China Regulator Fines Banks -- WSJ

Published July 29, 2017
Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 29, 2017).

BEIJING -- China's foreign-exchange regulator, in a rare move, accused several banks of negligence or violation of rules amid its efforts to stem capital outflows.

The State Administration of Foreign Exchange on Friday said that it found irregularities in local branches of nine banks when handling foreign-exchange transactions, combined valued at almost $360 million.

The regulator has penalized nonfinancial firms and individuals for moving funds offshore by faking deals or through underground banks before, but it is the first time the regulator has exposed banks' alleged wrongdoings.

A local branch of the Industrial Bank Co. failed to conduct due diligence on checking the documentations of 15 trade deals valued at $162 million, the regulator said. Those deals turned out to be fake, and the regulator slapped a fine of 900,000 yuan ($133,470) on that branch, the agency said.

More than a dozen employees at a branch of China Minsheng Bank purchased foreign exchanges for an executive at the branch and friends of that executive through the employees' own annual quotas for foreign exchanges, the regulator said.

Other banks penalized include local branches of Bank of Ningbo Co. and Agricultural Bank of China Ltd.

The regulator's notice of the actions was released late Friday in Beijing, and the banks couldn't be reached for comment.

Beijing has been ramping up efforts to halt a flood of money leaving the country in response to an economic slowdown and a depreciation in the yuan since the second half of 2015.

The regulator has had a relatively easier time controlling outflows this year amid a broad-based U.S. dollar weakness. The yuan has risen against the U.S. dollar by about 3% this year after dropping more than 7% last year.

At a recent briefing, the regulator vowed continuous scrutiny in compliance checks involving cross-border capital flows.

--Liyan Qi

(END) Dow Jones Newswires

July 29, 2017 02:47 ET (06:47 GMT)