Hong Kong Phooey: Virtual Money Laundering Syndicate Foiled

A crime syndicate based in Hong Kong(HK) paid ‘digital mules’ up to $1,000 each to have them open virtual bank accounts in their names, and then give access to those accounts to the gang, which then used those accounts to launder illicit funds. These mules were a mix of restaurant employees, housewives, transport workers, the underemployed and the unemployed; people living paycheck to paycheck and therefore easy marks.

Prior to 17 of the syndicate’s crew of digital mules being (unfairly?!) arrested last week for conspiracy to launder money, they had effectively laundered just over $12 million(USD) for the syndicate in just 16 weeks. They were indeed prolific, in spite of being overexposed.

“We discovered that some of the accounts had 1,000 transactions involving more than HK$100,000 in a single day,” Senior Inspector Tuen Yuk-hang of the Kowloon East regional crime unit reported to the South China Morning Post. “The investigation suggests the money involved was crime proceeds generated from illegal gambling, loan-shark activities, and online shopping scams.”

Here’s the kicker for the gang and what makes my head spin because it is also why they got caught— they laundered their illicit, fiat money in exchange for fiat, instead of fiat for cryptocurrency and then back to fiat after a quick tumble in a Tornado Mixer. Duh. It is such a proven process that the Feds in the US want to put an immediate clamp on crypto, while China has already banned the use of crypto outright. Doesn’t everyone know that crypto is where it’s at these days for money laundering? Bitcoin, Ethereum, et al, and crypto’s associated products like NFTs have, in fact, brought about what I have labeled the golden age of money laundering.

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Richard Paxton

CEO of the Alacer Group. Sharing the latest news in financial crimes and best practices that enable financial institutions to prevent money laundering.

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