In practice, many people have such cognitive misconceptions:
Foreign exchange or introduction behaviors may be illegal, but absolutely do not constitute criminal offenses;
One's private foreign exchange behavior is very covert and is not easily detected by judicial authorities;
Helping others exchange currency without profit definitely does not constitute administrative violations or criminal offenses;
Selling the only US dollars and other foreign currencies to others to earn exchange rate differences should not be illegal;
I don't care if my family and friends are making money through currency exchange. I'm just providing them my bank account number for free, and I haven't done anything illegal;
If a client asks for help in introducing foreign exchange channels, and I happen to know someone, then I introduce them. Since I haven't received any money from it, there should be no risk;
So, do the above behaviors have legal risks?
If it is illegal, how should it be qualified? Is it an administrative violation or a criminal offense?
Where is the boundary between foreign exchange activities constituting administrative violations or criminal offenses?
On May 8, 2025, the Supreme People's Procuratorate and the State Administration of Foreign Exchange jointly issued typical cases of the reverse connection between criminal offenses and administrative violations in the foreign exchange field, addressing the above issues.
This article interprets the guidance cases published this time.
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Article author: Lawyer Shao Shiwei
Providing your bank card to help others receive payments actually constitutes a crime?
Among the typical cases published this time, there are 2 cases where the actors provided bank accounts for engaging in illegal foreign exchange activities and received payments. So is this behavior an administrative violation or a criminal offense? How should it be qualified?
"I just listened to my friend's arrangement and helped him receive payments. How my friend and the supplier connect, I don't care, and I don't participate. Will I have risks?"
Case 1: Li Mouyi is suspected of illegal business offense and criminal reverse connection case
Li Moujia took advantage of his convenience in providing cross-border logistics transport services between China and Vietnam to illegally exchange foreign currency with a Vietnamese person named Huang.
In the cooperation process, Li Moujia arranged for Li Mouyi to be responsible for collecting RMB from Chinese clients within China, which was then transferred to Li Moujia, who then transferred it to a designated domestic bank card in China as instructed by Huang Mou, thus exchanging it for Vietnamese Dong.
The prosecutor's office determined that Li Mouyi provided assistance to Li Moujia in illegally engaging in capital settlement services and illegal buying and selling of foreign exchange, and due to relevant factors for reducing and mitigating punishment, ultimately made a decision of minor circumstances and non-prosecution (constituting a crime).
The court determined that Li Moujia was an accomplice and sentenced him to one year and three months in prison.
Lawyer Shao's analysis:
In this case, Li Mouyi actually had a significant mentality of taking chances. He might believe that he was merely helping to receive payments at the instruction of Li Moujia, and these funds were not black money, but legitimate trading payments, so there should not be much risk. However, in fact, what he was engaged in was the act of assisting in matched foreign exchange.
"My wife uses my account to help others receive payments. I believe I'm not lending my account to strangers, and I haven't profited. Am I committing a crime?"
Case 3: Chen Mouhong and Wu Mourong are suspected of illegal business offense and criminal reverse connection case
Chen Moumou asked her husband Wu Moulin to register as an individual business and open multiple personal foreign exchange settlement accounts at the bank. Later, in the form of fictitious trade, the aforementioned accounts were provided to underground bank gangs for receiving foreign exchange. After conducting foreign exchange settlement at the bank, the RMB was transferred to domestic accounts designated by the underground bank gang, from which fees and rebates given by the bank for foreign exchange settlement were collected.
The court believed that Chen Moumou and Wu Moulin were accomplices, sentencing Chen Moumou to four years and eight months, while Wu Moulin received a suspended sentence of one year and ten months.
In addition, Chen Moumou also asked her relatives Chen Mouhong and Wu Mourong to open e-commerce businesses and bank settlement accounts with foreign exchange settlement functions for her use. However, the prosecutor's office considered that the two did not profit and were relatives, determining that they constituted a crime but decided not to prosecute.
Lawyer Shao's analysis:
According to Article 44, Item 2 of the (Regulations on the Management of Domestic Foreign Exchange Accounts), lending, colluding, or transferring foreign exchange accounts may incur fines of up to 300,000. But after all, 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 only constitute administrative violations and are often not pursued for criminal liability.
However, in this case, the court determined that both Chen Moumou and her husband constituted illegal business offenses and sentenced them to prison terms.
Although a decision of non-prosecution was made for the two relatives, it should be noted that the prosecutor's office also determined that the two constituted crimes, issuing a decision of non-prosecution for minor circumstances (constituting a crime).
Lawyer's tips:
Do not provide foreign exchange accounts to help others receive payments out of "goodwill" or "help". Otherwise, even if you do not participate in specific illegal foreign exchange activities, there may still be legal risks 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 face double penalties for helping clients exchange currency for free?
Case 4: Fan Mou, Zhao Moumou, and Luo Moumou are suspected of illegal business offense and criminal reverse connection case
He Mouwei used the resources accumulated from promoting insurance business, such as overseas accounts and foreign exchange channels, to facilitate and introduce mainland insurance clients with foreign exchange needs, conducting two-way exchanges between RMB, Hong Kong dollars, and US dollars for paying overseas premiums or for domestic investment and consumption.
Fan and others, under He Mouwei's proposal, used sales channels for overseas insurance to engage in disguised buying and selling of foreign exchange through domestic and foreign "matched" transactions.
For He Mouwei, the court sentenced him to four years in prison and fined him 4 million.
For Fan Mou and others, the prosecutor's office determined that, due to the minor circumstances of their crimes, they decided not to prosecute (constituting a crime). At the same time, for their illegal introduction of buying and selling foreign exchange without profit, they were subject to administrative fines ranging from 1.4 million to 2.8 million in accordance with foreign exchange management regulations.
Lawyer Shao's analysis:
According to Lawyer Shao's experience in handling relevant cases, one common behavioral pattern of illegal business involving buying and selling foreign exchange is that intermediaries facilitate transactions between parties with foreign exchange needs, introducing foreign exchange buying and selling. For example, immigration companies, overseas property advisors, trusts, insurance, funds, and practitioners in the banking and financial sectors often inevitably receive inquiries from clients about foreign exchange channels as part of their primary business. In order to maintain customer relationships or facilitate transactions, they often act as information intermediaries, providing buying and selling information and introducing foreign exchange.
In this case, the mentioned insurance industry is subject to the regulations of the State Administration of Foreign Exchange. According to the regulations, each individual in China enjoys a facilitative foreign exchange purchase limit equivalent to $50,000 per year, which cannot be used for overseas real estate purchases, securities investments, purchasing life insurance, and investment-type return dividend insurance, and other capital projects that have not been opened.
For instance, for mainland residents, if they wish to purchase Hong Kong insurance, there will be various restrictions, such as:
Any insurance policy not signed locally in Hong Kong (such as domestic proxy signing or premium payment) is illegal. The policy must be signed by the insured in Hong Kong, and proof of insurance activities occurring in Hong Kong must be provided, such as a Hong Kong and Macau travel permit and entry records.
Personal foreign exchange purchases cannot be used to buy overseas investment-type insurance (such as participating insurance or universal insurance);
Some insurance companies require the insured to have Hong Kong residence or work status;
Premiums must be paid directly to the insurance company’s account and cannot be transferred through an intermediary’s personal account, otherwise it may be deemed illegal operations;
Some insurance agents, for various reasons (such as performance pressure, maintaining customer relationships, or profiting from their information advantages), help clients exchange currencies for a fee or for free, or facilitate clients to buy and sell foreign exchange through matched transactions. However, this behavior constitutes illegal business activity of buying and selling foreign exchange. Even if introduced for free, it may be deemed as a minor offense by judicial authorities, not prosecuted, but still faces substantial administrative fines.
Can Chinese people opening private foreign exchange companies abroad avoid domestic legal risks?
Why do legitimate overseas businesses still involve domestic criminal risks?
Case 5: Zhao Mouping and Yao Mou are suspected of illegal business offense and criminal reverse connection case
Yao Mouchen engaged in currency exchange between Rubles and RMB in Russia, earning foreign exchange differences or fees, illegally buying and selling foreign exchange worth over 24 million yuan, earning illegal profits of 485,000 yuan.
The court sentenced him to two years and three months, with a three-year suspended sentence, and fined him 500,000 yuan.
Lawyer Shao's analysis:
I have to complain first. This guy is indeed a bit miserable. He has been engaged in currency exchange business in Russia for 6 years, earning only 485,000, equivalent to just over 6,000 yuan per month. After 6 years, the case occurred, and he was sentenced to two years with three years suspended for illegal business, plus a fine of 500,000. This means that after 6 years of work, he lost 15,000.
In the article (Is it reliable to exchange money with legitimate foreign exchange companies abroad? What are the legal risks for exchangers, introducers, and exchange companies? (Part 2)) below, Lawyer Shao mentioned that if a foreign exchange company operates in countries or regions without foreign exchange control and obtains relevant qualifications and licenses, there is no problem in conducting foreign exchange business. Unless the business involves money laundering, it generally will not be investigated by foreign regulatory authorities.
However, our criminal law is personal jurisdiction. This means that if a Chinese citizen commits offenses against domestic laws while abroad, there will still be criminal legal risks. In terms of foreign exchange operations, even operating a private foreign exchange company abroad, even obtaining local licenses and qualifications, is legal locally, but if domestic money is involved and foreign exchange business is conducted in a "matched" manner, there will inevitably be criminal risks.
Is there a legal risk in selling legally earned foreign currencies such as US dollars or Hong Kong dollars to others?
Is legal foreign exchange reselling also illegal?
Case 6: A certain technology company is suspected of illegal business offense and criminal reverse connection case
From 2017 to 2021, a certain freight forwarding company legal person Qi Moumou colluded with multiple enterprises, using agricultural products that others could not refund taxes to impersonate their own export goods, forging contracts, invoices, and other materials, and found technology company legal person Yao Moumou to buy foreign exchange (about 113 million yuan), forging overseas collection records to defraud the state of 245 million yuan in export tax rebates.
Yao Moumou assisted Qi Moumou in completing tax fraud by transferring foreign exchange from the sale of electronic products to Qi Moumou through an overseas account, charging an extra fee of several hundred yuan for every ten thousand US dollars.
The court ruled that Qi Moumou committed the crime of defrauding export tax rebates and sentenced him to life imprisonment.
The prosecutor's office believes there is insufficient evidence to determine that Yao Moumou constitutes illegal business and does not prosecute.
Lawyer Shao's analysis:
In this case, the principal offender was sentenced to life imprisonment, while the accomplice was acquitted.
It is conceivable that the psychological state of the technology company legal person in this case must have been like a roller coaster. Although the prosecutor's office ultimately decided not to prosecute the legal person due to insufficient evidence, from the incident to the judgment, it was a torment of more than two years, watching friends being sentenced to life imprisonment, surely thinking about how many years he would have to pedal the sewing machine.
Having finished the complaints, let's analyze: Why does Yao Mou not constitute a crime?
One model of illegal business is buying and selling foreign exchange, where the actor, for profit, buys foreign exchange at a low price and then sells it at a high price to earn the price difference. However, in this case, all of the foreign exchange held by the actor was obtained from selling products, and not illegally acquired at a low price elsewhere. Moreover, the purpose of selling was also for settlement, not to use the proceeds from the sale to continue buying foreign exchange for profit. Therefore, based on the elements of the crime of illegal business activity of buying and selling foreign exchange, their behavior does not constitute this crime.
However, Lawyer Shao also wants to remind: personnel from trading companies must not engage in similar behaviors just because such actions were not deemed criminal by the prosecutor's office in this case. Because the understanding of this type of model by case handlers is not uniform, there are indeed cases in practice where such behaviors were deemed criminal. Furthermore, even if ultimately not deemed criminal, there is still the risk of administrative penalties, as in this case, the technology company was fined 15 million, which is not a small amount.
Final remarks
As mentioned at the beginning of this article, many people have cognitive misconceptions, believing that their foreign exchange activities are very covert, especially when using the "matched" method, thinking that law enforcement agencies cannot discover them. Some people simply believe that even if discovered, the most they would face is a fine.
However, in practice, illegal business activities involving buying and selling foreign exchange often involve large amounts of money. Once the amount exceeds 25 million yuan or profits exceed 500,000 yuan, the parties may face more than 5 years of imprisonment. However, for defense lawyers, with more accumulated experience in this type of case, it will often be found that there are corresponding breakthroughs in individual cases, seeking a certain degree of defense space. Even if the amount involved is large, it may still be possible to negotiate a suspended sentence or even achieve a result of non-prosecution.
With the development of financial technology, illegal foreign exchange methods have evolved from traditional cash transactions to more covert ways such as virtual currency transactions, POS machines smuggling out of the country, and false trade contracts, with the amount involved becoming larger. Therefore, in recent years, China has significantly increased its crackdown on illegal activities in the foreign exchange field. In this context, we cannot be overly optimistic about the future enforcement agencies' efforts to punish illegal criminal activities related to foreign exchange.
Illegal foreign exchange activities can lead to funds escaping the regulatory system, resulting in abnormal cross-border capital flows, which may cause exchange rate fluctuations, loss of foreign exchange reserves, and other issues. Therefore, as individuals, it is essential to abide by the law and not have a mentality of taking chances. Foreign exchange transactions must be conducted through legal channels.
