This article is inspired by a recent case involving an introduction-related criminal case due to foreign exchange issues handled by Lawyer Shao. However, to protect privacy, specific details of ongoing cases will not be disclosed. The article aims to educate readers about such scams, encouraging awareness and precautionary measures to avoid potential criminal risks in the future.
Groups with foreign exchange needs generally fall into two categories: those with legitimate needs such as studying abroad, traveling internationally, or engaging in cross-border trade, and those with illegal intentions such as asset transfer or money laundering.
Due to China’s foreign exchange control system, private foreign exchange transactions are illegal despite being common in practice, facilitated by differences between Hong Kong’s and mainland China’s financial systems, where credited funds do not necessarily equate to received funds, providing opportunities for fraudsters.
In Hong Kong, checks are a common payment method akin to mobile payments in mainland China. However, there’s a crucial distinction in the processing of check payments, where funds are initially in a pending state upon receipt, with a 24-hour window for cancellation before final clearance. This process involves two notification messages: the first indicating funds are “transferred” (pending status) and the second confirming funds are “deposited” (finalized receipt), separated by more than 24 hours.
Moreover, criminals exploit weekends by scheduling transactions on Fridays when banks are closed until Monday, allowing them to vanish before victims realize they have been defrauded.
Introducers in foreign exchange, like in the case of Mr. Gao, often act as intermediaries in transactions between individuals A (domestic) and B (foreign), facilitating currency exchanges without the parties necessarily knowing each other initially. These introducers, typically from fields such as education consulting, immigration services, finance brokerage, currency exchange, insurance, trust, banking, and wealth management, have access to high-net-worth clientele due to their professions.
For instance, in a 2020 Chengdu court case (Case No. 2019) Sichuan 01 Criminal End 1114), Mr. Gao, known for his involvement in education and immigration services, facilitated a currency exchange deal initiated by Mr. Jason through Mr. Zhao, a financial consultant in Australia. The deal involved converting $9 million USD into RMB, linking Mr. Jason with Mr. Xiong via Mr. Wu, a property agent. Despite initial confirmation of funds, issues with check clearance led to Mr. Gao’s arrest, with fees withdrawn but no further transactions.
Legal analysis shows that while illegal transactions like “back-to-back” foreign exchange or disguised transactions are prohibited administratively, criminal liability for “introducing transactions” remains undefined under criminal law, often subject to judicial interpretation.
In conclusion, while introducing foreign exchange transactions themselves are not explicitly criminalized, the involvement in transactions exceeding 5 million RMB or benefits exceeding 100,000 RMB may incur significant criminal risks. Despite these risks, legal accountability for accomplices like fraudsters in such cases may be limited.
