Many Foreign Trade Enterprises in the Pearl River Delta Lose Huge Export Proceeds

Major fund-risk incidents have recently broken out in the foreign trade sector across the Pearl River Delta. To bypass official foreign exchange procedures and obtain better exchange rates, many small and medium-sized foreign trade enterprises entrusted their export receivables to Hong Kong underground banks for cross-border "matching" forex settlement. Unexpectedly, the underground bank gang absconded with the funds. Dozens of exporters failed to receive their overseas payments, with the involved funds amounting to tens of millions of RMB. Many enterprises are facing capital chain rupture.

According to representatives of the victimized foreign trade companies, such Hong Kong underground banks have long relied on referrals within cross-border trade circles. They settled small transactions on time at the early stage, offering better exchange rates and lower handling fees than banks to build trust. Their operating model is typical cross-border matching settlement: overseas buyers remit USD or HKD payments to the underground bank’s Hong Kong account, and the bank promises to transfer equivalent RMB to the exporter’s personal domestic account. No actual cross-border fund transfer occurs; settlements are offset between the bank’s accounts in two regions, completely outside official bank forex channels.

Many factories and trading firms in Shenzhen and Dongguan exporting to Southeast Asia relied on these Hong Kong underground banks to receive payments, as they adopted document trading for exports and could not use official corporate forex collection channels. The underground bank involved in this incident had cooperated with enterprises for nearly two years. Payments for dozens of previous transactions arrived normally, so many companies gradually increased their settlement amounts. Last month, after several enterprises’ overseas payments were sent to the bank’s Hong Kong account, the promised domestic RMB transfers never arrived. The gang became unreachable via WeChat and phone and simply disappeared.

Many victimized business owners stated that they only realized the core problem after the incident: forex transactions via underground banks are illegal, and such exchange agreements are not protected by law. By knowingly using underground banks, the enterprises themselves are suspected of illegal forex trading. Even if the underground bank absconds with funds, victims hesitate to report to the police because they would bear legal liability themselves, making fund recovery extremely difficult. Some enterprises tried cross-border recovery, but gang members mostly hide overseas with fake identities and layered segregated accounts, hindering investigation.

The foreign exchange authority warns: document trading for exports plus forex collection via underground banks constitutes dual violations with accumulated risks. Besides fund embezzlement by underground banks, two other major risks exist:

RMB funds remitted by underground banks may be mixed with gambling funds and telecom fraud proceeds, leading to freezing of the foreign trade enterprise’s bank accounts by public security authorities.Data cross-checks among customs, tax and forex authorities can easily identify document trading and underground forex collection as fake trade, resulting in administrative penalties.

Regulators advise foreign trade enterprises to switch to compliant forex collection solutions as soon as possible: corporate forex collection with self-obtained import & export qualifications, 1039 market procurement trade, and forex collection through formal foreign trade agents. Foreign trade practitioners should not be tempted by underground banks’ "better exchange rates and simple procedures". Once funds go missing, there is no way to safeguard rights, and business owners may face criminal risks related to illegal forex operations.

Industry lawyers remind: for foreign trade payment settlement, the fund flow, goods flow and customs declaration documents must be consistent. Any private matching forex settlement through Hong Kong underground banks or offshore personal accounts is illegal foreign exchange activity, and there is no such thing as "safe and stable" operation.