How Triad-linked gang used crypto and casinos to launder $10B
Australian Federal Police have announced their dismantling of the Xin Money Laundering Organization, which moved an estimated $10 billion.
Among those arrested is the apparent leader of the organization, Steven Xin. Xin was the Australian business partner of former junket operator Alvin Chau. Together they ran the SunCity junket, apparently in coordination with ‘Broken Tooth’ Wan Kuok-koi, boss of the Macau branch of the 14K Triad during the bloody Triad wars.
Junkets are businesses that solicit high-roller gamblers and help direct them to partner casinos, often offering credit to these individuals and aiding the casinos in collecting debts. Junkets have been a target of China’s crackdown on capital flight.
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Xin associate was jailed for attempted murder
Kuok-koi was arrested in 1998 on charges of attempted murder of the chief of police, illegal gambling, loan sharking, and more. He was convicted in 1999 and was in prison until 2012.
The former gang boss has been sanctioned by the United States Treasury. Several organizations he controlled, including the Dongmei Group, Palau China Hung-Mun Cultural Association, and the World Hongmen History and Culture Association, have also been sanctioned.
Dongmei Group notably was a key investor in the Saixigang Industrial Zone Project in Myanmar. It focused on building casinos in the east of the country and was linked to rebel Karen forces.
These efforts purport to be under China’s ‘Belts and Road’ initiative, though China denies the affiliation and cracked down on related activities in Cambodia after pleas from the local government.
Kuok-koi has actively used cryptocurrencies to advance his aims before. He was a noted participant in the ‘Dragon Coin‘ cryptocurrency scheme — an ICO that was meant to be used for casino junkets. It allegedly raised $500 million.
Xin, along with business partner Zhouhua Ma, provided shadow banking infrastructure involving cryptocurrencies, crypto exchanges, and casinos to enable wealthy Chinese nationals to evade restrictions on moving their assets.
The Xin organization would collect dirty cash, and in exchange for a percentage would lend it out to Chinese customers in Australia. It would then be used to fund a variety of purchases, including luxury real estate. The ‘loans’ would then be paid back by transferring assets within China to a shell company controlled by the Xin organization. This system of shell accounts and ledger movements prevented funds from crossing country borders, helping the organization evade detection.
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Xin’s laundering model is tried and tested
Several months ago, Australian authorities disrupted another Chinese money laundering organization known as the ‘Chen Organization‘ that was purportedly moving hundreds of millions of dollars per year. The organization was used by Xin’s business partner Chau to move millions before he was arrested and charged with money laundering and illegal gambling. Chau has since been sentenced to 18 years in prison on illegal gambling charges. The money laundering charges were dropped.
The model of money laundering used by both the Chen Organization and the Xin Money Laundering Organization mimics the ‘Vancouver Model’ used by the triads in Vancouver. Similarly, this model relies on dirty money being moved around by shadow banks and casinos.
It’s not yet clear what crypto businesses the Xin Organization relied on in order to move its funds.