The penetration of Asian Organised Crime into Australia gained momentum with the wave of Japanese investment and economic influence in the late 1980s, early 1990s. Now there is China, the new Asian imperialist, and with Chinese investment comes the influence of organised crime as well. “…there is a dark side to remittance operations. To ultimately settle exchanges via hawala, Chinese underground banks regularly use cash generated by criminal groups through activities such as drug trafficking, cigarette smuggling, organized illegal immigration and human trafficking, according to the NCA (National Crime Authority).” This money ultimately floods into the quest to buy up property in sucker countries such as Australia:
Let Bloomberg detail this one further:
“…opportunities to move cash legitimately from China are severely limited, with individuals normally allowed to wire only $50,000 a year overseas. They also have a one-time opportunity to move their money when they emigrate. Plugging the gap is where the underground networks come into play.
“These agencies have sprouted to meet soaring demand,” says Joel Gallo, an adjunct professor of finance at New York University Shanghai. “They act as quasi-banking firms, yet operate without the scrutiny of one and adroitly engage in regulatory arbitrage by standing in a gray zone.”
There’s no reliable estimate on how big the industry is, but probes disclosed by authorities suggest an enormous scale. One investigation in China’s western Gansu province uncovered an operation with 75.6 billion yuan in assets, state media reported in 2021, citing China’s State Administration of Foreign Exchange.
The money was spread among a network of five organizations that used more than 8,000 bank accounts across more than 20 provinces.
The networks are truly global in scope, operating not only in Hong Kong but wherever there are significant numbers of the Chinese diaspora.
It’s “highly likely” that underground banks will have pools of funds ready in key locations, so recipients can receive their cash quickly, and in the local currency, according to a 2019 intelligence assessment by the UK’s National Crime Agency (NCA).
…there is a dark side to remittance operations. To ultimately settle exchanges via hawala, Chinese underground banks regularly use cash generated by criminal groups through activities such as drug trafficking, cigarette smuggling, organized illegal immigration and human trafficking, according to the NCA.
For example, a gang with operations in both China and the UK might front the money to pay a hawala recipient in London and then get paid a corresponding amount by the underground bankers in Shanghai.
…Right now there are increasing signs that more money is looking to leave. Real estate consultant Juwai IQI said in August that it expects more than 700,000 Chinese to exit the country in the next two years.
Top destinations for buying property—based on searches on its site—include Australia, Canada and the UK. Singapore introduced a 60% property tax for foreign purchasers in April, which has crimped midmarket demand.
Any local established property sold to a foreigner is wrong. We have a shortage for our children. That it is executed via organised crime makes it illegal as well.
What can we expect the Albanese government to do about it? Nothing. He’s too busy grovelling his way to celebrating fifty years of Labor grovelling.
Hopefully, China will repeat its 2017 crackdown on capital flight. It is usually Beijing and not Canberra that acts in the Australian interest.
It has good reason to. It must protect CNY lest it generate a banking crisis amid the property crash. Goldman:
How capital outflows this year differ from 2015/16: After the PBOC released the final details of Q2 balance of payments (BOP) data last week, we highlight two differences between capital outflows in 2023H1 vs. in 2015/16.
First, the magnitude is much smaller (around US$100bn annualized rate in 2023H1 vs. over US$600bn in 2015/16), although we saw increased outflows more recently in August.
Second, this year’s outflows have been mostly driven by foreign investors selling Chinese assets, compared to outflows via “other investments” and “net errors and omissions” in 2015/16 (reflecting Chinese residents acquiring foreign assets).”