"With the rise of virtual currencies, their decentralization and anonymity have attracted the attention of criminals, making them a new tool for "underground banks" to launder money, with the amounts involved often reaching billions or even tens of billions. In the cryptocurrency world, which seems to be full of opportunities, investors may be drawn into the illegal vortex of money laundering if they are not careful."
How do underground banks use virtual currencies to launder money?
Underground banks, as illegal financial institutions not approved by the government, have long been active in the gray area of financial supervision. In the past, they mainly transferred funds between different countries through cash transactions or bank account transfers to launder dirty money.
At present, the common situations of using virtual currency for money laundering are:
1. Criminals deposit the stolen money into underground banks, which then exchange it for virtual currency, thus realizing the conversion of “stolen money → clean virtual currency”.
2. Criminals deposit the stolen money into underground banks, which convert the stolen money into virtual currency. They then use layers of disguise to convert the virtual currency into clean legal currency and transfer it to the account designated by the criminals, thus realizing the conversion of "stolen money → virtual currency → clean legal currency".
3. Criminals deposit dirty money into underground banks, which then exchange it for legal tender or mix it with the clean virtual currency of the underground banks and trade it before exchanging it for legal tender. Finally, the clean legal tender is transferred to the account designated by the criminals, thus realizing the conversion of "dirty money → clean money".
How do underground banks use virtual currency to launder money and involve bank buyers, U merchants, and ordinary cryptocurrency participants?
Money House Buyer
Money bank buyers are often attracted by the high salary recruitment of underground money banks and join them. Usually, money bank buyers will register for currency apps such as Binance and Huobi with their own identity information or the identity information provided by the money bank, and then use the registered account or the account provided by the underground money bank to buy and sell U, so as to convert legal currency into virtual currency and launder the stolen money.
In the above activities, the funds handled by money house buyers are often illegal funds involved in drugs, gangs, terrorist activities, etc. The buyers' actions of providing accounts and buying and selling virtual currencies objectively conceal and cover up the source and nature of funds, and put the black money in a legal cloak, or provide certain convenient conditions for this, resulting in the risk that the buyers may be involved in money laundering or assisting information network criminal activities (i.e., aiding and abetting).
The main difference between money laundering and aiding and abetting crime lies in the different levels of subjective knowledge of the buyer. In money laundering, the buyer is required to clearly know that the proceeds and profits of specific upstream crimes such as drugs and gangs are concealed and hidden, and to know both the upstream case and the nature of the funds. However, in aiding and abetting crime, the buyer is only required to know in general that the funds may involve illegal and criminal activities, and does not need to know the specific upstream case and the nature of the funds.
In practice, how to examine and judge the subjective knowledge of the buyer? According to relevant regulations and judicial practice, the degree of subjective knowledge of the buyer is generally determined based on the information the buyer has accessed, the circumstances of the stolen money he has handled, the characteristics of the money, the method of transfer, account anomalies, etc., combined with his occupation, relationship with the upstream criminals, and testimonies from all parties.
U-Shang
In the cryptocurrency trading ecosystem, U-merchants play a key role in capital circulation, mainly earning the difference by buying and selling cryptocurrency. U-merchants' transactions are generally divided into two types: on-site transactions and over-the-counter transactions.
In the case of over-the-counter transactions, U merchants will look for customers in WeChat groups and TG groups. Someone in the group will place an order to contact the U merchant, informing them that there is a buyer who wants to buy U. The U merchant and the buyer will conduct an offline transaction, exchanging money and U at the same time; or the buyer deposits cash into a designated payment account, and the U merchant will transfer U to the buyer after receiving the money. In the case of on-site transactions, the U merchant places an order on the platform, and when someone asks him to buy U, he will receive the payment through WeChat, Alipay or bank card, and then transfer U to the buyer. At the same time, underground banks may reach long-term cooperation with some U merchants, deposit the stolen money into the U merchant account, and the U merchant will transfer U to the underground bank.
In these cases, U merchants handle the illegal money of underground banks and assist them in converting funds. Objectively, there are acts of concealing and disguising the source and nature of funds for underground banks, which makes U merchants very easy to become a link in the criminal chain. If U merchants do not do a good job of KYC during the transaction process, buy and sell a large amount of illegal U or stolen money, and at the same time there are "abnormal behaviors" that are not recognized by the judicial authorities, such as the transaction price is obviously inconsistent with the real-time market price, and a large number of other people's accounts are used, it may be presumed that U merchants know that the counterparty is engaged in illegal activities or the funds are illegally obtained, thus constituting the crime of aiding and abetting or concealing the most. Of course, it does not constitute a criminal offense to assist underground banks in facilitating the conversion of illegal funds. In practice, judicial authorities will also make judgments based on the specific implementation of the behavior and the payment settlement time nodes provided.
Ordinary cryptocurrency players
Ordinary participants in the cryptocurrency circle may feel that they will not be associated with money laundering by underground banks. On the contrary, since ordinary participants in the cryptocurrency circle often have the need to withdraw and deposit funds, they usually choose U merchants on the cryptocurrency app for C2C transactions, which makes them very likely to be involved in the criminal network of underground banks. For example, many participants in the cryptocurrency circle will buy and sell U on the APP. The main transaction mode is to place an order on the APP and then receive and pay through Alipay or WeChat. Just like the common transaction scenarios in the cryptocurrency circle, S contacts A on an APP to sell U, and the two parties quickly reach a transaction intention, agreeing that A will transfer the money to S's Alipay, and S will transfer U to A.
Underground banks have become one of the main bases for laundering and transferring funds of many illegal crimes. Whether it is virtual currency job hunting, buying and selling U, or even unrelated individuals, they are easily involved in the criminal network of underground banks, constituting the crime of money laundering and assisting information network criminal activities. Therefore, when entering the virtual currency market, you must always be vigilant and do a good background check before activities and transactions to avoid accidentally becoming part of virtual currency criminal activities. In addition, it is recommended that when encountering legal disputes, you should contact professionals as soon as possible to help resolve risks and solve problems to avoid escalation.