New Documents Reveal Details of ICBC Money Laundering in Spain

New documents were revealed in the ongoing money laundering case being prosecuted against the Industrial and Commercial Bank of China (ICBC) by Spanish authorities that show the bank aided in the transfer of an estimated $1.4 billion in illicit funds from Spain to China between 2009 and 2012.  The documents, among a large amount of communications intercepted by authorities that were reviewed and reported on by Reuters, reveal that Wang Jing, a senior employee of the state-owned bank’s Madrid branch, was intimately involved in a scheme which saw ICBC function as a channel for the funneling of tax fraud proceeds back to China.

According to Reuters, Wang Jing was quoted in one exchange with a client that had been the target of a complaint by another banker suspecting fraud related to their account, “You have to look out for yourself and make sure these people are obedient.”  Additional complaints would lead to “problems” for the bank, Wang warned.  These intercepted calls reportedly became the basis for investigators bringing the current case to a head.

The embarrassment of a scandal engulfing China’s largest bank has led the Chinese embassy in Madrid to publicly press for the case to be closed, with authorities in Beijing also threatening economic retaliation.  The revelations come at a time when Chinese financial institutions are also increasingly on the radar of U.S. sanctions officials for reasons related to North Korea.  In this environment, ICBC is likely to gain increased attention, particularly as the bank is not the only Chinese financial institution to fall afoul of the law in Europe.  The Bank of China settled a case in Italy in February 2017 following accusations of similarly aiding in the smuggling of $4.78 billion back to China between 2006 and 2010.

The case will prove a test for EU officials, who must juggle their desire to encourage Chinese investment with growing pressure to account for investment-related security concerns and uphold laws against illicit finance.  Beijing’s reaction to the heightened profile of the Spanish case and the revealing of incriminating communications should also be watched closely.