The banks claim they’re complying with anti-money laundering regulations.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
Spain’s Association of Financial Users (ASUFIN) has announced it will be representing Chinese residents in Spain in their legal struggle against three of the country’s biggest lenders, BBVA, Caixabank and Bankia, which it accuses of contravening Spain’s data protection and consumer protection laws and even the Spanish constitution.
The three banks in question recently froze the accounts of thousands of Chinese residents in Spain for almost two weeks, in accordance — or so the banks claim — with Spain’s money laundering regulations. On Feb 15, after weeks of being locked out of their accounts, feelings finally boiled over and hundreds of Chinese residents took to the streets of Madrid to decry the banks’ actions. It was the biggest spontaneous public protest ever held by Chinese residents in Spain.
The bank at the center of the current scandal — Spain’s second largest lender, BBVA — allegedly froze 5,000 accounts belonging to Chinese nationals out of a total of around 40,000, according to the Chinese Association in Spain (ACHE). Many of those customers were Spanish born children of Chinese parents who say they were not even warned their account was about to be frozen.
“These are normal people, without risky movements or suspicious operations.” says Patricia Suárez, president of ASUFIN. “They are angry and have even protested, something quite unusual among the Chinese.”
Some protesters said their accounts had been blocked for as long as two or three months, but insisted they had done nothing wrong. “We gathered here to demand equality because we are ordinary citizens,” said Yunajie Chen, a Chinese accountant who arrived in Spain as a child and has been a BBVA customer for more than six years. “I work in a consultancy office and I don’t have suspicious transactions.”
ASUFIN’s Suárez says the account freezes are being applied in an arbitrary, blanket fashion, with many innocent citizens being unfairly targeted.
“Their only crime is to be Chinese, to have a different surname. There are people who have had Spanish citizenship for 50 years, yet the bank has still blocked their accounts without any justification. The banks should have to flag up the supposedly suspicious transaction(s). There have been some scandals related to Chinese money, but this is not the case.”
In 2017 China’s biggest bank, the Industrial and Commercial Bank of China (ICBC), was ensnared by a Spanish police probe allegedly laundering hundreds of millions of euros in illegal funds from tax fraud and smuggling by “Chinese criminal organizations.” The Spanish authorities estimate that these groups, with the help of ICBC, siphoned as much as €1.2 billion out of Spain to China between 2009 and 2013.
According to Reuters, the probe reached high into the state-run bank’s European operation and “so alarmed Beijing that China’s top official in Madrid publicly pressured Spanish officials to conclude the inquiry, warning that failure to do so would harm economic relations.” A year later, Spain’s third largest bank, Caixabank, was also charged with helping to launder almost €100 million of funds destined for China and Hong Kong.
Since then, Spain has beefed up its money laundering rules, requiring banks to obtain a series of personal details and background information from clients. Jose Luis Martinez Campuzano, a spokesman for the Spanish banking association AEB, said the rules are being applied regardless of nationality. But since the law’s passage most of the focus appears to have been on Chinese nationals. And many apparently innocent bank customers have been caught in the resulting trawl.
ASUFIN describes this new scandal as one of the biggest cases of mass discrimination since the foundation of Spain’s democracy some 40 years ago:
Although the banks claim that they are complying with anti-money laundering regulations, it is evident that their actions are discriminatory and would contravene even the Spanish Constitution itself. After hearing the testimonies of the people affected, ASUFIN believes that the behavior of these banks violates banking regulations, consumer and data protection laws and even the same regulations on the prevention of money laundering.
BBVA has since apologized for the inconvenience caused but denies deliberately targeting Chinese customers, claiming the accounts were blocked in compliance with Spanish anti-money laundering legislation. However, according to Spain’s Ombudsman, some of the citizens targeted say they didn’t receive any communication requesting documentation or information regarding the source of their income before their account was blocked.
The Chinese government, which itself recently passed a raft of new anti-money laundering legislation, has also waded into the affair urging Spain to adopt “effective measures” to “protect” Chinese citizens from discrimination by lenders.
Since the scandal erupted, some customers have had their accounts unblocked but others haven’t, says Patricia Suarez. And the banks are yet to explain why.
“We are preparing a report for the Ombudsman and will lodge a collective complaint with the Bank of Spain. If the banks are not able to demonstrate why they closed these accounts, we will be facing something really troubling,” she says. If the Bank of Spain does not respond satisfactorily to the complaint, ASUFIN says it will launch a suit for damages for each of the affected users. By Don Quijones.