Chinese underground banking networks, often called āshadow bankers,ā are playing a major role in global organized crime. A recent investigation shows how these secret systems are now using cryptocurrency casinos and online gaming to wash huge amounts of dirty money from activities like drug trafficking, online scams, and sanctions evasion. The methods are fast, hard to detect, and increasingly international.
Underground Banking and the Rise of Crypto Laundering
These underground financial systems, known as āfei qian,ā operate outside normal banking rules. They allow criminals to move money quickly across borders without traditional checks. Cryptocurrency makes the process even easier, enabling transactions that are rapid, pseudonymous, and very difficult to trace.
Chinese Triad gangs have been quick to take advantage of these methods. In the past, Triads controlled gambling junkets and smuggling networks in Hong Kong and Macau. These were used to disguise the origin of illegal earnings, often from drug smuggling. Today, they have expanded across Southeast Asia, running both physical casinos and online gambling sites. Many also operate scam call centers, which act as money laundering hubs.
Chinese Underground Banking: Unraveling the Hidden Network of Global Money Movement
From Casinos to Online Scams
When COVID-19 forced many casinos to go online, criminal groups saw an opportunity. They turned these platforms into tools for cyber fraud. Scam compounds, often running romance or investment frauds, started producing huge cryptocurrency profits that needed to be laundered.
Triad-linked underground banks take criminal cash and convert it into gambling credits or cryptocurrency for online betting. The money is then pushed through high volumes of bets, mixing illegal funds with legitimate gamblersā money. When withdrawn, the funds appear as casino winnings or business income, masking their criminal origins.
Authorities say this setup moves money in much larger and more hidden ways than before. Criminal proceeds are also used to buy goods like electronics or luxury products, which are shipped overseas and sold for clean money. Increasingly, cryptocurrency is used in these trade deals, making the flow of funds even harder to track.
Chemical companies in China that produce ingredients for fentanyl and methamphetamine also play a role. Many accept payment in cryptocurrency, allowing criminal groups to pay for drug precursors, turn them into narcotics, sell them for cash, and feed the profits back into the laundering network.
Global Criminal Links and Sanctions Evasion
Chinese shadow banking networks are also used by foreign criminal organizations. Mexican drug cartels use them to move money without transferring it physically between countries. A method called the mirror exchange allows cash in one country to be matched with money in another, and cryptocurrency has made this process quicker and harder to detect.
Cartel brokers can place drug money into crypto ATMs or exchanges in the U.S., convert it to Bitcoin, and send it instantly to Chinese partnersā wallets. The value is transferred without going through banks.
North Korean hackers, who have stolen billions in cryptocurrency, also depend on these networks. Stolen funds are routed through shell companies, mixers, and blockchain bridges to hide their origins, then turned into cash to buy sanctioned goods.
Macau Junket Operations: China Launches Crackdown on Illegal Money Exchanges
These same casino trickshave been used to help Russian entities bypass sanctions. Chinese companies manufacturing military equipment have sold to Russia using cryptocurrency payments. Some funds from North Korean-linked wallets have gone to Russian exchanges and mixers, showing how different groups share these money-moving channels.
The findings show how casinos, online gaming, underground banks, and cryptocurrency have combined into a powerful tool for hiding criminal money on a global scale.