Special Statement: This article is an original piece by lawyer Shao Shiwei, representing only the author's personal views, and does not constitute legal consultation or legal advice on specific matters.
In practice, many people have such cognitive misconceptions:
The possibility of illegal currency exchange or introduction behavior exists, but it definitely does not constitute a criminal offense;
His private currency exchange behavior is very discreet and is unlikely to be detected by judicial authorities easily;
Helping others with currency exchange without profit surely does not constitute administrative violations or criminal offenses;
Selling the only US dollars and other foreign currencies to others to earn the exchange rate difference should not be illegal;
I don't care if my family and friends are making money through currency exchange; I just give them my bank account number for free, and I haven't done anything illegal;
A client asked me to help introduce a currency exchange channel, and I happen to know someone, so I introduced them; I didn't collect any money, so there shouldn't be any risk;
So, do the above behaviors have legal risks or not?
If it is illegal, how should it be classified? Is it an administrative violation or a criminal offense?
What is the boundary between administrative violations and criminal offenses in currency exchange activities?
On May 8, 2025, the Supreme People's Procuratorate and the State Administration of Foreign Exchange jointly released typical cases of reverse connection in the foreign exchange field, addressing the above issues.
This article interprets the guidance cases released this time.
Author of this article: Lawyer Shao Shiwei
Providing one's bank card to help others receive payments actually constitutes a crime?
In the typical cases released this time, there are two cases where the perpetrators provided bank accounts to upper sellers for engaging in illegal currency exchange activities to receive payments. So, how should this behavior be classified, as administrative violations or criminal offenses?
"I just followed a friend's arrangement to help him receive payments. I don't care how my friend and the upper seller connect; I am not involved. Will I have risks?"
Case One: Li is suspected of illegal经营罪 in a reverse connection case.
Li used his convenience of engaging in China-Vietnam cross-border logistics services to illegally exchange foreign currency with a Vietnamese individual.
During the cooperation process, Li arranged for Li to be responsible for receiving renminbi from Chinese clients within China, then transferred it to Li, who then transferred it to the designated domestic bank card specified by Huang to exchange for Vietnamese dong.
The procuratorate determined that Li provided assistance for Li's illegal engagement in fund settlement services and illegal buying and selling of foreign exchange, and due to relevant mitigating circumstances, ultimately made a decision of non-prosecution (constituting a crime) due to minor circumstances.
The court determined that Li was an accomplice and sentenced him to one year and three months in prison.
Lawyer Shao's analysis:
In this case, Li actually had a significant sense of luck. He might think he was merely helping receive payments according to Li's instructions, and that these payments were not dirty money, but legitimate payments, which should not pose a risk. However, he was indeed engaging in helping with foreign exchange matched transactions.
"My wife uses my account to help others receive payments. I think I am not lending my account to strangers, and I am not making a profit; do I constitute a crime?"
Case Three: Chen Hong and Wu Rong are suspected of illegal经营罪 in a reverse connection case.
Chen asked her husband Wu to register an individual business and open multiple personal foreign exchange settlement accounts at the bank, then provided these accounts to underground money exchange groups to receive foreign exchange under the guise of fictitious trade, transferring the renminbi to specified domestic accounts of the underground money exchange group after settlement at the bank, collecting fees and bank rebates.
The court believed that Chen and Wu Lin were accomplices, sentencing Chen to four years and eight months in prison and Wu Lin to one year and ten months with a two-year suspension.
Additionally, Chen also let her relatives Chen Hong and Wu Rong open e-commerce businesses and bank settlement accounts with exchange functions for her use. However, the procuratorate considered that the two did not profit and were related by blood, determining that they constituted a crime but opting for non-prosecution.
Lawyer Shao's analysis:
According to Article 44, Clause 2 of the (Domestic and Foreign Exchange Account Management Regulations), lending, colluding, or transferring foreign exchange accounts can result in fines of up to 300,000 yuan. However, providing a foreign exchange account does not equal directly engaging in illegal buying and selling of foreign exchange.
Therefore, in practice, individuals who only provide foreign exchange accounts generally constitute administrative violations and are often not subject to criminal liability.
However, in this case, the court determined that both Chen and her husband constituted illegal经营罪 and sentenced them to prison.
Although the two relatives were not prosecuted, it is important to note that the procuratorate also determined that the two constituted a crime, issuing a decision of non-prosecution due to minor circumstances (constituting a crime).
Lawyer's Reminder:
Do not provide foreign exchange accounts to help others receive payments out of 'goodwill' or 'help'; otherwise, even if you did not participate in specific illegal currency exchange activities, there may still be legal risk of constituting a crime in the future.
To maintain customer relationships or facilitate transactions, how high is the risk of introducing or helping with currency exchange?
Financial practitioners should be cautious of the 'introducing foreign exchange' minefield—why is providing free assistance to clients in currency exchange subject to dual penalties?
Case Four: Fan, Zhao, and Luo are suspected of illegal经营罪 in a reverse connection case.
He Wei used the resources he accumulated during the promotion of insurance business, such as overseas account opening and currency exchange channels, to facilitate and introduce domestic insurance clients with currency exchange needs, exchanging renminbi and Hong Kong dollars, US dollars, etc., for paying overseas premiums or for investment and consumption within the country.
Fan and others, under the proposal of He Wei, used overseas insurance channels to indirectly buy and sell foreign exchange in a 'matched' manner.
For He Wei, the court sentenced him to four years in prison and fined him 4 million yuan.
For Fan and others, the procuratorate determined that due to the minor circumstances of their crime, a decision of non-prosecution (constituting a crime) was made. At the same time, for the illegal introduction of foreign exchange transactions without profit, according to foreign exchange management regulations, they were subject to administrative fines ranging from 1.4 million to 2.8 million yuan.
Lawyer Shao's analysis:
Based on lawyer Shao's experience in related cases, a common pattern of illegal经营罪 related to foreign exchange is that intermediaries facilitate both parties with currency exchange needs, introducing foreign exchange trading. For instance, immigration companies, overseas property consultants, trusts, and financial industry practitioners such as insurance, funds, and banks often encounter inquiries from clients about currency exchange channels during their regular business. To maintain customer relationships or facilitate transactions, they often act as information intermediaries, providing trading information and introducing foreign exchange transactions.
This case discusses the insurance industry. According to the regulations of the State Administration of Foreign Exchange, individuals in the mainland enjoy a facilitative foreign exchange purchase quota equivalent to $50,000 per person per year, which cannot be used for overseas real estate purchases, securities investments, purchasing life insurance, and investment-type return dividend insurance that are not yet open capital projects.
For mainland residents, there are many restrictions if they want to purchase Hong Kong insurance, such as:
Any insurance policy not signed locally in Hong Kong (such as domestic agency signing or paying premiums) is illegal and must be signed in person in Hong Kong, providing proof of entry records and other evidence to show the insurance activity occurred in Hong Kong;
Personal foreign exchange purchases cannot be used to buy overseas investment-type insurance (such as participating insurance, universal insurance);
Some insurance companies require policyholders to have Hong Kong residency or work status;
Premiums must be paid directly into the insurance company's account and cannot be transferred through individual intermediary accounts; otherwise, it may be deemed illegal operation;
Some insurance agents, for various reasons (such as performance pressure, maintaining customer relationships, and leveraging their information advantages for profit), assist clients in currency exchange, either for a fee or for free, or facilitate clients to buy and sell foreign exchange through matched transactions. However, this behavior constitutes illegal经营罪 related to foreign exchange trading. Even if it is a free introduction, it may be determined by judicial authorities as a case of minor circumstances not prosecuted, avoiding criminal liability, but still faces hefty administrative fines.
Can Chinese people open private currency exchange companies abroad to evade domestic legal risks?
Why does legitimate overseas business still involve domestic criminal risks?
Case Five: Zhao Ping and Yao are suspected of illegal经营罪 in a reverse connection case.
Yao engaged in the exchange of rubles and renminbi in Russia, illegally buying and selling foreign exchange worth over 24 million renminbi, illegally profiting 485,000 yuan.
The court sentenced him to two years and three months in prison, with a three-year suspension, and fined him 500,000 yuan.
Lawyer Shao's analysis:
I have to complain first; this guy is really a bit miserable. He worked in currency exchange in Russia for six years and only made 485,000 yuan, which is just over 6,000 yuan a month. After six years, the case broke, and he got sentenced to two years suspended for three, plus a fine of 500,000 yuan. It's like he worked for six years and lost 15,000 yuan.
In the article (Is it reliable to exchange money with a foreign, licensed currency exchange company? What legal risks do currency exchangers, introducers, and exchange companies face? (Part II)), lawyer Shao previously mentioned that if a currency exchange company operates in a country or region with no foreign exchange restrictions and has obtained the relevant qualifications and licenses, operating currency exchange business itself is not a problem. Unless the business content involves money laundering, it generally will not be investigated by foreign regulatory authorities.
However, our country's criminal law is based on personal jurisdiction. This means that if a Chinese citizen commits a violation of domestic law abroad, they will still face criminal legal risks. In terms of currency exchange, even if one operates a private currency exchange company abroad and has obtained local permits, it is legal to operate there. However, if they engage in currency exchange business with domestic funds using matched transactions, they will inevitably face criminal risks.
Is there a legal risk in selling one’s legitimately earned US dollars, Hong Kong dollars, and other foreign currencies to others?
Is selling legitimate foreign exchange illegal?
Case Six: A certain technology company is suspected of illegal经营罪 in a reverse connection case.
From 2017 to 2021, a freight forwarding company's legal person Qi colluded with multiple enterprises to use agricultural products that others could not refund taxes to impersonate their own export goods, forging contracts, invoices, and other materials, and sought foreign exchange from technology company legal person Yao (about 113 million yuan) to forge overseas payment records, thereby defrauding the state of 245 million yuan in export tax refunds.
Yao transferred the foreign exchange from selling electronic products to Qi via an overseas account, charging hundreds of yuan as a fee for every ten thousand US dollars to assist in tax fraud.
The court sentenced Qi to life imprisonment for fraudulently obtaining export tax refunds.
The procuratorate believes that there is insufficient evidence to establish Yao's illegal经营罪, thus not prosecuting.
Lawyer Shao's analysis:
In this case, the main perpetrator was sentenced to life imprisonment, while the accomplice was acquitted.
It is conceivable that the legal person's psychological state in this case must have been like a roller coaster. Although the procuratorate ultimately decided not to prosecute due to insufficient evidence, from the incident to the verdict, it was two years of torment, watching their partner being sentenced to life imprisonment, surely always wondering how many years they would have to serve.
Having complained, let us analyze: why does Yao not constitute a crime?
One of the patterns of illegal经营罪 is to buy and sell foreign exchange, where the perpetrator, for profit, buys foreign exchange at a low price and then sells it at a high price to earn the difference. However, in this case, all the foreign exchange held by the perpetrator was obtained from sales of products, not illegally purchased at a low price from elsewhere. Furthermore, the purpose of selling was also to settle foreign exchange, not to continue buying foreign exchange with the proceeds for profit. Therefore, in terms of the elements constituting the crime of illegal经营罪 related to foreign exchange trading, their behavior does not constitute the crime.
However, lawyer Shao also needs to remind that trade company personnel must not engage in similar behaviors just because the procuratorate did not recognize the behavior in this case as a crime. Due to the inconsistent understanding of such models by case handlers, there are not a few cases where this behavior is recognized as a crime in practice. Additionally, even if ultimately not recognized as a crime, there is still the risk of administrative penalties. For example, in this case, the technology company was fined 15 million, which is not a small amount.
Written at the end
As mentioned at the beginning of this article, many people have cognitive misconceptions, believing their currency exchange behavior is very discreet, especially when using 'matched' methods, thinking that law enforcement agencies cannot discover it. Some simply believe that even if discovered, the worst outcome would be just a fine.
However, in practice, illegal经营罪 related to foreign exchange often involves large amounts of money. Once the amount exceeds 25 million yuan or the profit exceeds 500,000 yuan, the parties may face imprisonment for more than five years. However, for defense lawyers, with more accumulated experience in such cases, it is often possible to find corresponding breakthroughs and seek some degree of defense space, even if the amount involved is large, there may still be a chance to obtain a suspended sentence or even achieve a non-prosecution result.
With the development of financial technology, illegal currency exchange methods have evolved from traditional cash transactions to more concealed methods such as virtual currency transactions, POS machine smuggling, and fraudulent trade contracts, with the amounts involved becoming increasingly large. Therefore, in recent years, our country has significantly intensified its crackdown on illegal activities in the foreign exchange field. Against this backdrop, we must not be overly optimistic about the future enforcement agencies' efforts to punish illegal foreign exchange activities.
Illegal currency exchange activities can lead to funds escaping the regulatory system, resulting in cross-border abnormal capital flows, which may trigger exchange rate fluctuations and depletion of foreign exchange reserves. Therefore, as individuals, it is essential to adhere to laws and regulations without harboring a sense of luck and must conduct foreign exchange transactions through legal channels.
