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28 January 2020

Bank of China to pay $4.2 million to settle money laundering case

Bank of China follows in the footsteps of Google and Societe Generale in reaching a settlement in France thanks to a US-style tool inaugurated by HSBC Holdings in 2017

While the fine is modest, the Bank of China deal is the first negotiated by Paris prosecutors/Bloomberg

Bank of China has agreed to pay EUR 3.9 million ($4.2 million) to settle a French probe into allegations it turned a blind eye as customers moved millions to their Asian accounts without paying European taxes.

Paris prosecutor Remi Heitz said that the bank will pay a EUR 3 million fine and EUR 900.000 in damages to French tax authorities to end the criminal prosecution. The case will continue against 28 business owners and intermediaries involved in transferring the funds to China, said Heitz.

The Beijing-based bank had been charged with aggravated money laundering over the transfer of suspect funds worth nearly EUR 40 million to 168 Bank of China accounts mostly in the Zhejiang province—south of Shanghai—between 2012 and 2014.

While the fine is modest, the Bank of China deal is the first negotiated by Paris prosecutors. The Parquet National Financier had extracted penalties between a quarter and half a billion euros a piece from the search-engine giant and the two banks.

The lender acknowledged the underlying facts as well as the corresponding legal qualification used by investigators but did not plead guilty.

As part of the case, French authorities accused the Beijing-based bank of standing idly—failing to request any proof of earnings—as account holders with no particular business activity in China received money from commercial firms.

The funds first passed through companies in France and other European countries such as Spain, Lithuania, and Poland before landing in Bank of China accounts in Asia. French investigators suspected the funds initially came from undeclared sales of Chinese businesses based north of Paris.

The probe began after a routine check following a red flag. Criminal authorities began investigations in 2013 after the French anti-money laundering body, known as Tracfin, noticed a very unusual increase over a few months in the revenue of a Paris-based shop that specialised in urgent locksmith and plumbing repairs.

RELATED STORIES: Bank of China France anti-money laundering body Tracfin





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