April 11 2016
The Bank of Italy is carrying out an on-site inspection at the Italian offices of Bank of China Ltd , a Chinese state-owned bank already facing accusations of aiding illicit money flows from Italy to China, a source familiar with the situation said.
Italian prosecutors are seeking to bring 297 people, mostly Chinese, as well as the Milan branch of Bank of China to trial on charges of allegedly smuggling more than 4.5 billion euros (US$5.12 billion) into China between 2006 and 2010. A judge in Florence is in the process of deciding whether they should be indicted and face a trial.
Part of the probe, code named ‘River of Money’, focuses on the relationship between Bank of China and defunct Chinese money transfer operator Money2Money, which used to dominate the market for Chinese remittances from Italy, a prosecutors’ document reviewed by Reuters shows.On-site inspections are a powerful tool the Italian central bank uses to safeguard the integrity of the financial system and to prevent illegal practices, including money-laundering.
If management irregularities and regulatory violations are discovered in the course of off-site reviews and on-site inspections, sanction procedures are triggered against bank directors that could result in administrative penalties, mainly fines, the central bank says on its website.
In the request for the indictment, Italian prosecutors allege billions of dollars, including proceeds from counterfeiting, exploitation of illegal labor and tax evasion, were sent to China and split into small sums to avoid being detected.
Half of the amount allegedly smuggled, or 2.2 billion euros, was sent via BoC’s Milan branch, the request says.
Bank of China has consistently denied any wrongdoing.