Use of Cryptocurrency for Criminal Activity in China on the Rise: Peak Domestic Payments Body


The peak body for China’s payments sector has highlighted a rise in the use of cryptocurrency domestically for illegal activities.

The Payment & Clearing Association of China (PCAC) issued a risk warning on 9 June, pointing to a “gradual rise in the use of virtual currency and other forms to engage in illegal criminal activities.”

“Because [cryptocurrency] transactions are anonymous, convenient and global, they have gradually become a key channel for cross-border money laundering,” said PCAC.

PCAC pointed in particular to the emergence of “pao fen” (跑分) gambling activities, which involve illegal payments and settlements platforms purchasing “points” or chips from cross-border online gambling platforms to conduct transactions.

According to PCAC nearly 13% of online gambling sites support cryptocurrency recharges and the use of blockchain technology for anonymous transactions, employing a large volume of C2C transactions to conceal transfers of gambling proceeds and raise the difficulty of tracking the movements of funds.

China cracked down on the cryptocurrency sector back in September 2017, with the launch of a ban on initial coin offerings (ICO’s), the use of cryptocurrency for financing purposes and the operation of domestic cryptocurrency exchanges.