PBoC Headquarters Beijing China
PBoC Headquarters Beijing ChinaReuters

China's central bank is looking into allegations that the state-owned Bank of China has breached the country's money laundering laws by transferring money offshore for its clients.

The official Xinhua news agency, citing a spokesman from the central bank, reported that the Peoples' Bank of China (PBoC) is verifying media reports accusing the Bank of China of money laundering.

"We have noticed the media report about a commercial bank's cross-border renminbi business, and are verifying related facts," the spokesman told the news agency.

The scrutiny comes after China Central Television (CCTV), the state TV broadcaster, reported that several domestic branches of Bank of China were suspected of money laundering via its "Youhuitong" service, which enables cross-border transfer of large sums of yuan abroad for clients.

An undercover investigation by CCTV found that through the Youhuitong service Bank of China helped clients move more cash offshore, exceeding the annual cap set by the country. The report alleges that the bank kept the programme secret as it knew it was illegal.

Bank of China has denied the allegations, saying the service was part of the government's efforts to increase the popularity of the yuan across the globe.

China's cross-border yuan business has witnessed rapid growth in recent years in line with the country's efforts to expand financial market at home and abroad.

Commercial banks such as Bank of China have largely been helping companies that look to expand their business overseas as financial intermediaries, facilitating large amounts of yuan transactions for their clients.

"During business expansion, institutions must comply with laws and regulations, improve their related rules and prevent legal and operational risks," the spokesman said.