On January 9, 2020, the Parquet du Tribunal Judiciaire de Paris announced that it had entered into a convention judiciaire d’intérêt public (CJIP) with the Bank of China Limited, following a six-year investigation into money laundering from accounts in Lithuania, Latvia, Poland, Spain, China and France. The investigation began following information provided to the authorities by Traitement du renseignement et action contre les circuits financiers clandestins (known as Tracfin), an information service working under the auspices of the French Ministry for Government Action and Public Accounts. According to the public prosecutor, the bank used false invoices to justify the transfer of funds, and to alter cash payments for the sale of contraband, enabling twenty-eight merchants and intermediaries to evade both corporate and value added tax. The suspected businesses used bank accounts at a Bank of China branch bank in Zhejiang, China to deposit the proceeds.
The attorney general’s office charged the Bank of China with aggravated money laundering of tax proceeds for having opened these client accounts without complying with the know-your-client provisions of the anti-money laundering laws, and without properly overseeing transactions related to the accounts. The businesses involved in the transactions are under investigation by the French authorities.
Pursuant to the CJIP, the Bank of China agreed to pay a fine of €3 million, representing the benefit derived from the violations. In addition, the bank will pay €900,000 to pay for the costs of the investigation and loss of tax income to the public coffers.
In an unrelated action, the New York branch of the Bank of China consented to an order issued by the Comptroller of the Currency of the US Department of the Treasury on April 24, 2018, based on the bank’s failure to adopt and implement a compliance program that adequately addressed anti-money laundering compliance and the requirements of the Bank Secrecy Act and the Office of Foreign Assets Control. In the consent order the Bank of China and the OCC stipulated that the bank had failed to file suspicious activity reports as required, had an inadequate system of internal controls, and systemic deficiencies in its customer due diligence and transaction monitoring systems. The order required the bank to submit an acceptable action plan to achieve compliance, to take corrective action, to conduct and report on risk assessments, customer due diligence, and actions taken by the bank’s general manager to implement the action plan.