Failing to comply with customer due diligence as required by money-laundering legislation when transferring some $53 million from China saw Qiang Fu fined $180,000, his foreign exchange business Jiaxin Finance Ltd fined $2.55 million and his mother Fuqin Che fined $202,000. Remitted via 311 separate transactions, the $53 million is alleged to be illicit proceeds from a fraudulent pyramid selling scheme in China engineered by Xiao Hua Gong, also known as Edward Gong.
The High Court was told Che, also known as Lily Che, had dealings with Mr Gong as far back as 2011. She was then managing a business owned by her son called Global Concept Capital Investment and Finance. This relationship continued when Fu’s new business, Jiaxin Finance, subsequently took over Global Concept’s client base.
They were convicted of failing to carry out customer due diligence and failing to keep adequate records. Justice Walker said the sheer volume and frequency of remittances processed through Jiaxin Finance on behalf of Mr Gong should have raised suspicions. There was no stated commercial objective for the foreign exchange transfers other than laundering funds from China.
Using Mrs Che as a buffer creating the appearance that she, not Mr Gong, was Jiaxin’s customer did not excuse Jiaxin from looking beyond Che to identify and to undertake due diligence on the actual customer.
Police said Mr Fu has convictions in China dating back to March 2013 for foreign exchange trading offences. Their relevance to an increased penalty when sentencing in a New Zealand court for similar offences cannot be taken into account without formal proof of conviction from China authorities, Justice Walker said.
R. v. Jiaxin Finance Ltd, Qiang Fu & Fuqin Che – High Court (3.03.22) & Supreme Court (4.11.22)
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