Looking at Money Laundering from the Case of “Cracking Money” in Hong Kong

Relying on the wide application of Internet technology, a wide variety of financial products for people to choose from floods the market. As the most mature application of blockchain technology, virtual currency may be used by criminals for its anonymity, decentralization, and difficulty in tracking. , Global liquidity, transaction convenience, irrevocability after transaction, diversity of holding methods, etc., used for money laundering.

Coin-crashing cracks a virtual currency money laundering case in Hong Kong

On July 15, 2021, the Hong Kong Customs announced that the recently conducted law enforcement action code-named “Cracking Coins” has successfully closed the net. The operation successfully uncovered a case of using virtual currency to launder money, and 4 persons involved have been arrested. It is reported that the amount involved in this case is as high as 1.2 billion Hong Kong dollars, which is the largest case of money laundering using virtual currency in the history of Hong Kong.

At the beginning of 2021, China Customs and other relevant departments used technical means to detect abnormal capital flows in several accounts. After months of continuous monitoring and tracking, they finally locked a criminal group suspected of using virtual currency to launder money. After in-depth investigation, in early July 21, several residential units in Wong Chuk Hang, Prince Edward, Tuen Mun and Tin Shui Wai and an office building in Mong Kok were raided and successfully arrested 4 persons involved.

According to CCTV News, the four people used accounts opened in multiple banks in Hong Kong to conduct exchange transactions between legal currency and virtual currency on a virtual currency trading platform between February last year and May this year, and successfully processed the value contract. 1.2 billion Hong Kong dollars and unknown source of funds. Once convicted, the person involved in the case will face a fine of up to HK$5 million and a severe sentence of 14 years in prison.

General procedures for using virtual currency to launder money

The process of using virtual currency to launder money is more complicated and can be roughly abstracted into three stages (in real cases, these three stages do not always have clear boundaries at all times. They overlap each other sometimes, and sometimes appear scattered. , Use the characteristics of virtual currency to play various tricks.)

The first stage: placement . Criminals buy virtual currency and inject illegal funds into the channels to be “laundered”.

In the case of virtual currency money laundering in Hong Kong, criminals used three companies that used false registrations from February 20 to May 21 to use virtual currency trading accounts and bank accounts to use “currency in and currency out.” And the “currency in and out of money” method to handle a large number of unusual and huge transactions, including 880 million Hong Kong dollars virtual currency (TED) and 350 million Hong Kong dollars in cash. In this step, criminals often combine other methods to confuse the source of virtual currency. But no matter how the criminal methods are used, as long as the criminals infiltrate the stolen money into a third-party platform for money laundering, this process can be called placement.

The second stage: cultivation . Money launderers use the anonymity of virtual currency to conduct multi-level and complicated transactions, thereby concealing the nature and source of criminal proceeds.

In the virtual currency money laundering case in Hong Kong, criminals used shell company accounts to process a large number of unusual large transactions by means of “currency in and currency out” and “currency in and out of currency”, including 3 virtual currency accounts. The transaction is extremely frequent, from February to May 20, a total of more than 1,800 transactions were processed, up to 19 transactions per day. And each transaction involves an average of 400,000 virtual currencies, and the maximum amount of a single transaction exceeds 20 million Hong Kong dollars.

The third stage: integration . After experiencing the first and second stages of the source of confusion and the constant transfer of “bleaching”, the virtual currency held by criminals can hardly show its true colors, and has basically reached the “legal” standard. At this time, they You only need to integrate the “bleached” virtual currency together and you can withdraw safely.

Case analysis of virtual currency money laundering

Use “Canon” for money laundering

“Canon” refers to ordinary people who are used by money laundering criminals to actively provide their multiple bank cards and virtual currency trading platform accounts to criminals for frequent transfers to confuse the source of funds, purchase virtual currency and other money laundering procedures. They often do not know the law well and lack basic financial management knowledge. Under the lure of criminals’ high commissions, they are still willing to be “canons” even if they know that the act of providing their bank cards for others to use “is tricky”.

After the criminals obtained a large number of bank card use rights by using “Cannon”, they first dispersed the illegally obtained “black gold” into different accounts and flowed funds between different accounts, and then used the mixed funds from the virtual currency trading platform. Purchasing virtual currency on the Internet, and finally realizing the purpose of legalizing criminal proceeds through the purchase of other assets.

Case: Hu Moumou, Li Moumou, etc. were charged with money laundering (2020) Su 0506 Xing Chu No. 579

Summary of the case

In 2019, the victim Li was defrauded by the upstream criminal gang to obtain card numbers, passwords, ID cards and other information, and was transferred away a total of more than 270,000 yuan. Defendants Sun Moumou and Li ** knew that the above-mentioned funds were the proceeds of financial fraud, and they still provided the SPD Bank card number of Xu Mouyang, the “head”, to defendants Li Moumou and Hu Moumou. Subsequently, the defendants Li Moumou and Hu Moumou provided the above-mentioned card numbers to the online, and from the online money line, the RMB was transferred through multiple account transfer operations to the “Head” Xu Mouyang Pudong Development Bank card, which was purchased by the defendant Li Moumou. Encrypt the digital currency and withdraw it to the online controlled account.

The court held that

The defendants Hu Moumou, Li Moumou, Sun Moumou, and Li ** knew that they were the proceeds of financial fraud crimes. In order to conceal and conceal their source and nature, they still provided fund accounts and assisted the transfer of funds by purchasing encrypted digital currencies. Their actions have constituted the crime of money laundering.

case analysis

In this common money laundering method, the key for the court to determine whether the defendant constitutes the crime of money laundering lies in whether the defendant knows that it is the proceeds of the crime ( 7 specific crimes ) and the proceeds (subjective elements)

In this case, whether the four defendants knew that the money laundering part of the indictment was the proceeds of the crime of financial fraud, there is evidence to prove the following:

(1) The funds for buying coins are all fractional pens, each of 50,000 yuan is transferred to the “head” card, and the next “head” must be replaced when each head is operated at 500,000 yuan; the four defendants bought coins from the above The profit in the withdrawal behavior is huge. The defendants Hu Moumou and Li Moumou can get 1,500 yuan for every 500,000 yuan operation, while the defendants Sun Moumou and Li ** calculate the profit based on the number of people provided. Amount

(2) The four defendants did not dare to report to the police after they knew that the funds entered into the account had been transferred away privately by the “head”;

(3) Introducing the defendants Hu Moumou and Li Moumou who came to the mainland to become coin buying operators Chen Mouyan (a separate case dealt with) was arrested by the Shaanxi police, the defendants Hu Moumou and Li Moumou immediately transferred to Suzhou to continue buying coins Withdrawal behavior;

(4) When the defendant Hu Moumou was arrested, the chat software with the previous family was deleted immediately;

(5) The card merchants where the defendants Sun Moumou and Li ** belonged had a large number of collection and sale of four-piece USB-shield sets, public accounts, private accounts, and other information related to bank cards.

It can be seen that whether the comprehensive evidence in the whole case is sufficient to determine that the defendant’s subjective “knowing” that the source of funds is not a legitimate source but the proceeds of crime is the key to the crime of money laundering. In this case, although there is no direct evidence to prove that the four defendants knew that the funds were derived from the proceeds of crime, each fund in the comprehensive defendant’s operating account did not exceed 50,000 yuan and each “head” did not exceed 500,000; The four defendants who transferred account funds did not dare to call the police; when defendant Hu Moumou was arrested, he immediately deleted the indirect evidence such as the chat software with his family, which has formed a closed loop of evidence, which is sufficient to prove that the defendant “knowingly” that the funds were criminal proceeds .

Write at the end

Due to the characteristics of virtual currency, law enforcement agencies and regulatory agencies still have difficulties in cracking down on crimes related to virtual currency. However, through continuous tracking of transaction data on the chain , combined with address labeling, address profiling, address characteristics, clustering calculations, and screening, they can still To a certain extent, it is possible to track and trace the behavior of virtual currency money laundering .

A good business environment is the prerequisite for the sustainable development of China’s economy. The purpose of “breaking the wall” of virtual currency and cracking down on crimes using virtual currency is not to limit the progress of the digital economy and science and technology but to promote the region. The healthy development of the block chain . Vigilant against new methods of money laundering is a long way to go.

The above is today’s sharing, thank you readers!

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