At present, there are two main channels for domestic investors to invest in foreign exchange, one is to trade through foreign exchange firms opened by domestic banks, and the other is to open accounts abroad directly through overseas dealers (domestic agencies) to conduct foreign exchange margin business. The biggest difference between foreign exchange margin trading and foreign exchange firm trading is that foreign exchange margin trading takes the form of margin, using the principle of leverage to make it small and broad. This paper focuses on whether it constitutes the crime of illegally buying and selling foreign exchange or related illegal acts for residents to log on to the platform of overseas dealers for foreign exchange margin trading through personal login or online agency platform.
Does speculation in foreign exchange by domestic residents constitute the crime of illegal trading in foreign exchange? Do not constitute
Previously, there was a view that buying and selling foreign exchange in China must be carried out in designated banks or related institutions, and speculation in foreign exchange is obviously an act of buying and selling foreign exchange, which is a typical profit-making act. Therefore, this kind of behavior constitutes illegal trading of foreign exchange outside the prescribed place. As long as the transaction amount exceeds 200,000 US dollars or the profit exceeds 50,000 RMB, it constitutes the crime of illegal business operation.
A well-known case is that Huang Guangyu was convicted of insider trading and illegal business operations. The court found that Huang Guangyu paid hundreds of millions of yuan to Macao casinos through underground banks in order to repay his gambling debts in Macao. The court held that this kind of behavior belongs to buying and selling foreign exchange outside the designated place, which constitutes the crime of illegal business operation.
But first of all, the object of the crime of illegally buying and selling foreign exchange is China's foreign exchange management system. The reason why China's judicial organs identified the behavior of Huang Guangyu and others as the crime of illegal business operation is because this behavior of buying foreign exchange through underground banks violated China's existing foreign exchange management system and was a typical realization of illegal over-the-counter foreign exchange trading.
But speculating in foreign exchange through overseas platforms is different.
Its essence is an act of using RMB for overseas investment. Most of them use margin trading to invest in foreign exchange platforms, and most of them use margin mode to buy short. The relevant foreign exchange did not really flow into China, nor did it really flow out of the country. It's like China citizens buying houses and investing in real estate in the United States. Overseas housing prices rose, and China citizens earned dollars. They can choose to continue to invest in the United States and use these dollars, or they can convert them into RMB for domestic use. These are ordinary investment activities and will not infringe on China's foreign exchange management system.
Secondly, whether Huang Guangyu's purchase of foreign exchange to pay for gambling funds constitutes illegal business is still controversial in the theoretical circle. For example, Chen Xingliang, a famous criminal law scholar in China, pointed out that the crime of illegal business operation stipulated in Article 225 of the Criminal Law of China, although it is not clearly stipulated in the Criminal Law that the establishment of this crime must be for profit. However, since this crime is a crime of illegal business operation, its constitutive elements can only be illegal business operation. Profit here refers to the exchange of certain returns through trading activities.
The typical innocent case is Liu Han's case. The illegal trading of foreign exchange in the Liu Han case is the same as that in the Huang Guangyu case. Both of them are settled in RMB in China and in Hong Kong dollars abroad, and gambling debts incurred abroad are returned. However, in the case of Liu Han, the first-instance judgment found that Liu Han constituted the crime of illegal business operation. On appeal, the second instance verdict was not guilty. It should be that the court found that the actor had no profit-making purpose subjectively, and objectively it was not foreign exchange operation at all, so it could not constitute the crime of illegal business operation. Of course, the research on this issue is not the focus of this article.
Speculation in foreign exchange is for profit, why does it not constitute the crime of illegal business operation?
Of course, some readers may ask that foreign exchange speculation is obviously for making money and making profits. Is it just in line with the constitutive requirements of the profit-making behavior of the crime of illegal business operation mentioned by Professor Chen Xingliang? I think the answer is still no, because it has been explained in detail above that China citizens' foreign exchange transactions in the international market through overseas companies do not violate the domestic foreign exchange management order, damage China's foreign exchange reserves and foreign exchange trading system, and are not harmful to society. Therefore, it does not constitute the crime of illegal business operation.
Second, is it illegal for citizens to speculate in foreign exchange?
Some readers may ask, since it does not constitute a crime, is this behavior illegal?
First of all, we must make it clear that illegality and crime are two concepts. In a broad sense, violation of the law refers to the violation of the national constitution, laws, decrees, administrative regulations and administrative rules, and its extension is extremely extensive. This crime must conform to the provisions of China's criminal law on crime. The preceding article has made it clear that the act of speculating in foreign exchange does not constitute the crime of illegal business operation.
Secondly, there is no law or regulation that it is illegal to speculate in foreign exchange. It is clear that foreign exchange margin trading is a global financial investment method, and the daily trading volume in the international financial market is huge. Today's foreign exchange market has far surpassed other financial markets such as stock futures and become the largest financial market in the world. At present, overseas foreign exchange trading institutions are generally subject to strict supervision, such as FCA of the British Monetary Authority and NAF of the National Futures Association of the United States.
According to the current law, China does not restrict such investment behavior of individual citizens, just like the issuance and financing of virtual tokens, which was recently banned in China. However, China does not prohibit peer-to-peer token trading between citizens, nor does it prohibit citizens from investing in overseas virtual currency projects, nor does it prohibit citizens from trading on overseas virtual token platforms. Similarly, for foreign exchange, it is only an investment target. The state has not promulgated laws to prohibit individual citizens from investing abroad, but because the domestic and foreign markets are not fully open.
This is like China citizens traveling abroad and investing in legal foreign exchange trading companies abroad. After returning home, they naturally have the right to control their investments and issue trading orders. Now, with the development of network technology, operating on overseas foreign exchange trading platforms through the Internet will not change its legal nature.
Third, opening a foreign exchange investment platform in China and providing agency services for overseas foreign exchange trading platforms to collect commissions are suspected of constituting the crime of illegal business operation.
Taking the provision of agency services for overseas foreign exchange platforms as an example, in judicial practice, judicial organs often think that such platforms buy and sell foreign exchange outside designated foreign exchange banks, China Foreign Exchange Trading Center and its sub-centers without obtaining the approval or filing consent of the industry regulatory authorities according to law, which is a typical illegal business operation. The legal basis is 1998 "Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Laws in the Trial of Criminal Cases of Fraudulent Purchase of Foreign Exchange and Illegal Trading of Foreign Exchange". Whoever buys or sells foreign exchange outside the designated foreign exchange banks, China Foreign Exchange Trading Center and its sub-centers and disrupts the order of the financial market in any of the following circumstances shall be convicted and punished in accordance with the provisions of Item (3) of Article 225 of the Criminal Law.