Leading Lenders Penalised over Foreign Exchange Infractions


A slew of China’s leading banks have been implicated in foreign exchange infractions involving roughly USD$1.3 billion in funds over just the past several years.

According to some observers this recent crackdown on foreign exchange infractions amongst banks comes in response to the recent wave of cross-border capital flows and an increasingly vexing foreign exchange market, targeting malicious arbitrage in particular.

China’s State Administration of Foreign Exchange (SAFE) has revealed that it has uncovered and penalised a total of 12 major regulatory infractions involving 11 banks since 2014, and issued fines worth a total of 7.53 million yuan in response.

China’s biggest lenders rank amongst the infringers, including the Jiangsu province branch of the Industrial and Commercial Bank of China, the Beijing Dongsi Branch of China Construction Bank, the Shanghai Fengxian branch of Agricultural Bank of China, and the Taizhou branch of Industrial Bank Co.

Other penalised banks include the Suzhou branch of Minsheng Bank, the Xuzhou branch of Shanghai Pudong Development Bank, and the Shanghai Pudong branch of the Postal Savings Bank of China.

The vast majority of these infractions were committed in 2015 and 2016, with just one taking place in 2014.

According to analysts the infractions could have been the result of either moral hazard or carelessness on the part of banking staff.

ABC’s Shanghai Fengxian branch was penalised for the use of counterfeit documents to handle foreign exchange purchases on behalf of companies, while the Jiangsu province branch of ICBC and two of Minsheng Bank’s branches (Suzhou and Kunming) were all penalised for handling of settlement, sale and exchange operations in breach of regulations.

These infractions all attracted the largest fines of 1 million yuan, as well as saw the suspension of settlement and exchange operations and the pursuit of individual staff for liability.