In Vancouver, a Supreme Court case showed that one lender, Canadian Imperial Bank of Commerce, had assisted such transactions. Moving wealth abroad The case arose when a CIBC financial adviser allowed a wealthy Chinese client to route two deposits of $US50,000 through her private accounts to buy a home, leading to the dismissal of the banker for "commingling" her own funds with her client's. "With the corruption crackdown and the recent financial markets meltdown, more Chinese than ever are looking to move their wealth – some legitimately earned and some not – to safe havens outside of China," said Bill Majcher, a Hong Kong-based former financial crimes investigator for the Royal Canadian Mounted Police. "Chinese capital is simply too large to ignore, so the banks will do all they can to capture this growing business, regardless of the risk it brings."

Chinese buyers for the first time ranked as the biggest foreign purchasers of US homes in the year through March, laying out $USUS28.6 billion. In Sydney, Chinese buy almost a quarter of the supply of new homes, and are forecast to double their purchases to $60 billion by 2020. In Vancouver, home prices have doubled since 2005, and owning a home can cost as much as 91 per cent of household income. The Canadian court judgment last year in the fired banker's wrongful dismissal case described the practice of bypassing China's controls as challenging, complicated – and something that CIBC "supported". 'Very infrequent' transactions "If, for example, a CIBC client wanted to send $US150,000 from China to Canada, the money had to come from three accounts belonging to three different account holders in China and be transferred to three separate accounts belonging to three separate account holders in Canada," the ruling said.

"As long as all the appropriate accounts were set up, the money could be moved." In April this year, British Columbia's Court of Appeal overturned the lower court's ruling in the banker's favour and ordered a new trial. Asked about such transfers, CIBC said it makes money-laundering checks, flags suspicious dealings to regulators and ensures that these "very infrequent" transactions comply with Canadian law. CIBC isn't legally responsible for ensuring that money transfers comply with Chinese law, a duty that falls on institutions in China, spokesman Kevin Dove said by email. Global banks have run afoul of regulators in recent years for failing to do enough to counter money laundering, one of the risks that arises from smurfing.

As part of a $US1.9 billion settlement in 2012, HSBC admitted to failing to maintain effective anti-money-laundering programs in both the US and Mexico, and in June of this year the bank said it had agreed to a fine to close an investigation into allegations of money laundering at its Swiss private-banking unit. "We expect our customers to be in full compliance with all relevant laws and regulations, including those related to Chinese currency controls," Sharon Wilks, a spokeswoman for HSBC's Canada business, said by e-mail. Due diligence China has been tightening up on channels for outflows, capping withdrawals at overseas automated teller machines and telling banks to watch out for "ants moving their house", the term used in Chinese. In September, the State Administration of Foreign Exchange (SAFE) said lenders can refuse to process frequent withdrawals or transfers in which five or more people send money to the same overseas account.

In Hong Kong, banks have stepped up efforts to report suspicious transactions and cut the risk of financial crime, the Hong Kong Monetary Authority said in response to questions. Banks accounted for 83 per cent of such reports to the Joint Financial Intelligence Unit last year, the police-customs agency that helps investigate money laundering, the HKMA said. Asked whether financial institutions are allowed to knowingly help Chinese citizens evade their home country's capital controls, government agencies in Canada and Australia cited requirements including verifying customers' identities and reporting suspicious transactions. A spokesman for the Financial Crimes Enforcement Network, an agency of the US Treasury Department, said that banks are required to "conduct enhanced due diligence on foreign correspondent accounts". Tiny penalties Last year, smurfing surfaced again when Beijing police busted underground banks for $US23 billion of alleged transactions, including illegal transfers of money abroad. In one case, a man had moved more than $US5 million overseas in a year by breaking up the amount and using different bank accounts that had been borrowed, rented or purchased, according to the police statement.

Penalties for violating the $US50,000 annual cap are tiny: 30,000 yuan ($6620) for banks and 1000 yuan for individuals, according to a SAFE rule issued in 2007. SAFE didn't respond to a faxed request for comment on the rules and their enforcement. The pooling of $US50,000 quotas is routine. Jenny Cai, a Shanghai resident, said she used her family members to help her buy a $1.2 million apartment in downtown Sydney by grouping her own allocation along with those of her husband and daughter. Her property agent told her the arrangement is commonly used, she said, although her family members needed to falsely state that the cash was to be used for tuition fees. Elsewhere in China, examples include a company that ordered employees to use their accounts to wire money to Canada for private property purchases, according to Christine Duhaime, a Canadian lawyer specialising in financial crime. China's rules are being "made a mockery of," she said. "I wouldn't do it if I ran the banks." Bloomberg