bowl and mines, whilst the population can’t afford to put a roof over itself. From a financial terrorism point of view it’s brilliant.

  13. bolstroodMEMBER

    + lots AngryMan.
    Pommie Abbott may stir war memories of many Aussies.
    He has put Aus firmly in the anti Chinese camp.

    Dick head indeed

  14. Best case scenario is that individuals with bags of money buying up Sydney and Melb with cash start becoming rarer and rarer.

    Worse case scenario is that teh Chinese government “tells” the Oz gov to actually to something about this or trade goes out the window.

    Either way, fun times…

    • Suspect number one was always going to happen…eventually. Question is whether it happens quickly enough to avoid number two.

      In case of number two, Julie Bishop says China respects nations that stand up to them. I think she’s probably right, China would respect a nation like Australia standing up to them in the same way a Hells Angel would respect someone built like Christopher Pyne vandalising their motorbike.

    • flyingfox, Scenario 2 would be best case actually. I would be very happy to see our government squirm and try to sheepishly explain that they had no idea this has been happening or some such excuse.

      And then I’d be even happier for them to be forced into actually doing something. Because they’re certainly not going to do anything to change the status quo if they don’t have to.