Exchange Office: Investigation into Suspicious Transfers of AED2.87 Billion to China

The Customs and Indirect Taxes Department opened an extensive investigation, in coordination with the Exchange Office and the Tax Department, into suspicious financial transfers totalling about 2.87 billion dirhams (287 billion centimes), which were transferred to China within 14 months, amid strong suspicions of exploiting the importation of goods as a front to smuggle funds abroad in the form of sham trade settlements. Three companies are at the heart of the suspicion. The investigation includes three import companies. The data available to the concerned departments revealed that the total value of transactions which these companies have declared to the tax authorities does not exceed one tenth of the value of imports actually linked to the controlled transfers, a disparity that prompted investigators to expand research into the sources of financing of these companies and their real financial capacity. The investigation is based on several parallel axes, the most prominent of which is the verification of invoices suspected of forgery or "inflating" their value to justify transfers, and the comparison of authorized prices with the prices of other Chinese suppliers of the same goods that show significant differences, in addition to checking a supplier whose name appeared in the "regulations Black” held by the customs of foreign countries. Investigators also work to track the actual beneficiaries of the transferred funds, by matching invoices, bank records, customs declarations and tax data, in cooperation with their counterparts abroad. In the context of tightening controls on Asian imports, this investigation is part of a broader tightening of controls on imports transiting the ports of Tanger Med and Casablanca, after customs data analysts monitored import companies established less than three years ago, declaring Unusually low values compared to real prices of goods coming from China and other Asian countries. The concerned administrations point out that Moroccan brokers in the source countries are sometimes involved in illegal exchange operations, which provide large quantities of yuan in exchange for dirhams, which are later transferred to China under the cover of commercial profits. This investigation has an importance that goes beyond the potential judicial file, as it directly affects Morocco's ability to protect its foreign currency reserves and fight tax evasion through foreign trade, at a time Financial authorities continue to tighten controls on outflows of funds.