Recently, the Supreme People's Procuratorate of China and the State Administration of Foreign Exchange jointly released a series of typical cases involving foreign exchange violations and crimes. These cases not only demonstrate the effectiveness of the two agencies' coordinated operations, but are also of great significance for continuing to strengthen the connection between executions and punishing cross-border financial crimes in accordance with the law.

Strengthen the connection and crackdown on executions

The eight typical cases announced by China's Supreme People's Procuratorate in the joint operation mainly involve cross-border blackmail-type illegal foreign exchange trading activities. These cases reflect the close cooperation between China’s judicial authorities and foreign exchange authorities in the use of administrative and criminal justice methods.

New trends: increased stealth and complexity

China's top prosecutor said that current foreign exchange crimes have shown new characteristics, including that cross-border transfers of funds have become more covert and capital transactions have become fast and complex. China’s top prosecutor summarized three phenomena:

First, cross-border transfers of funds are more hidden. The illegal buying and selling of foreign exchange by underground banks mostly adopts the cross-border "knock-off" model, which involves transferring RMB domestically and foreign exchange overseas. Domestic and foreign funds circulate independently, deliberately evading regulatory attention.

Second, capital transactions are faster and more complex. Payment and settlement tools such as bank cards, POS machines, and online payments are convenient and efficient. Criminals launder, disperse, and aggregate funds among multiple banks and multi-layer accounts across the country. New payment methods such as virtual currencies have increased the concealment of fund transfers. sex.

The third is the "social mediaization" of illegal information release and dissemination. Social networks and live broadcast platforms are full of information. Overseas websites and chat software provide private communication tools. Criminals use public and private contacts to publish illegal fund exchange solicitation advertisements and connect illegal transactions. After being cracked down and blocked, they can be replaced in a very short time. URLs are making a comeback.

Typical case analysis: virtual currency USDT money laundering

The illegal business case of Zhao et al. is one of the eye-catching cases. The case involved virtual currency transactions and demonstrated how virtual currencies can be used as a medium to conduct illegal foreign exchange transactions. It also highlighted the importance of electronic data in such cases.

"From February 2019 to April 2020, Zhao organized Zhao Moupeng, Zhou Mokai and others to provide foreign currency dirham and RMB exchange and payment services in the United Arab Emirates and China. The group collected dirhams in Dubai, United Arab Emirates RMB in cash, and at the same time transfer the corresponding RMB to the domestic RMB account designated by the other party, and then use dirham to purchase "Tether" (USDT, a stable currency anchored to the US dollar) locally, and then transfer the purchased Tether through domestic The gangs immediately illegally sold and re-obtained RMB, thereby forming a circulation of domestic and foreign funds. Through exchange rate differences, the group can earn more than 2% on each foreign currency purchase and sale business. After investigation, Zhao and others exchanged more than RMB 43.85 million between March and April 2019, making a total profit of more than RMB 870,000. "

China: Virtual currency exchange is illegal

China's top prosecutor said that using virtual currency as a medium to exchange RMB and foreign exchange constitutes an illegal business crime.

Using virtual currency as a medium to earn profits from exchange rate differences by providing cross-border exchange and payment services, it uses the special attributes of virtual currency to bypass national foreign exchange supervision and realize the exchange of foreign exchange and RMB through the exchange of "foreign exchange-virtual currency-RMB" Value conversion is a disguised purchase and sale of foreign exchange and should be investigated for criminal liability for illegal business operations in accordance with the law.

Key points for investigating and handling virtual currency money laundering cases

China's Supreme People's Procuratorate stated that the virtual currency wallet address can be obtained based on the transaction characteristics of most virtual currencies, and the virtual currency transaction records under the wallet address can be queried through public channels. When handling such cases, attention should be paid to identifying the virtual currency wallet addresses used by criminal suspects and defendants. This can be done through targeted electronic inspection of mobile phones, computers and other electronic devices used by criminal suspects and defendants, as well as the software stored therein. , obtain the wallet address, and on this basis further verify the registrant information of the wallet address involved and the bound bank account and other related information.

China determined to crack down on illegal foreign exchange activities

China's Supreme People's Procuratorate said that this release demonstrated its determination and ability to crack down on foreign exchange crimes, and also provided valuable experience and guidance for handling related cases in the future. As forms of financial crime continue to evolve, this cross-sector cooperation will play an increasingly important role in maintaining the security and stability of financial markets.

This article China’s Supreme People’s Procuratorate and the State Administration of Foreign Exchange join forces to crack down on illegal cross-border financial activities, and USDT money laundering is listed as a priority. First appeared on Lian News ABMedia.

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