Web3 Legal Popularization | How does cryptocurrency become a money laundering "tool" for underground banks?

"With the rise of virtual currency, its decentralization, anonymity and other characteristics have been targeted by criminals, and it has become a new tool for "underground banks" to launder money. The amounts involved are often as high as billions or tens of billions. In this currency circle It seems to be a field full of opportunities, but if investors are not careful, they may be involved in the illegal whirlpool of money laundering.”

This article will take the typical scenario of underground banks laundering money through virtual currency as an example to explain the specific operation mode of underground bank money laundering, thereby specifically analyzing the potential involvement of groups such as buyers, U-businessmen, and ordinary currency circle players who are easily involved in underground bank crimes. Criminal Legal Risks.

How do underground banks use virtual currencies to launder money?

Underground banks, as illegal financial institutions without official approval, have long been active in the gray area of ​​financial supervision. In the past, they mainly laundered dirty money by transferring funds between different countries through cash transactions or bank account transfers.

Common situations in which virtual currencies are used to launder money include:

1. Criminals put the stolen money into underground banks, and the underground banks exchanged the stolen money into virtual currency, realizing the conversion of "filthy money → clean virtual currency".

2. Criminals put the stolen money into underground banks, and the underground banks exchanged the stolen money into virtual currency, and then through layers of disguises, the virtual currency was converted into clean legal currency and transferred to the account designated by the criminal, realizing "illegal money → virtual currency → clean "fiat currency" conversion.

3. Criminals put the dirty coins into underground banks, and the underground banks convert the dirty coins into legal currency or mix and trade the dirty coins with clean virtual coins from underground banks and then exchange them into legal currency. Finally, the clean legal currency is transferred to the criminals' designated location. account. Realize the conversion of "dirty money → clean money".

In terms of specific operating modes: Money laundering gangs of underground banks usually recruit “buyers” from various places and use their identity information to register accounts on platforms such as Huobi and Binance. After the upstream criminal suspects transfer the stolen money to the collection account of the underground bank, the "buyer" often uses virtual currency trading and other methods to conduct transactions through major platforms or U-merchants to complete the laundering of funds. Criminal risks of underground bank virtual currency money laundering

When underground banks use virtual currency to launder money, how do they involve bank buyers, U-merchants, and ordinary currency circle participants?

bank buyer

Bank buyers are often attracted by the high-paying recruitment of underground banks and thus join underground banks. Usually bank buyers will register for currency circle apps such as Binance and Huobi with their own identity information or the identity information provided by the bank, and then use the registered account or the account provided by the underground bank to buy and sell U, so as to convert legal currency into virtual currency, thereby converting the stolen money. Whitewash.

In the above-mentioned activities, the funds handled by bank buyers are often illegal funds involved in cases such as drugs, underworld, and terrorist activities. The buyer's actions such as providing an account and buying and selling virtual currencies objectively conceal and disguise the source and nature of the funds, and cover up black money in a legal guise, or provide certain conveniences for this, which may lead to the buyer being involved in money laundering. The risk of crime or the crime of assisting information network criminal activities (i.e. the crime of aiding trust).

The main difference between the crime of money laundering and the crime of trust lies in the different levels of subjective knowledge of the buyer. In the crime of money laundering, the buyer is required to clearly know that he is covering up and concealing the income and proceeds from specific predicate crimes such as drugs and underworld, and he is aware of both the upstream cases and the nature of the funds. However, in the crime of trust, the buyer is only required to have general knowledge that the funds may be involved in illegal and criminal activities, and does not need to know the specific upstream cases and the nature of the funds.

In practice, how to examine and judge the buyer’s subjective awareness? According to relevant regulations and judicial practice, a comprehensive determination will generally be made based on the actor's access to information, handling of stolen money, characteristics of the money, transfer methods, account abnormalities, etc., combined with his occupation, relationship with upstream criminals, and the testimony of all parties.

U business

In the virtual currency trading ecosystem, U merchants play a key role in capital circulation, mainly earning price differences through buying and selling virtual currencies. The transactions of U merchants 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 and contact the U merchant to inform them that there are buyers who want to buy U merchants. The U merchants will conduct offline transactions with the people who buy U merchants. , pay the money in one hand and the U in the other; or the buyer deposits cash into the designated collection account, and the U merchant will transfer the U to the buyer after receiving the money. In the case of on-site trading, the U merchant places an order on the platform. If someone asks him to buy U, he collects the payment through WeChat, Alipay or bank card, and then transfers the U to the person who buys U. At the same time, underground banks may reach long-term cooperation with certain U-merchants and transfer the stolen money into the U-merchant's account, and the U-merchant will then transfer the money to the underground bank.

In these cases, U-businessmen handle illegal funds from underground banks and assist underground banks in converting funds. Objectively speaking, there are behaviors of concealing and disguising the source and nature of funds for underground banks, which makes it easy for U merchants to become a link in the criminal chain. If the U.S. merchant fails to do a good job in KYC during the transaction process, collects and sells a large amount of illegal U.S. dollars or stolen money, and has "abnormal behavior" that is not recognized by the judicial authorities such as the transaction price is obviously inconsistent with the real-time market price, using a large number of other people's accounts, etc., it may be presumed The U-merchant knowingly knew that the counterparty was engaged in illegal activities or that the funds were illegal gains, thus constituting the crime of trust or concealment. Of course, it does not mean that assisting underground banks to facilitate illegal fund conversion will constitute a criminal offence. In practice, judicial authorities will also make judgments based on the specific actions implemented and the payment and settlement time nodes provided.

Ordinary currency players

Ordinary currency circle participants may feel that they have nothing to do with money laundering by underground banks. On the contrary, because ordinary currency circle participants often have the need to withdraw and deposit funds, they usually choose U merchants on the currency circle app for C2C transactions, and they are easily involved in the criminal network of underground banks. For example, many currency circle participants will buy and sell U on the APP. The main transaction mode is to place orders on the APP and then make payments through Alipay or WeChat. Just like a common transaction scenario in the currency circle, S contacted A on an APP to sell U. The two parties quickly reached a transaction intention and agreed that A would transfer the money to S's Alipay, and S would transfer U to A.

On the surface, this seems to be an ordinary currency transaction, but if S is a buyer of an underground bank, and the U used for sale is the criminal's stolen money, then the individual will have a conflict with the underground bank's stolen money. connect. If it is a high-priced transaction, a cash transaction, an offline transaction, or a virtual currency transaction that has been frozen, the judicial authorities will often comprehensively determine whether it was known based on the transaction situation and personal experience. In practice, the current regulatory situation is becoming increasingly strict. If there are multiple abnormal factors in the transaction involved, there are even cases where a single transaction will be involved in criminal risks. Mankiw Lawyer Summary

Underground banks have become one of the main sites for the laundering and transfer of illegal and criminal funds. Whether they are looking for jobs in virtual currency, buying and selling U, or even unrelated individuals, it is extremely easy to be involved in the criminal network of underground banks, which constitutes the crime of money laundering and assistance. Crimes of information network criminal activities, etc. Therefore, when entering the virtual currency industry, you must always remain vigilant and conduct background checks before activities and transactions to avoid inadvertently becoming part of virtual currency criminal activities. In addition, it is recommended that when encountering legal disputes, contact professionals as soon as possible to help resolve risks and solve problems to avoid escalation of the situation.