Bank of China Ltd. denied a report by the state broadcaster alleging it broke the nation’s foreign-exchange rules by providing services that help clients move “dirty money” abroad.
Reports by China Central Television and other media “contain discrepancies with and misunderstanding of the facts,” the Beijing-based lender said in a statement on its website late yesterday. “References to an ‘underground bank’ and ‘money laundering’ are inconsistent with the facts.”
CCTV said Bank of China Ltd. was among lenders that circumvented the foreign-exchange regulations. Customers at the country’s fourth-largest lender by market value can convert unlimited amounts of yuan into other currencies through a product called “Youhuitong,” CCTV said in the 20-minute broadcast yesterday, which included interviews with several unidentified employees of the bank.
Chinese foreign-exchange rules cap the maximum amount of yuan that individuals are allowed to convert into other currencies at $50,000 each year, the state broadcaster said. China’s policy makers have taken steps in recent years including allowing freer movements of capital in and out of the country as they seek to boost the global stature of the yuan.
“Bank of China introduced a cross-border yuan transfer service in 2011 that only allows money to be moved for immigration and overseas property investment purposes,” the lender said. The company has strict and robust operational procedures for its cross-border yuan transfer business, it said.
Shares of Bank of China closed 2.8 percent lower in Hong Kong trading yesterday, the biggest decline among stocks in the Hang Seng Finance index.
The bank’s role as a gateway between China and overseas “makes them more vulnerable to this kind of accusation,” Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd., said by phone. “The appearance of breaking the law is just as negative as actually breaking the law.”
To contact Bloomberg News staff for this story: Aipeng Soo in Beijing at firstname.lastname@example.org
To contact the editors responsible for this story: Chitra Somayaji at email@example.com Russell Ward, Darren Boey