The China crackdown on cross border crime and underground banking
The Asian Crime Century briefing 54
Chinese state broadcaster CCTV published a video and accompanying news story on 8th January explaining the criminal prosecution and conviction of Suncity Group founder Alvin Chau Cheok Wa and others from the Macau Suncity casino junket. The timing of the story is interesting, coming only a month after a letter allegedly from Alvin Chau to President Xi Jinping was published in news media (see Asian Crime Century briefing 48).
The CCTV report, titled “Crack down on cross-border gambling crimes! Starting the "Case of Zhou Zhuohua's Cross-border Gambling Criminal Group" (严打跨境赌博犯罪! 起底“周焯华跨境赌博犯罪集团案”). The CCTV report rebuts the claims made by Alvin Chau that he is innocent.
The article clarifies that from 2015, Alvin Chau and his associates began to open multiple online gambling platforms in the Philippines. From 2015 to 2019, the amount of online gambling originating from China amounted to 300 billion yuan (over US$42 billion), which Suncity was deeply involved in.
The commentary from CCTV clearly indicates that the authorities will continue to crackdown on cross border crime, underground banking, and any established commercial sector that facilitates these activities.
The Economist reported in December 2023 that “Although outflows from China are not yet on the vast scale of those seen during the panic of 2015-16, they might prove more enduring. Back then, a government-engineered credit boom in the property industry helped revive the economy’s animal spirits. This time around, the Chinese government wants to allow the industry to cool. Without a sudden, unexpected recovery in the fortunes of the Chinese economy, the stream of capital looking for an exit is unlikely to slow.”
Clearly CCTV talking about Alvin Chau and Suncity and their cross border crime is making a point - Unauthorised movement of funds out of China will be punished.
An English translation of the CCTV article is below, and worth reading to understand the attitude of the Chinese authorities to cross border crime, in particular financial crime that involves capital flight from the country.
严打跨境赌博犯罪! 起底“周焯华跨境赌博犯罪集团案”
“In August 2022, the Wenzhou Intermediate People's Court of Zhejiang Province disclosed three cases involving Zhang Ningning, the backbone of Zhou Zhuohua's cross-border gambling criminal group, and others after a three-day trial. The trial of this case provided ample evidence for the arrest and trial of Zhou Zhuohua [Chau Cheok Wa] and others in Macau, and also directly promoted the Criminal Law Amendment (11) to add the crime of organizing organizations to participate in foreign (overseas) gambling.
From August 10 to 12, 2022, the Intermediate People's Court of Wenzhou City, Zhejiang Province held a public hearing in accordance with the law and jointly tried the defendant Zhang Ningning and other 34 people for the crime of opening a casino and illegal business operations. The defendant Zhang Shixiu was guilty of opening a casino and the defendant Zhong Haiyan was guilty of the crime of opening a casino. Three cases, including the crime of opening a casino, are all a series of cross-border gambling criminal group cases headed by Zhou Zhuohua (handled separately).
Wang Haoze, Judge of the First Criminal Tribunal of the Wenzhou Intermediate People's Court: Zhou Zhuohua established Sun City Gaming Agency One-person Co., Ltd. overseas. The company has multiple departments such as the Finance Department, Accounting Department, IT Department, and Customer Service Department. Zhang Ningning is Zhou Zhuohua's employee. The person in charge of an asset management company established in China. In the company's internal address book, her position is director of the asset management department.
After the trial, it was found that since 2007, Zhou Zhuohua, a shareholder and director of Macau Sun City Gaming Agency One-person Co., Ltd., has contracted gambling halls in casinos in Macau and other places, and began to open multiple online gambling platforms in the Philippines and other places in 2015 for gambling activities. In order to make huge profits, Zhou Zhuohua used commissions and dividends as bait to induce others to serve as agents. Through these agents, he organized and recruited Chinese citizens within the country to go to Suncity Casino to participate in gambling or cross-border online gambling.
Judge Wang Haoze of the First Criminal Tribunal of the Wenzhou Intermediate People's Court: The scale requirement for domestic gambling agents is that if each agent buys shares in Sun City Company, the investment fee is HK$5 million, and the monthly transcoding volume is The required target is HK$50 million. It has successively recruited 283 Chinese shareholder agents, so one can imagine the huge scale of gambling capital. Online gambling from 2015 to 2019, according to the corresponding electronic data seized in our territory, the betting volume of domestic gamblers was more than 300 billion yuan, and the amount of gambling money won in the country was more than 8.7 billion yuan.
After trial, it was found that as the scale of gambling continued to expand, a cross-border gambling criminal group was gradually formed, headed by Zhou Zhuohua and backed by the defendants Zhang Ningning, Zhang Shixiu and others. The criminal group set up companies in the country to provide agents and gamblers with assets in exchange for gambling credit, chips and other services, and to recover gambling debts. In order to avoid supervision and crackdowns, it also used illegal channels such as underground banks to receive and settle gambling funds. In addition, the criminal group also set up or provided technical support or services such as gambler management, vehicle transportation, publicity and promotion through companies in China, making the entire criminal activity more concealed.
This cross-border gambling criminal group also violated national regulations, fabricated transaction agreements, and made multiple cross-border cash payments totaling more than 1.16 billion yuan, making illegal profits of more than 17 million yuan, seriously disrupting the order of my country's financial market.
Judge Wang Haoze of the First Criminal Tribunal of the Wenzhou Intermediate People's Court: For society and the country, cross-border gambling will cause damage to the social and economic order and the good customs of citizens getting rich through hard work, and this damage will be even greater if it is subtle. It has a huge impact on domestic economic security.
On September 30, 2022, the Wenzhou Intermediate People's Court publicly pronounced judgment on the above three cases. The first instance found that the defendants Zhang Ningning and Peng Hao were instructed to receive gambling funds and gambling debts and operate and manage them in China; the defendant Zhong Zexin and others organized and solicited Chinese citizens to gamble overseas and participate in cross-border online gambling; the defendant Yu Huijun and others knew that others Anyone who commits the crime of opening a casino and still provides assistance constitutes the crime of opening a casino. Zhang Ningning also illegally bought and sold foreign exchange, constituting the crime of illegal business operations. Taking into account the specific circumstances of each defendant, he was sentenced to a prison term ranging from seven years and six months to one year and three months in accordance with the law, and was also fined; the property used for the crime, gambling funds, illegal gains and gains, and interest were recovered.
After the verdict was announced, the defendants Zhang Ningning, Zhong Zexin, and Pang Kexun appealed, and the Zhejiang Provincial High Court ruled in the second instance to reject the appeal and uphold the original verdict.
Yang Guozhi, President of the Second Criminal Tribunal of the Wenzhou Intermediate People's Court: This case comprehensively verified the specific harmful behaviors of the cross-border gambling criminal group in various aspects such as organizational agency, gambling settlement, online gambling, asset management, technology and vehicle services. , cracking down on the entire chain, fully revealing the behavior of overseas gambling forces relying on legal gambling halls to recruit and solicit gambling in the country to illegally make money, which endangers economic development and social stability. Combating cross-border gambling in accordance with the law adheres to my country's consistent stance of severely cracking down on gambling crimes, purifies social atmosphere, and ensures economic security. It is of landmark significance to my country's law-based crackdown on cross-border gambling crimes. (CCTV reporter Zhang Gang)”
(Source: CCTV, 严打跨境赌博犯罪! 起底“周焯华跨境赌博犯罪集团案”, 8 January 2024)