China Money Laundering Probe: Gangs & Virtual Currencies

China has said it has arrested 93 people suspected of involvement in a gang that laundered up to US$5.6 billion using virtual currencies.

In an official statement, Chinese police said the group had been buying cryptocurrency with illicit funds for at least four years.

The money, which is believed to have been obtained through telecoms fraud and gambling operations, was usually converted into US dollars and then moved via domestic and overseas accounts in countries with little government oversight. So far, the authorities have only recovered $1 million of the stolen money.

China does not, as yet, have a clear strategy in place to combat money laundering that uses digital currencies. But last year the Chinese government did successfully tackle nearly 260 cases of crypto-related money laundering, seizing cryptocurrencies worth more than $1.5 billion.

China’s central bank has said that the country’s share of global Bitcoin trading volume has fallen steeply as the authorities tackle speculation in domestic virtual currency trading.

Despite not having a clear strategy to tackle money laundering through cryptocurrency, China does appear to be having some success in this area by targeting the gangs who are using increasingly sophisticated tactics.

Yet despite such successes, it should be noted that Chainalysis’ “2022 Crypto Crime Report’’ stated that all cryptocurrencies that it tracks grew to be worth a total of $15.8 trillion in 2021 - up 567% since 2020. It is unsurprising, therefore, that criminal gangs continue to develop the ways and the means to tap into the virtual currency world in order to launder the money they have derived from illegal activity.