Chinabank Payments to Pay Record $4.2 Million Fine for Illegal FX Transfer

China’s government slapped a third-party payment processor with the record fine for financial transactions tied to unauthorised online gambling sites.

Chinabank Did Not Properly Monitor Operations

On Tuesday, local media reported that the Beijing office of China’s State Administration of Foreign Exchange had imposed a RMB29.4 million (US$4.2 million) fine on Internet Banking Online (Beijing) Technology Co Ltd, also known as Chinabank Payments. The fine was issued by the Beijing office of China’s foreign exchange regulator. The payment processor, a unit of e-commerce company JD.com, is based in Beijing and is owned by JD Finance.

Chinabank has been charged with assisting mainland residents in illegally transferring foreign currency overseas. The transactions also included payments to internationally licensed online gambling sites. The gambling transfers, which also happened through several other mainland payment channels, took place in the period May 2017 – May 2018.

Chinabank Payments issued a statement that in 2017 the platform failed to supervise properly some of its users’ access, which was then used by a number of external merchants to make illegal transactions. The payment processor said it carried out an internal investigation which resulted in those merchants being expelled. Chinabank Payments said it was supportive with the regulator’s decision.

Chinabank Payments seriously reflected on our business management and carried out rectifications. We apologize for the negative impact we caused to the industry.

The Gambling Operation Linked to Macau Casinos

According to local media outlets, the online gambling operation was based in Cambodia and implied websites with names implying ties with popular Macau casino brands, including Las Vegas Sands and SJM Holdings’ Lisboa. State-run media recently informed that over 1.2m customers engaged in this Sihanoukville-based online operation.

In the beginning of November, police in Jiangxi’s provincial capital Nanchang disrupted a “large-scale multinational” online gambling operation, which allegedly processed bets worth over RMB30 billion ($4.3 billion) from around 1.2 million wagers.

The online ring was based in Cambodia’s Preah Sihanouk province, where some 200 staff engaged in the case were reportedly arrested at two facilities.

The Sihanoukville operation is thought to have administrated a number of websites, among which Golden Lisboa and Macau Casino, apparently purposefully implying connections with Macau-licensed casino operators.

AMCM Warns for Irregularities Beforehand

In October, a few mainland-registered financial services firms, including JD.com, were cited in a warning issued by the Monetary Authority of Macao (AMCM) for carrying out “unauthorized financial activity.” The AMCM called local residents to be attentive about certain individuals who were promoting their ability to send money from mainland-licensed processors to Macau through “underground banking” networks.

China has been recently tightening its measures against gambling activity of various types. This week, China’s Ministry of Culture and Tourism issued a notice of Measures for the Management of Gaming Equipment, which covers everything from video games in internet cafés to claw-crane machines stuffed with plush toys.