Technological advances and the growing use of cryptocurrencies have made it easier for Chinese “shadow bankers” to launder money on a global scale. So concludes a new report from blockchain intelligence firm TRM Labs.
Chinese Triads have long used casinos and casino junkets to launder money from drug trafficking and other crimes, the report states. During Covid-19 lockdowns, when land-based casinos shifted online, the criminals moved too.
Since then, they have built a worldwide financial ecosystem that lets bad actors move money freely through casino accounts, betting credits and cryptocurrency transfers. Known in Mandarin as “fei qian” (“flying money”), these networks fly under the radar, sidestepping traditional routes “in ways that frustrate law enforcement oversight”. The transactions circumvent international bank wires that could trigger AML alarms.
Shadow bankers under the radar, but not invisible
According to a July study from the Foreign Affairs Forum, the illicit brokers “have significantly outpaced traditional money laundering groups, primarily by offering exceptionally rapid transfer services, charging minimal commissions – typically less than 2% of the principal amount”. Their sophisticated methods render cash “virtually untraceable as it crosses international borders”.
Their proliferation could “exacerbate widespread problems such as drug epidemics, tax evasion and organised crime over the coming years”, the FAF warned.
However, law enforcement agencies are aware of the underground financiers and are working to fight them on their own turf: in cyberspace. As stated in the TRM report: “The same features that make cryptocurrency attractive to criminals (speed, global reach, pseudonymity) can be leveraged by investigators to track and freeze illicit assets in ways not possible before.”
The report states that with “diligent blockchain analysis, interagency collaboration and bold strategies – including going on the offensive in cyberspace – authorities can illuminate these shadowy networks” and eliminate some of them.
For the full report, click here.
A new report from blockchain intelligence platform TRM Labs says Chinese shadow bankers are increasingly using online and crypto casinos to launder money.