A Chinese probe into trade finance exposed fraudulent deals amounting to nearly US$10bn, according to a senior official.
Wu Ruilin, deputy director of the supervision and inspection department of China’s State Administration of Foreign Exchange (SAFE), said the regulator initiated a campaign to crack down on fraudulent trade financing in April 2013. Initially centred on 13 provinces and cities, this year it was extended to 24 provinces and cities.
To date, SAFE has discovered trade fraud of nearly US$10bn throughout the country and has referred at least 15 cases to the police, Wu said.
“Trade-financing fraud is very harmful not only to trade but also to the overall economy,” he told reporters. “It increases the pressure of hot money inflows and has even become the channel through which funds of some criminal activities flow in and out of China.”
Wu’s comments provided further insights into the problems within trade finance in China since a scandal involving metal supplies in the port cities of Qingdao and Penglai put the practice drew international attention. Foreign banks and commodities firms have exposure to nearly US$1bn in potential losses, while the estimated exposure for Chinese banks reportedly amounts to billions of dollars.
SAFE’s activities also lend weight to earlier concerns that at least some of China’s trade data has been distorted by companies faking trading invoices to secure financing, especially from Hong Kong, where borrowing rates are cheaper. Chinese regulators last year promised to crack down on the practice.
Rising interest rates, excitement around blockchain use cases and cross-border payments were all hot topics at this year's AFP conference in San Deigo.
The US dollar and debt yields falling on the North Korea missile test, treasury being a top target for cyber criminals and why treasurers aren't into real-time payments all hit the latest headlines in the world of treasury this week. Don't miss our ten top news stories from around the world.
Treasurers are being expected to do more work with fewer resources than ever before, so it is little wonder that the automation of day-to-day operations was highly discussed on the second day of EuroFinance, the annual treasury event held in Barcelona this week.
Chicago based Treasury Management System (TMS) vendor GTreasury and Sydney based risk and treasury management vendor Visual Risk have joined forces in a strategic alliance to ... read more