China’s major banks have halted an experimental program that helped citizens transfer large sums of money overseas, the Wall Street Journal reported, citing people familiar with the matter.
The halt, which is likely to be temporary, came after state broadcaster CCTV claimed that the money transfer service was helping wealthy Chinese move huge sums abroad.
Large commercial banks including Bank of China, Industrial & Commercial Bank of China and China Citic Bank have halted the program, which allowed people to remit their yuan across borders, sources were quoted as saying.
Last week, CCTV accused Bank of China of improperly helping clients skirt China’s controls on cross-border fund transfers. In some cases, the bank worked with immigration agents to help customers disguise the origins of their funds, the report said.
The People’s Bank of China (PBoC) is said to be looking into the allegations.
Bank of China has denied the accusations. It said in a statement last week that it adhered to regulatory requirements in conducting the business, including those prohibiting money laundering.
The CCTV report brought to light a trial program the PBoC launched about two years ago that allowed a few approved banks to start offering cross-border yuan remittance services for Chinese individuals through their branches in the southern province of Guangdong. The central bank never publicly announced the program because it intended to carry out the trial quietly, the report said.
“The program itself is neither illegal nor improper as it’s been approved by the central bank, but the question is if any particular bank has gone too far by offering clients services they are not supposed to,” the Journal quoted a senior executive at a state-owned bank in Beijing as saying. “We all had to put a brake on it before the central bank draws a conclusion from its investigation.”
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