Mother of the Girlfriend of Mayor of Vancouver held on corruption charges in China

Mother of the Girlfriend of Mayor of Vancouver held on corruption charges in China

By Christine Duhaime | April 25th, 2015

In the latest twist in the continuous coverage of high-ranking Chinese foreign nationals who immigrated to Vancouver, the mother of the girlfriend of the Mayor of Vancouver has been incarcerated over corruption charges in China.

Here is the story as reported in South China Morning Post.

The Mayor, Gregor Robertson, has a girlfriend who is a current or former (details seem fuzzy on her status), Chinese foreign national named Wanting Qu, who prefers to be called just “Wanting”. She is a singer and is a “tourism ambassador” for Vancouver and her ultimate boss is the Mayor. The Province newspaper is pursuing the story of the appointment of Wanting by the City of Vancouver.

Below is a picture of “Wanting” from her Instagram account.

Wanting’s mother, Qu Zhang Mingjie, was a Chinese government official, specifically the Deputy Director of the Development and Reform Commission of the City of Harbin, China. In September 2014, she was fired from her position and is now incarcerated in China facing a criminal trial. She is alleged to have sold state property at discounted rates to purchasers impliedly in exchange for benefits paid to her. Wanting immigrated to Canada several years ago and told the media that her mother financially supported her studies in Canada. That flow of funds from mother to daughter, from China to Vancouver, and from whence they were derived, may be an issue.

The story is fascinating from a financial crime perspective because Qu Zhang Mingjie is a politically exposed person in anti-money laundering law. As her daughter, so is Wanting. And the Mayor, as Wanting’s boyfriend, is also a politically exposed person under the FATF policy guidance.

As a politically exposed person (“PEP”), banks in Vancouver, Hong Kong and China that provide services to Wanting, and her mother, are and were, obliged to treat them as high-risk clients and vet and confirm the source of their funds above a certain threshold. That is because, pursuant to policy and research by the FATF, G20 and others, politically exposed persons are at a higher risk for the commission of financial crimes. With respect to parents and children, financial crime typologies show that politically exposed parents often transfer proceeds of crime to their children,  hence children are PEPs by definition. Financial crime typologies in respect of Chinese foreign nationals indicate that they often transfer proceeds of crime to places like Vancouver to pay for the education of their children and buy them luxury homes and cars.

With respect to the Mayor, as a FATF designated politically exposed person, his banks in Vancouver and elsewhere are also required to treat him as a PEP. The downside with dating a PEP is that you become one too.

Most global banks are de-risking PEPs outright because of the expense and regulatory risk of servicing their accounts and of the often impossibility of ascertaining source of funds pursuant to proceeds of crime legislation, and the continuing obligations on banks vis a vis PEPs.

The Government of China is now fully aware of the PEP regime and what is required of Western banks when they bank PEPs.

There is no allegation that Qu senior transferred any of the alleged proceeds of corruption, if there are any, to Qu junior. But if Qu Zhang Mingjie is convicted of corruption, the Government of China will likely be tracing funds she transferred to Vancouver. It knows that she transferred funds to Vancouver because, as noted above, her daughter told the media her mother funded her studies in Vancouver. The only question will be, if she is convicted, how much money she sent to her daughter in Vancouver; when; whether the funds exceeded $50,000 annually and were sent with Government approval; whether the funds were proceeds of corruption; and whether the banks treated the accounts as PEP accounts.

The Chinese government is actively seeking recovery of proceeds of crime removed from China and parked in Vancouver. China just released a list of the top 100 Chinese foreign nationals who left China with proceeds of crime derived from corruption and apparently over 25% of them parked the proceeds of crime in Canada, mostly Vancouver. It is not an understatement to say that the jurisdiction most under scrutiny in China for the illegal removal of state assets is Canada – specifically Vancouver.