By Kazunori Takada and Pete Sweeney
SHANGHAI, July 11 China's central bank is
looking into allegations by a state broadcaster that Bank of
China , the country's fourth largest lender,
has been laundering money offshore for clients, the official
Xinhua news agency said on Friday.
While Beijing maintains a tight control over its capital
account, limiting foreign currency transfers by individuals to
$50,000 a year, wealthy Chinese, including corrupt government
officials, have managed to move their money out to snap up
overseas property and other assets.
The China Central Television (CCTV) aired what it said was
an undercover investigation programme on Wednesday that focused
on a service offered by BOC called "You Hui Tong", which is
designed to help Chinese individuals take part in investment
emigration programmes in other countries to move cash offshore
in amounts the exceed the annual cap.
The report quoted unnamed BOC sources as saying the bank
kept the programme secret because it knew it was illegal.
However, BOC has denied the allegations.
Xinhua news agency reported the People's Bank of China, the
central bank, was now looking into the matter.
"We have noticed the media report about a commercial bank's
cross-border renminbi business, and are verifying related
facts," Xinhua quoted an unidentified central bank spokesman as
The PBOC statement quoted by Xinhua did not name the Bank of
China specifically, referring instead to "a commercial bank,"
and it did not use the term "investigation," which often implies
a degree of formality.
BOC has said the service was part of the government's
efforts to open the capital account and increase the
international popularity of the yuan, and that branches of other
banks in Guangdong province offered similar services.
Investment programmes that grant Chinese passport holders
citizenship or residency in exchange for substantial investment
have become popular with wealthy citizens and government
China has been cracking down on such "naked officials", one
whose spouse and children have emigrated. In May, a senior
official in Guangdong province was removed from his position in
what Xinhua said one of the first to lose his position.
Since the mid-1990s, an estimated 16,000 to 18,000 Communist
party officials, businessmen, CEOs and other individuals have
"disappeared" from China, taking with them some 800 billion yuan
($133 billion), according to a PBOC report prepared in 2008.
(Editing by Raju Gopalakrishnan)