introduction:
The so-called "drivers", also known as "professional cash withdrawers", refer to middlemen who are specifically responsible for withdrawing and transferring stolen money. They help criminal gangs "launder" the stolen money in order to earn commissions.
Due to the anonymity of the USDT virtual currency, money laundering teams will recruit drivers to buy and sell USDT through U-merchants (see the picture below) to "launder" the funds.
So, does the driver's behavior of cashing out and transferring stolen money constitute a joint crime of fraud with his upstream dealer, or does it constitute the crime of concealing and hiding the proceeds of crime and the profits from the proceeds of crime (hereinafter referred to as the crime of concealment)?
Author: Lawyer Shao Shiwei
0 1
Subjective knowledge: Did the perpetrator know that the funds were fraudulent?
In cases of telecommunications fraud, money laundering, and money laundering, one of the important factors in determining the choice of charges is the degree of "subjective knowledge" of the perpetrator, that is, whether the perpetrator knew or should have known the nature of his or her behavior. This is divided into two concepts:
① Whether the perpetrator knew that the funds he helped to transfer were proceeds of upstream crimes;
② Whether the perpetrator knew that the funds he helped to transfer were proceeds of upstream fraud crimes;
No perpetrator will proactively tell the police during interrogation that he knew that the upstream funds were proceeds of crime and helped transfer them, so it is generally presumed based on the evidence in the case that the perpetrator "knew or should have known".
First , if the perpetrator has no knowledge and helps transfer funds completely under deception (for example, a college student looking for a part-time job), then it does not meet the first level of concept mentioned above and does not constitute a crime.
Secondly , based on the confession of the perpetrator and the evidence in the case, it can be inferred that he knew or should have known that the money was proceeds of crime, but there is insufficient evidence to prove that he knew that it was proceeds of telecommunications fraud, and he cannot be convicted of joint crime of fraud.
Because for drivers and other people who help launder money, if they connect with multiple upstream parties at the same time, the stolen money they help transfer may come from fraud crimes, online gambling, spreading obscene materials, etc. In addition, there may be "water rooms", "running points platforms", "driver organizers", "second channels", and "third channels" between drivers and telecom network fraudsters. There is a de facto information asymmetry between cash withdrawal drivers and these upstream personnel. It is difficult to prove that when the upstream criminals commit fraud, the perpetrators have reached an agreement with the upstream to transfer the stolen money. Therefore, it is also difficult to prove that the perpetrators are aware of the specific nature of the upstream funds.
However, for the organizers of the drivers, if they have been serving a telecommunications fraud gang for a long time, then based on the degree of their participation, they may be deemed to have "subjective knowledge" (but can their "subjective knowledge" be deemed as a joint offender in the crime of fraud? This will be discussed later).
In practice, drivers may know that the funds upstream are proceeds of crime. Therefore, in order to make their behavior of helping to transfer the stolen money safer, they will take many measures to evade detection, such as the recent high incidence of using online ride-hailing vehicles to transport gold and cash to transfer stolen money (see the picture below), and formulating many templates for dealing with "Uncle Hat", etc.
The purpose of these methods is to evade crackdowns by public security organs, but if it is to be determined that the drivers knew or should have known that the funds they helped transfer were proceeds of telecommunications fraud, it is necessary to combine other evidence for comprehensive identification (such as confessions of the same criminals, Telegram group chat records, the perpetrators' past experiences, etc.).
Therefore, in the absence of prior collusion between the upstream and downstream parties, and the driver only joins after the upstream crime has been committed, and only has a general knowledge that the nature of the money is the proceeds of crime, then he can only be convicted of concealment.
Finally , if, based on the confession of the perpetrator and the evidence in the case, it can be inferred that he knew or should have known that the funds were from telecommunications fraud, does this constitute fraud or concealment? This is the question to be discussed next.
0 2
What crime does it constitute if one helps transfer funds knowing that the funds are fraudulent?
2015 Edition - Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Criminal Cases of Concealing and Hiding Proceeds of Crime and Proceeds of Proceeds of Crime
Article 5 Whoever conspires in advance with criminals of theft, robbery, fraud, snatching, etc. to conceal or hide the proceeds of crime and the profits generated by them shall be treated as an accomplice to theft, robbery, fraud , snatching, etc.
2016 - Opinions of the Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security on Several Issues Concerning the Application of Law in Handling Criminal Cases Involving Telecommunications and Internet Fraud
III. Comprehensive Punishment of Related Crimes
Anyone who knowingly transfers, cashes out, or withdraws money in any of the following ways is liable for concealing or hiding the proceeds of crime or the proceeds of crime in accordance with the provisions of Article 312, Paragraph 1 of the Criminal Law, unless there is evidence that the person was truly unaware:
1. Assisting in the conversion or transfer of property through illegal means such as using point-of-sale terminals (POS) to swipe cards for cash;
2. Helping others to deposit large amounts of cash in multiple bank accounts, or frequently transferring cash between different bank accounts;
3. Using multiple credit cards or fund payment settlement accounts opened with identity documents other than one's own, or using abnormal means such as covering cameras or disguising oneself to help others transfer, cash out, or withdraw cash;
4. Providing a credit card or fund payment settlement account opened by another person using identity documents other than his/her own, and then helping the other person to transfer, cash out, or withdraw cash;
5. Cashing out through mobile phone top-up, trading game cards, etc. at a price that is obviously different from the market price.
If the above-mentioned acts are committed with prior collusion, they shall be treated as joint criminals.
2018-Notice on Issuing the "Guidelines for Procuratorial Organs to Handle Telecommunications and Internet Fraud Cases"
2. Examination of Crime Patterns
1. The attempted fraud amount can be verified
The standard for determining telecommunications and Internet fraud is that the victim loses actual control of the defrauded money.
(V) Review of prior conspiracy in related crimes
According to the Opinion, knowing that the proceeds of telecommunications network fraud and the income generated by it, and assisting in the conversion or transfer of property through illegal means such as using point-of-sale terminals (POS) to swipe cards and cash out, etc., will be treated as joint offenders only if they have conspired with the suspects who directly committed telecommunications network fraud in advance . Therefore, it should be examined whether the person who helped convert or transfer property conspired with the suspects who committed the fraud before the fraud was completed, or provided assistance even though there was no conspiracy, knowing that others committed the crime.
2021-Opinions of the Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security on Several Issues Concerning the Application of Law in Handling Criminal Cases Involving Telecommunications and Internet Fraud (II)
11. If anyone knowingly transfers, cashes out or withdraws money in any of the following ways, knowing that the money is the proceeds of telecommunications network fraud and the proceeds generated by it, and it meets the provisions of the first paragraph of Article 312 of the Criminal Law, he shall be held criminally liable for the crime of concealing or hiding the proceeds of crime and the proceeds of crime, unless there is evidence to prove that he did not know.
(1) Using multiple payment codes, online payment interfaces, etc. opened with identity documents other than one's own to help others transfer, cash out, or withdraw cash;
(2) Exchanging property or cashing out through e-commerce platform prepaid cards, virtual currencies, mobile phone recharge cards, game point cards, game equipment, etc. at prices that are obviously different from the market price;
(3) Assisting in the conversion or transfer of property and charging a "handling fee" that is significantly higher than the market price.
If the above-mentioned acts are committed with prior collusion, they shall be treated as joint offenders; if they constitute other crimes at the same time, they shall be convicted and punished in accordance with the provisions of the heavier punishment, unless otherwise provided by laws and judicial interpretations.
2022-Minutes of the meeting on the application of law in the "card-cutting" operation
5. On correctly distinguishing the boundaries between the crime of assisting information network criminal activities, the crime of concealing and hiding the proceeds of crime, the proceeds of crime and the crime of fraud.
In handling criminal cases involving "two cards", there is a problem of accurately defining the boundaries between the three aforementioned crimes. The nature of the behavior should be determined based on the subjective knowledge of the perpetrator and the specific criminal behavior committed. Take credit cards as an example:
(1) Anyone who knowingly participates in a fraud gang or forms a relatively stable cooperative relationship with a fraud gang, or provides credit cards or transfers money to others for a long period of time, may be convicted of fraud .
(2) If a person rents or sells a credit card to another person and then, knowing that the proceeds of crime are proceeds of crime, transfers, cashes out, or withdraws money on behalf of the other person, or provides verification services such as facial recognition to assist others in transferring, cashing out, or withdrawing money, he or she may be convicted of concealing the proceeds of crime or the proceeds of crime .
Regarding this issue, according to the above legal provisions, it can be summarized into three categories:
Knowing the fraud + helping to transfer the money after it was committed + no collusion beforehand ➡️cover-up crime
Knowing that the money was fraudulent + helping to transfer it after it was completed + collusion beforehand ➡️ Joint crime of fraud
Knowing that the money was defrauded by telephone + participating in the joint crime of fraud before the crime was committed
The details are as follows:
1. If the driver knows that the upstream is a fraudulent fund and helps transfer the stolen money after the upstream crime is completed, and has not conspired with the upstream crime beforehand, he should be convicted of concealment crime .
2. If the driver knew that the upstream funds were fraudulent, and although he helped transfer the stolen money after the upstream crime was completed, he had colluded with the upstream crime beforehand, he should be convicted of joint crime of fraud .
Regarding the above two situations, there are the following issues that need attention:
How to determine whether the perpetrator “subjectively knew” that it was online fraud?
The Shanghai Railway Transport Court published a case on its official account in July 2024 (see the picture below): In order to make a profit, Xu organized others through Telegram to withdraw stolen money for overseas fraud gangs, and converted it into virtual currency or transferred it overseas by deposit, transfer, etc.
The article analyzes the nature of its behavior of helping upstream fraud gangs transfer fraudulent funds:
(Article ➡️ " Long-term organization of others to illegally withdraw and transfer nearly 10 million yuan for overseas fraud gangs, the court sentenced! ")
This case illustrates that if a person who helps transfer stolen money is found guilty of fraud, there needs to be evidence to prove that the person was aware that the stolen money he transferred was fraudulent funds.
On the premise that the perpetrator is subjectively aware and the upstream crime has been committed, the key to distinguishing the two crimes lies in whether there is collusion between the driver and the upstream crime .
So what does " conspiracy beforehand and transfer of stolen money afterwards " mean?
According to Zhang Mingkai[i], “a person who repeatedly helps a specific principal offender of telecommunications fraud to cash out or withdraw money can be considered an accomplice to the crime of fraud, even if there is no prior verbal or written collusion on the surface. In other words, although the first act of withdrawing money only constitutes the crime of disguising and concealing the proceeds of crime, if a psychological tacit understanding is formed in fact, the subsequent acts of withdrawing money should constitute an accomplice to the crime of fraud.”
That is, Zhang Mingkai believes that the first withdrawal by the withdrawer constitutes a crime of concealment. After helping to withdraw money for the first time, the withdrawer knew the nature of the upstream criminal behavior, and then established a long-term cooperative relationship, which strengthened the confidence of the upstream criminal to commit telecommunications fraud. The withdrawer's first withdrawal behavior became a prior conspiracy with the fraudster for the next time, and there was a psychological causal relationship between the withdrawal and the subsequent fraud results of the upstream fraudster. Therefore, the withdrawer should be treated as an accomplice to the crime of fraud.
Moreover, judicial cases in practice, such as the fraud case of Huang Xinghui, Zhong Xuheng, Yang Jinxiong, and Shao Yicai, the fraud case of Wu Ruikang (2016) Ji 08 Criminal Final No. 97, and the fraud case of Huang Zhuying (2018) Liao 08 Criminal Final No. 130, also support this view.
3. If the driver participates in the implementation of upstream fraud, then the driver constitutes a joint offender in the crime of fraud.
If the person who helps withdraw money participates in telecommunications fraud before the victim transfers the money (for example, knowing that others are committing telecommunications fraud, and informing upstream personnel of their bank card number, virtual currency wallet address, etc. in advance in order to receive the fraudulent funds), since the telecommunications fraud has not yet been completed, the person who helps withdraw money can be considered an accomplice in the succession of the crime of fraud. If the person helps withdraw money after the upstream fraud has been completed, it constitutes the crime of concealment.
However, the legal provisions on determining the time point when a crime is completed are rather vague.
In the 2018 Notice on Issuing the "Guidelines for Procuratorial Organs to Handle Telecommunications and Internet Fraud Cases", it is only stipulated that "telecommunications and Internet fraud should be considered as the standard for determining that the victim loses actual control of the defrauded money". This provision does not specify the time point when the victim loses control of the money - when the victim transfers the money to the perpetrator's account, or when the victim transfers the money to the perpetrator's designated account. For example, in the multi-level card fraud model, the victim remits the money to the perpetrator's designated account (this is why so many U-card buyers and sellers have their cards frozen). If the time point of completion is when the money is transferred to the perpetrator's account, then those who help withdraw the money will be identified as co-offenders of the crime of fraud.
In addition, Article 7 of the 2011 "Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Specific Application of Laws in Handling Criminal Cases of Fraud" stipulates that "if anyone knowingly provides credit cards, mobile phone cards, communication tools, communication transmission channels, network technical support, fee settlement and other assistance to others who commit fraud, he shall be treated as a co-offender."
But in this provision, does “fee settlement” include the act of helping to withdraw money? Even if it includes the act of helping to withdraw money, does it include the act of helping to withdraw money after the crime is completed? Some scholars believe that it is precisely because of the ambiguity of this provision that the relevant judgments have diverged between the crime of fraud and the crime of concealment[ii].
0 3
Conclusion
The "Prosecution's Work on Combating Telecom Network Fraud and Related Crimes (2023)"[iii] released by the Supreme People's Procuratorate mentioned that the number of telecom network fraud cases prosecuted by the procuratorate showed a significant year-on-year increase, and concealment was the second largest telecom fraud-related crime after aiding and abetting. In judicial practice, since the real perpetrators of fraud have strong anti-detection capabilities and are generally overseas, it is difficult to catch them, so the entities in the middle links such as helping to withdraw cash and transfer stolen money have become the focus of crackdowns.
From the perspective of a lawyer's defense, the accurate definition of the two crimes not only affects the defendant's sentence, but also involves the amount of compensation that needs to be paid. Therefore, the accurate definition of this crime and that crime is of great significance to the defense work.
[i] Zhang Mingkai, “Criminal Liability of the Person Who Withdraws Money (Transfers Stolen Money) in Telecommunications Fraud”
[ii] Yu Xiaohai: “Determination of the crime of assisting in withdrawing money in telecommunications fraud crimes”, People’s Justice, No. 19, 2015. Li Huibin: “How to characterize the behavior of the “driver” in telecommunications fraud withdrawals?”, Journal of the National Prosecutors College, No. 1, 2017.
[iii] The Supreme People’s Procuratorate: Concealment is the second largest cyber fraud-related crime after aiding and abetting. By October 2023, a total of 104,000 people were prosecuted, 18,000 of whom had a college degree or above - Anti-fraud publicity - Guangxi Hechi Public Security Bureau website http://gaj.hechi.gov.cn/ztzl/fzxc/t17554963.shtml
