Analysis of Legal Risks of Forex Illegal Activities

Recently, the Supreme People's Procuratorate and the State Administration of Foreign Exchange jointly released a batch of typical cases in the forex field, revealing the legal risks of illegal currency exchange and other behaviors. These cases are of significant guiding importance in clarifying the illegal boundaries of currency exchange behavior.

The Risks of Providing Bank Account Assistance for Currency Exchange

Case studies show that even just providing a bank account for others to receive payments can constitute a crime. Some people think they are merely helping to collect payments as instructed and are not directly involved in illegal currency exchange, so there should be no risk. However, in reality, such behavior may be deemed as assisting in illegal forex trading.

Even when accounts are provided between relatives, there is still a possibility of constituting a crime. In one case, someone allowed a relative to open a bank account with foreign exchange functions for use. Although the relative did not profit, the prosecution still determined that a crime was committed, but opted for non-prosecution.

Therefore, do not easily provide assistance in setting up forex accounts for others under the guise of "helping", as it may expose you to legal risks.

Introduction of Currency Exchange Risks by Financial Practitioners

Some financial practitioners may introduce forex channels to clients to maintain customer relationships or facilitate transactions. However, this behavior also carries legal risks.

In this case, the insurance salesperson used channels for selling overseas insurance to help clients indirectly buy and sell forex through domestic and foreign "offset" methods. Although it was a gratuitous introduction, the prosecution still determined that it constituted a crime and also faced substantial administrative fines.

Therefore, financial practitioners must be particularly cautious and should not provide forex information or channels to clients for various reasons, as even non-compensated actions may constitute a crime.

Risks of Overseas Forex Exchange Business

There is a view that opening a forex company abroad can avoid legal risks in China, but this is not the case. According to the principle of personal jurisdiction, Chinese citizens who violate domestic laws abroad may still face criminal risks.

In a case, someone operated a ruble and yuan exchange business in Russia for 6 years. Although it was legal locally, it ultimately resulted in a prison sentence and a fine due to the involvement of domestic funds. Therefore, even when conducting currency exchange businesses abroad, it is important to be cautious and avoid risks related to domestic funds.

The Risks of Selling Proprietary Forex

Some believe that selling legally obtained forex to others should not be illegal, but in reality, such behavior also carries risks. Although there are cases where the prosecution has not pursued criminal responsibility due to insufficient evidence, the recognition of such behavior varies among different case handlers.

Even if it ultimately does not constitute a crime, one may still face hefty administrative penalties. Therefore, units and individuals that possess forex, such as trading companies, should not casually sell forex to others.

Conclusion

Overall, illegal forex activities are facing increasingly strict regulations. Many people underestimate the legal risks associated with forex transactions, believing that even if discovered, the worst they would face is a fine. However, in reality, once the amount involved is significant, one may face a prison sentence of over 5 years.

With the development of financial technology, illegal forex exchange methods have become increasingly covert, and the amount involved in such cases is also on the rise. Against this backdrop, law enforcement agencies are intensifying their crackdown on forex illegal activities. Therefore, whether individuals or businesses, everyone should abide by the law and conduct forex transactions through legal channels, and not take chances.