Download - On Cross-border Economic Crimes in China and Countermeasures Jiangxi Police Institute, P. R. China Prof. Xiaobai CHENG Dr. Huijuan XUE Peng XU.

4 4 October October 20132013

On Cross-border Economic Crimes

in China and Countermeasures

Jiangxi Police Institute, P. R. China

Prof. Xiaobai CHENG Dr. Huijuan XUE

Peng XU

Self-introductionSelf-introduction BA in English literature MA in English linguistics A visiting scholar in the UK, sponsored by the

China Scholarship Council, MoE PhD in Business and Management – University

of the West of England, UK International Development Coordinator at UWE,

responsible for the EA market (2003 – 2010) Publications + professorship 2011


FUJIANFUJIAN

XINJIANGXINJIANG

XIZANGXIZANG(TIBET)(TIBET)

QINGHAIQINGHAI

GANSUGANSU

JILINJILIN

GUANGXIGUANGXI

SICHUANSICHUAN

YUNNANYUNNAN

HUNANHUNAN

GUIZHOUGUIZHOU

GUANGDONGGUANGDONG

JIANGXIJIANGXI

HUBEIHUBEI ANHUIANHUI

HENANHENANSHAANXISHAANXI

SHANXISHANXI

HEBEIHEBEI

SHANDONGSHANDONG

HEILONGJIANGHEILONGJIANG

NEI MENGUNEI MENGU(INNER MONGOLIA)(INNER MONGOLIA)

JIANGSUJIANGSU

LIAONINGLIAONING

HAINANHAINAN

TAIWANTAIWAN

BEIJINGBEIJING

HONG KONGHONG KONG

SHANGHAISHANGHAI

TIANJINTIANJIN

ZHEJIANGZHEJIANG

NINGXIANINGXIA

CHONGQINGCHONGQING

Where Are We?


I. Status Quo of Cross-Border Economic

Crimes in China

II. Establish and Practise the Cooperation System for Police Affairs to Suppress Cross-border Economic Crimes

III. Predicaments in Police Collaboration while Attacking Cross-border Economic Crimes

IV. Improve the Cooperation System to Crack down on Economic Crimes

。


I. Status Quo of Cross-Border Economic

Crimes in China

Definition: crimes committed / occurring within two or more than two countries, regions or judicial districts

earlier forms of cross-border crimes:

smuggling, illegal immigration and hijacking

。


change in number, methods and types in recent years:

expanded to cross-border corruption and bribery, manufacturing counterfeit notes, economic fraud, money laundering, invasion of intellectual property, credit card crimes, internet economic fraud and the like

good organisation and intelligence


Eg: money-laundering

HK Special Administrative Region, USA, Japan, Taiwan and Singapore – the main Sources of huge transactions of foreign currencies

HK: 40% of the total money that was laundered flowed out from HK


On 29 June 2010: Economic Cooperation Framework Agreement in the Taiwan Straits

aim: to gradually diminish or eliminate the barriers in trade and investment, create the environment for fair trade and investment, improve the relationship of trade and investment and establish a cooperative infrastructure for economic boom and development in the two regions

the ‘Great China Economic Circle’


In 1983, China became part of the

International Criminal Police Organisation (ICPO).

In 1984, Chinese police established relationship with HK Office of British National Central Bureau, ICPO.

In January 1987, Guangdong Province set up Guangdong Liaison Agency, ICPO, specially dealing with criminal cases that occurred in HK and Macau to attack cross-border crimes.


II. Establish and Practise the Cooperation System for Police Affairs to Suppress Cross-border Economic Crimes

After the handover of HK, the liaison agency was established, leading to the high-level contact mechanism. Guangdong and HK Police Committee meet to discuss about investigation; counterparts on both sides to keep direct channels for communication, and collaboration in police affairs in Shenzhen and HK regions.

The Economic Crime Investigation Agency in Guangdong Public Security Department established direct connections with HK Commercial Crime Investigation Section.



Up to 2007, Mainland China and HK had jointly investigated a series of important cases, including the economic crime case of Yu Zhendong in Kaiping Branch, Guangdong, Bank of China, which was a great sensation at the time.

The police force in mainland China had handed over to HK police 116 HK wanted men, 38 cars, 2 yachts, 114 counters, RMB 6.27 million and 3 million HK dollars.


In 1979, Guangdong and Macau police force initiated police collaboration, with Macau Judicial Police Bureau and Guangdong Public Security Department appointing the first liaison officer.

Since 1983, police forces on both sides have been holding regular meetings on public security twice a year.

After the handover of Macau in 1999, collaboration entered a brand-new period. eg. at the first meeting an agreement was reached on cooperation principles, scope, methods and liaison channels.


Established a framework of systems for information exchange: regular and irregular meetings, jointly handling individual cases and taking joint actions, liaising in both centralised and direct manners and also for Zhuhai and Macau police to liaise between each other on land.

In November 2011, HK and Macau police forces jointly succeeded in uncovering the so-called case of ‘JK No 1’ gang, who were forging international credit cards. The crime caused a loss of RMB0.32 billion.

From August to September in 2009, Guangdong and Macau police started the so-called ‘2009 Thundering Movement’ to attack cross-border crimes using joint forces. Over 80,000 Guangdong and Macau police took actions and they caught 1340 gangs, cleared up 1872 criminal cases and caught 8300 suspects.


Collaboration in police affairs between mainland China and Taiwan

Before the 1990s, no direct communication channels, with merely ICPO passing relevant information between.

In September 1990, Chinese Red Cross and Taiwan Red Cross signed an agreement in Jinmen to suppress crimes using joint forces.

It stipulated the issue of repatriating citizens and criminal suspects or criminals to each other.


Since 2006, both parties have assisted each in investigating 21 tele-fraudulent cases, with Taiwan police seeking cooperation from Fujian police 7 times, and 14 times the other way round.

In July 2007, the police, procuratorate and court in Fujian Province jointly decreed ‘Thoughts on Several Problems about Defrauding Cases via False Information’.

Since the ‘Fox-hunting Movement’ to crack down on fraud by deploying false information in February 2007, Fujian police have cleared up 1400 tele-defrauding cases by Taiwanese criminals and smashed over 60 defrauding gangs.



On 26 April 2009, Association for Relations across the Taiwan Straits and Taiwan Straits Exchange Foundation signed the ‘Agreement of China-Taiwan Jointly Cracking down on Crimes and Assisting Each Other Legally’.

The agreement stipulates such important issues as repatriating crime suspects, sharing crime intelligence and jointly conducting investigation, which has milestone significance in attacking economic crimes in both regions.


III. Predicaments in Police Collaboration while Attacking Cross-border Economic Crimes

1. Differences in Legal Systems in ‘Two Banks and Four Regions’

‘one country with four judiciary regions’


money laundering

The scope varies in definition in different regions. ‘Criminal Law’ in mainland China specifies that money laundering covers incomes and profits obtained from drug dealing, organised crime, terrorist attack, smuggling, bribery and corruption, disordering financial management and financial fraud.

HK, however, only limits money laundering to the illegal incomes from drug deals in ‘Drug Regulations’ decreed in 1989.

In 1994, HK extended its definition to include profits from other organised crimes such as gambling, prostitution, usurious loans, smuggling and so on.

Based on the ‘Money Laundering Preventative Law’ in Taiwan in 1996, money laundering agents are those who engage in illegal activities or illegal trades such as smuggling, economic crimes and corruption.

Relatively speaking, Macau has a narrow definition, defining laundering money by gangs in the underworld as a crime, disregarding laundering illegal incomes from other crimes as money laundering.

In this light, to obtain incomes from crimes other than the underworld in mainland China and HK, which are laundered in Mainland China, HK and Macau, as well as to obtain incomes from committing crimes specified in the criminal law in mainland China, which are laundered in mainland China and HK, can be convicted as crimes or not.


HK and Macau criminal law hardly has any restrictions on the methods of money laundering. In contrast, ‘Taiwan Law’ stipulates money laundering as the action of legalising illegal capital operated by financial or non-financial agencies, for the purpose of covering up the illegal source of money or its nature, to evade or restrict judiciary search. The criminal law in mainland China classifies money laundering into 5 types of behaviour.

Such divergences comprise legal barriers when one side requires another to assist in attacking the crime of money laundering.



2. The Imperfect Content in Regional Police Collaboration

Up to present, no serious consideration of: how to turn the information provided by the collaborative party into useful judiciary evidence;how the arrest order issued in mainland China works effectively in the other three regions;how to dispatch legal documents to other parties …


In March 2009, the Supreme Court in mainland China decreed ‘Several Regulations on Dispatching Legal Documents Involved in HK-Macau Civil and Commercial Cases’. This document specifies issues like the methods and dates to dispatch legal documents about civil and commercial cases, but no formal agreement for dispatching documents for criminal cases.

In April 2009, mainland China and Taiwan signed the ‘Agreement of China-Taiwan Jointly Cracking down on Crimes and Assisting Each Other Legally’, but the agreement is more robust in principle than operation.

Regarding economic crimes, to take preventative measures against them has paramount significance but the current mode of cooperation for individual cases reveals more attacks than prevention.

In 2008 saw the start to use Chinese currency to settle international transactions, which increased the flow of Chinese and foreign currencies across borders.

The management mode of ‘loose entry and strict exit’, namely looser policies for foreign currency to flow in and stricter rules to flow out make it possible for large sums of suspicious foreign currencies to stay out of the control of banks, which provides an opportunity for criminals to exploit it to their advantage.



3. Lacking An Information-sharing System to Suppress Cross-border Economic Crimes

Mainland China, Macau and HK have signed many agreements on information collection and exchange, the police forces and judiciary organisations in these regions are collaborating more, leading to successful conclusions of many big cases.

However, collaboration in regional police affairs normally has local characteristics; for instance, such collaboration between mainland China and Taiwan is mainly based in Fujian Province whereas cooperation among mainland China, HK and Macau is principally based in Guangdong Province.

HK, Macau and Taiwan, administering small regions, equal to the size of one province in mainland China, can swiftly collect relatively comprehensive information while mainland China manages a vast land, hence a wide expanse of crime information to process.

In August 2009, Guangdong, HK and Macau signed the ‘Memorandum of Understanding on Establishing Internet Cooperation Platform’.

However, such crimes, characterised by committing credit card crimes and tele-fraud, have sprawled to Shanghai, Zhejiang and Hebei areas in recent years.


Because the information content of collaboration is complicated, even with the established ‘Internet Cooperation Platform’, a simple cross-border tele-fraud case will call for relevant information from many departments, including telecom, finance, internet logistics, postal service and so on, therefore the running of investigation is not as convenient and the efficiency is not as expected.


4.Lacking An Effective Execution Mechanism

in Regional Police Collaboration


Up to now, the four judiciary regions have not developed a highly integrated organisation for police affairs. There has been no normalised collaboration system, hence encountering procedural problems.

HK and Macau governments both adopt many legally restrictive measures, either to ensure the former to be in a central place in world finance or to protect the development of gambling industry in the latter. When cases from beyond the border or overseas call for checking the local financial intelligence, organisations have to apply to the Supreme Court and then take actions after gaining permission. However, rarely are permissions granted for such applications.


Take investigating the phone fraud gang in sichuan as an example, the case was cleared up after the liaison between the Investigation Team of Fujian Public Security Department and Taiwan Criminal Bureau. Because the police forces in the Taiwan Straits lack direct connection channels, it is difficult to get hold of the basic information of cases, to manage the search of criminal evidence and the time to respond, leading to the delay in clearing up cases, thus preventing police from following up with the cases and finding out main plotters behind the scene.


The legal differences in diverse judiciary regions arise from the differing legal positions under ‘one country two systems’. To meet the needs of attacking cross-border economic crimes, it is practical to ‘adjust’ some aspects of the legal systems in the regions within the sovereignty of a single nation. Under the premise of mutual respect to each region’s legislative rights, mainland China, HK, Macau and Taiwan can amend their legal regulations regarding how to punish typical cross-border economic crimes under unified principles and content.

IV. Improve the Cooperation System to Attack Economic Crimes

1. Coordinate the Legal Systems in Four Judiciary Regions


Furthermore, all parties should quickly establish sound economic and trade regulations which not only cater for the target of economic development in its own region but also have high precautionary criteria. They should also integrate existing financial and trade law and legal regulations to strengthen the attack on cross-border economic crimes.

From a long-term viewpoint, to create a relatively complete regional agreement and reach a systematic cooperation mode in police affairs is to better form the regional frontline to attack cross-border economic crimes.

Given that different judiciary regions have diverse history of cooperation, what is most important for mainland China, HK and Macao to do under current conditions is to integrate regional cooperation modes, form a systematic collaboration framework and improve cooperation content.


2. Construct a Better Cooperation System for Regional Police Affairs

For mainland China and Taiwan, the priority is to further detail cooperation items based on the content of the ‘Agreement of China-Taiwan Jointly Cracking down on Crimes and Assisting Each Other Legally’ and on the practice and characteristics of police collaboration in the two judiciary regions.

Ultimately, when everything is ready, all judiciary regions formulate cooperation agreements to attack economic crimes through joint negotiation, with the content of cooperation no longer limited to simple assistance in individual cases but rather upgrade to the level when each region views it as their obligation to assist all other parties in attacking cross-border economic crimes.


One effective way to suppress crimes in different judicial regions is to report on crime intelligence in a timely manner to keep other regions well-informed of the current situation. Through collecting, analysing and drawing on criminal intelligence, through taking the initiative of crime investigation, and through taking effective measures to suppress cross-border economic crimes, the police force can attack all sorts of economic crimes, and organised ones in particular, and eliminate them in the cradle.


3. Construct A Regional Information-sharing System for Cross-border Crimes

The online collaborative platform established by police forces in Guangdong, HK and Macao in 2009 facilitates the sharing of information in police affairs, with crime trends, police forums, legal regulations, police newsletters, clues for investigation and the like greatly increasing the efficiency and raising the level of attacking cross-border economic crimes. Starting from this point, mainland China and HK/Macau can further develop the online collaboration platform and ensure successful intelligence collection and transmission.


(1) Establish A Regional Organisation for Liaison

and Coordination for Police Affairs

A central organisation established to run police affairs can inform all parties of relevant crimes in a timely manner and coordinate actions with all sides concerned.

‘HK-Macao Police Affairs Liaison Section’, ‘Investigation Office, Guangdong Provincial Procuratorate’, ‘Guangdong Liaison Office, China Centre’, International Criminal Police Organisation, are quite effective in practice.


4. Improve Regional Execution Systems for Police Cooperation

However, such approaches are not as efficient and nimble as special regional police liaison agencies; therefore it is necessary to establish a special liaison department to handle cross-border economic crimes, to take responsibilities for regional police collaboration such as sending or receiving requests for police cooperation, following-up and coordinating with the carrying-out of police affairs and reporting to regions concerned and decision-making committees on the progress of police collaboration.



(2) Standardise Regional Police Collaboration Procedures

Collaboration in police affairs should follow specific procedures. Years of practising police affairs among Guangdong, HK, Macau and Taiwan relate to the procedure, including dispatching documents, investigating and obtaining evidence, confirming and executing civil and arbitrary judgements, handing over criminals, repatriating criminals and suspects, handing over relevant evidence and signing at handover. However, there are still problems in practice, such as the lack of standards and stability and also with insufficient legal evidence.

In arresting and handing over suspects, for instance, there are no barriers for police in mainland China to transfer HK escaped criminals to HK police whereas the latter has restrictions in doing so.

For the police in ‘two banks and four regions’ to attack cross-border economic crimes jointly, it is imperative to view the procedural issues of criminal management, dispatching files, questioning criminals, accomplices and witnesses as key problems to be solved as a priority through negotiation by all parties.

It is equally important to work out practicable legal documents, items and methods, which will lay a solid foundation for a ‘green pass’ in running cross-border police affairs in all regions.


Thank you!

[email protected]
