Chinese shadow banks are increasingly using crypto casinos and online gaming as a means of money laundering, a trend that is accelerating with technological advancements and the proliferation of cryptocurrencies. A new report released by blockchain intelligence firm TRM Labs shows that China's underground financial networks have built a cross-border fund transfer system through online gambling and cryptocurrencies, making it difficult for law enforcement to track illicit gains.
Historically, the Chinese underworld has relied on physical casinos and intermediaries for money laundering, but during the pandemic, as offline entertainment venues closed, criminal networks quickly shifted to online platforms. Through casino accounts, betting points, and cryptocurrency transfers, funds can flow freely globally, bypassing the traditional banking system and anti-money laundering monitoring. These transactions are referred to in Mandarin as "flying money," completed with extremely low transaction fees, usually less than 2% of the principal, with complex operational techniques making tracking almost impossible.
A July study by the Forum on Foreign Affairs pointed out that these illegal brokers play a significant role in the global money laundering network, with fast speeds and high concealment, promoting the spread of organized crime, tax evasion, and drug trafficking. The Afghanistan Financial Supervisory Authority warned that its impact would intensify regional crime issues in the coming years.
However, law enforcement agencies have begun to track these underground financial networks in the digital space. The TRM report emphasizes that through blockchain analysis, inter-agency cooperation, and online operations, authorities can expose dark web activities, track and freeze illegal assets, thereby weakening the global money laundering capabilities of shadow banks.
