Preventing systemic risks in China's financial sector is a major goal for the government this year. Yang Chengxi interviewed lawmaker Chen Jingying about this issue. Chen is a National People's Congress deputy.

YANG CHENGXI SHANGHAI "China's underground banks are enabling certain people and companies to illicitly move massive sums of money in and out of China beyond the official annual quota of 50 thousand US dollars. The shady practice has become a thorn big enough to affect China's economy."

CHEN JINGYING, VICE PRESIDENT EAST CHINA UNIVERSITY OF POLITICAL SCIENCE AND LAW "It has been used to launder money by corrupt officials and businessmen."

YANG CHENGXI SHANGHAI "Here's an example of how an underground bank works. You set up a series of accounts in both Chinese and foreign banks. When a customer from the Chinese mainland wants to convert, say, a million RMB to US dollars, you simply ask him to deposit the money in your domestic account, and withdraw US dollars from your overseas account. When the transaction is completed, no money has actually crossed any borders. So to operate an underground bank, you need huge amounts of cash in both of your accounts."

CHEN JINGYING, VICE PRESIDENT EAST CHINA UNIVERSITY OF POLITICAL SCIENCE AND LAW "In a campaign in 2017, authorities exposed underground banks that collectively held some 300 billion yuan. The criminals were charged with 200 million yuan just in fines alone."

YANG CHENGXI SHANGHAI "The bigger problem right now is that many underground banks have evolved. They used to be family-owned but now they've set up shell trading companies and move money through corporate wire transfers."

CHEN JINGYING, VICE PRESIDENT EAST CHINA UNIVERSITY OF POLITICAL SCIENCE AND LAW "It is very, very difficult for banks to examine the huge amounts of electronic transfers and determine which ones are illegal.

YANG CHENGXI SHANGHAI "Individuals aren't the only ones using underground banks. Professor Chen says some state-owned and foreign firms are involved too. One might ask, why would companies use illegal ways to move their legitimate money?"

CHEN JINGYING, VICE PRESIDENT EAST CHINA UNIVERSITY OF POLITICAL SCIENCE AND LAW "It's because the legal ways require too much paperwork and time. Therefore, this situation should serve as a warning bell for Chinese banks who need to improve their efficiency."

YANG CHENGXI SHANGHAI "Professor Chen is among those calling for reforms in the banking sector. She is also proposing to the NPC for an upgrade in China's criminal laws and pass stricter anti-money laundering legislation to thwart the underground banks. Harsher punishment and fewer loopholes are expected to help China deal with the brewing banking menace. YCX CGTN SHANGHAI."