Chinese Underground Banks in China and the United States: Background

Abstract

Chinese underground banks are not a recent phenomenon. An analysis of their historical evolution indicates that they were burgeoning in China’s financial market in the first half of the 20th century and then disappeared from the scene by the 1950s. A reforming China in the later part of the 20th centu\ry furnished an opportunity to resurrect these old institutions, first in South China. Considering that these informal fund transfer systems (IFTs) are illegal in both the U.S. and China, how they thrived in China, expanded their territory into Chinatown, NYC, and became implicated in human smuggling is a mystery worthy of unraveling. Interviews with Fujianese illegal immigrants in this study show that underground banks in the U.S. collaborated with their counterparts in China in smoothly transferring the earnings of Fujianese illegal immigrant workers from the U.S. to China, since transactions undertaken through underground banks have never gone through conventional financial systems.