Report links Chinese laundering to crypto casinos, gambling
Chinese underground banking networks play a “critical role in facilitating transnational organised crime, including through their use of crypto casinos and online gambling for money laundering purposes,” according to a report by TRM Labs.
The report outlines how Chinese Triads, long-established organised crime syndicates, have “aggressively embraced underground banking and cryptocurrency to launder their illicit proceeds.” Historically, groups such as 14K and Sun Yee On managed Hong Kong and Macau gambling junkets and smuggling networks, using them to “clean cash from activities like drug trafficking.”
The report said that for decades, gambling in Macau and parts of Southeast Asia provided Triads with a steady mechanism to move large volumes of money under the cover of legitimate gaming activity. These networks exploited junket systems, cash buy-ins, and debt settlement arrangements to disguise the origin of criminal proceeds.
In recent years, Triad-affiliated networks have expanded this model across Southeast Asia, now operating both physical and online casinos alongside scam call centres and shell companies that serve as laundering hubs.
Shift to online operations during pandemic
A “shift occurred during the COVID-19 pandemic” when land-based casinos transitioned to online operations. The report stated that criminal groups seized the opportunity, repurposing their infrastructure to operate cyber-scam centres, particularly in special economic zones along the Mekong and Myanmar borders.
The report notes that these scam compounds are “frequently involved in ‘pig-butchering’ romance and investment frauds” that generate massive cryptocurrency profits, which need to be laundered. Triad gangs have turned casinos and underground bankers into an “underground banking system” that allows criminals to move money through casino accounts, betting credits, and cryptocurrency transactions.
The report stated that these online operations are particularly appealing for money laundering because they enable cross-border transfers without the need to move cash physically. Funds can be converted into digital credits instantly and gambled from anywhere in the world, enabling criminal syndicates to integrate illicit earnings into the legitimate financial system more efficiently.
Harder to trace and larger in scale
The UN Office on Drugs and Crime is quoted in the report as saying that Chinese Triads and affiliated gangs use casino-based networks to transfer funds in ways that are “much bigger and more untraceable than in the past.” This makes it “exceedingly difficult for authorities to track the money.”
One prevalent method involves integrating cryptocurrency into casino and trade-based money laundering schemes. For example, a Triad-linked underground bank may “accept criminal funds from sources like drug sales or human trafficking and, in return, issue the equivalent value as gambling credits in a special economic zone (SEZ) casino or as cryptocurrency that can be gambled online.”
According to the report, once the money has entered the system, it is wagered at high volumes, blending with legitimate betting activity. This intermingling of funds frustrates investigative efforts because it creates a paper trail that appears to originate from lawful gambling winnings rather than criminal operations.
Blending illicit and legitimate funds
The report explains that the funds are circulated through high-volume betting, often “intermingling illicit money with legitimate gamblers’ funds” before being cashed out as “casino winnings” or business revenues.
The convergence of cryptocurrency and underground banking “significantly amplifies the scale” of these operations, allowing larger sums to move through the system more quickly and with less oversight than traditional banking channels, according to the report.
Unlicensed crypto exchanges and covert transactions
Triad money launderers have established “their unlicensed crypto exchanges and OTC (over-the-counter) desks” to cater to clients. They frequently advertise via encrypted apps such as WeChat or Telegram, which the report describes as “resistant to surveillance” by authorities.
The TRM Labs report said that these private channels enable criminal groups to bypass regulated financial institutions entirely, reducing the risk of transactions being flagged for suspicious activity. By combining anonymous cryptocurrency transfers with gambling systems, the report said that Triads can conceal the movement of funds across multiple jurisdictions in a matter of hours.
Multi-step laundering process
The report outlines that a single laundering operation might involve swapping cash for crypto through a broker, gambling with cryptocurrency on an online casino controlled by the gang, and then withdrawing the funds in another form elsewhere. Each step, it says, makes it “progressively harder to connect the final ‘clean’ money back to its original criminal source.”
Adaptation of old methods to new technology
TRM Labs observes that these schemes highlight the Triads’ “adaptability in utilising new technology.” The report concludes that they have “essentially transformed cryptocurrency into another effective tool for their long-standing money laundering operations, alongside casinos, shell companies, and trade fraud.”
