Answer in one line: Yes. Moving money into or out of China through an underground bank is normally prosecuted as illegal business operation under Article 225 of the Criminal Law — since the 2019 judicial interpretation, RMB 5 million of illegal turnover or RMB 100,000 of illegal gains is already a criminal case, and if the funds came from crime, money laundering charges are added on top.

What the law provides

Article 225 of the Criminal Law punishes illegal business operations that seriously disrupt market order: up to five years’ imprisonment plus a fine of one to five times the illegal gains, and where circumstances are especially serious, five years or more, with a fine or confiscation of property. Item (3) of that article covers unauthorised payment and settlement business, which is where most underground bank cases start.

The 2019 Judicial Interpretation on illegal payment and settlement and illegal foreign exchange trading spells out the conduct. Buying and selling foreign exchange back and forth — the classic FX scalper — and disguised dealing are both sentenced under Article 225(4) as illegal business operation. On the settlement side, the interpretation lists paying a designated payer through POS terminals or online payment interfaces, cashing out corporate accounts, and cashing cheques for others without a licence.

Articles 3 and 4 then set the money lines: illegal turnover of RMB 5 million, or illegal gains of RMB 100,000, is serious circumstances. RMB 2.5 million, or RMB 50,000 of gains, plus an aggravating factor — a prior criminal or administrative punishment for the same conduct, refusal to explain where the money went, or other serious consequences — also counts. RMB 25 million, or RMB 500,000 of gains, is especially serious, and RMB 12.5 million with an aggravating factor reaches the same tier.

Why the money never crossing the border is no defence

Most underground banks now work by offsetting: you hand over RMB inside China, a partner abroad releases the foreign currency, and the two sides settle accounts later, so no money physically moves. The interpretation’s official explanation singles this out — cross-border offsetting is disguised foreign exchange trading, and the text calls it a priority enforcement target. Investigators do not need to trace a wire transfer; chat records, ledgers and bank statements are enough to establish turnover.

What this means in practice

Where the money comes from changes how many charges you face. Funds from drug offences, organised crime, terrorism, smuggling, corruption, financial-order offences or financial fraud bring Article 191 money laundering into play: up to five years, and five to ten years where serious, and the proceeds are confiscated. Funds from other offences bring Article 312, concealing criminal proceeds, which carries up to three years, or three to seven years where serious. Accounts connected to the arrangement are frozen while the case is investigated, and lending your own account to someone else’s conversion can pull you into the same case.

A typical scenario (hypothetical)

A trading company wants to send RMB 8 million abroad for a property deposit that its bank will not process. An intermediary offers the standard pitch: transfer the RMB to a domestic account today and the equivalent in US dollars is released in Hong Kong tomorrow. At RMB 8 million the turnover is above the RMB 5 million line, so the matter is already in serious circumstances territory — for the intermediary and for anyone running the same channel repeatedly.

FAQ

Q: Is using an underground bank in China a crime?

A: Yes. It is treated as illegal business operation under Article 225 of the Criminal Law, with the conduct defined by the 2019 judicial interpretation on illegal payment and settlement and illegal foreign exchange trading.

Q: How much money makes it criminal?

A: RMB 5 million of illegal turnover or RMB 100,000 of illegal gains is serious circumstances. RMB 2.5 million, or RMB 50,000 of gains, also qualifies if there is a prior punishment or a refusal to explain where the funds went.

Q: What sentence can be imposed?

A: Up to five years plus a fine of one to five times the illegal gains; five years or more where circumstances are especially serious, at RMB 25 million of turnover or RMB 500,000 of gains.

Q: Does it matter that no money actually crossed the border?

A: No. Cross-border offsetting is expressly treated as disguised foreign exchange trading, so netting the two sides abroad does not take the case outside Article 225.

Q: Can further charges be added?

A: Yes. If the funds come from the offences listed in Article 191, money laundering applies; funds from other offences can be caught by Article 312.

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Wang Guan | Co-founder, Beijing Haolue Law Firm | +86 17813108512