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Last Friday, the Supreme People's Procuratorate and the People's Bank of China jointly released typical cases of punishing money laundering crimes, selecting 6 typical cases of punishing money laundering crimes, covering the current common and frequent upstream crimes of money laundering. Today, the legal team of Sister Sa selected one of the typical cases for everyone to interpret. Chen Moubo registered and established Yimou Financial Information Service Company. Without the approval of relevant state departments, he publicly promoted fixed-income financial products in the name of the company, decided the price fluctuations on his own, and used the funds mainly for repayment of principal and interest and personal squandering, and refused to repay in the later period. He then opened a digital currency trading platform to issue virtual currency, deceived customers into recharging and trading on the platform through false propaganda, fabricated platform transaction data, and covered up the funding gap by restricting large withdrawals and falsely claiming that hackers had stolen the currency, delaying or even refusing investors to withdraw cash. On November 3, 2018, the Pudong Branch of the Shanghai Public Security Bureau filed a case against Chen Moubo for suspected fund-raising fraud. The amount involved was more than 12 million yuan, and Chen Moubo fled abroad. From late October to early November 2018, Chen transferred 3 million yuan of illegal fund-raising funds to Chen Zhi. In order to conceal the proceeds of crime, the two divorced. Defendant Chen Zhi knew that Chen was being investigated by the public security organs for suspected fund-raising fraud and fled to Hong Kong, but he still transferred 3 million yuan of illegal funds obtained by Chen through his personal account to Chen Bo; he sold the vehicle purchased by Chen Bo with the stolen money at a low price of more than 900,000 yuan, and bought Bitcoin to transfer to Chen Bo.
Controversy Can the use of virtual currency for cross-border exchange to convert criminal proceeds and profits into foreign legal currency or property be considered an act of money laundering? Verdict The judgment (2019) Hu0115Xinchu No. 4419 pointed out that Chen Mouzhi knew that the proceeds of financial crimes and the income generated by them, in order to conceal and hide the source and nature of the crime, provided a capital account, converted the property into RMB and virtual currency respectively, and assisted in the transfer of funds abroad through transfer, and his behavior constituted the crime of money laundering. The sentence is as follows: 1. The defendant was sentenced to two years’ imprisonment and a fine of RMB 200,000. 2. The stolen money and seized property that have been returned shall be confiscated according to law, and the remaining stolen money shall continue to be recovered or ordered to be returned.
Case Analysis The author believes that the determination of money laundering crime is mainly divided into two parts: the establishment of upstream criminal facts and the five types of money laundering behaviors stipulated in Article 191 of the Criminal Law. We interpret them in turn: First, the upstream crime. The object of money laundering is the proceeds of upstream crimes and the income generated by them. That is, if the proceeds of non-drug crimes, organized crimes of a mafia nature, terrorist crimes, smuggling crimes, corruption and bribery crimes, crimes that undermine the financial management order, and financial fraud crimes and the income generated by them are laundered, then the crime of money laundering is not established. Specifically: 1. Drug crimes refer to crimes stipulated in Chapter 6, Section 7 of the Criminal Law; 2. Organized crime of a mafia nature and terrorist crimes refer to various crimes (including some property crimes) committed by mafia organizations, terrorist organizations and their members; 3. Smuggling crimes refer to all smuggling crimes in Section 2, Chapter 3 of the Criminal Law; 4. The crime of corruption and bribery needs to be discussed in detail, because from the literal interpretation, Article 191 of the Criminal Law refers to "corruption and bribery crimes", which is not equivalent to the crime of corruption and bribery in Chapter 8 of the Criminal Law. Therefore, in addition to the crimes stipulated in Chapter 8 of the Criminal Law, the upstream crime should be interpreted broadly without violating the principle of legality of crime and punishment. Therefore, Article 163 of the Criminal Law, the crime of bribery by non-state personnel, is also included. Of course, not all crimes of corruption and bribery in Chapter 8 can become upstream crimes of money laundering. For example, Article 384 of the Criminal Law, the crime of misappropriation of public funds, requires specific analysis of specific cases. The establishment of misappropriation of public funds does not require the possession of the funds, and the public funds are not the "proceeds" of the upstream crime. Therefore, if only A misappropriates public funds and B knows about it and helps him to remit the public funds abroad, it should not be considered as money laundering. The proceeds generated after misappropriation of public funds belong to the proceeds generated by the upstream crime and can be the object of money laundering. 5. Crimes of disrupting financial management order and financial fraud crimes refer to the crimes stipulated in Section 4 and Section 5 of Chapter 3 of the Criminal Law respectively. Secondly, regarding the act of money laundering, Article 191 of the Criminal Law stipulates five types: (1) providing a funding account; (2) converting property into cash, financial bills, or securities; (3) transferring funds through wire transfer or other payment settlement methods; (4) transferring assets across borders; and (5) concealing or disguising the source and nature of criminal proceeds and their benefits by other means. In this case, the first item of providing a funding account and the fourth item of assisting in remitting funds overseas are established, and the key issue is whether the defendant's transfer of funds overseas by transferring virtual currency can be considered money laundering. Hermeneutics is always the ontology of criminal law. The extension of the "property" in the second item "converting property into cash, financial bills, and securities" is relatively broad, including the conversion of physical objects into cash, financial bills, and securities, as well as the conversion of this cash with that cash, this financial bill with that financial bill, and this kind of securities with that kind of securities. Chen Mouzhi's behavior is equivalent to converting a physical car into RMB, and then converting RMB into virtual currency. In fact, when converting to RMB, the second item "converting property into cash" has been established, and the focus of the dispute in this case is the defendant's final virtual currency conversion behavior. Even though my country's regulatory authorities have clearly prohibited token issuance financing and exchange activities, the regulatory attitudes of various countries or regions towards virtual currencies are different. It is entirely possible for the perpetrator to exchange virtual currency into legal currency at a virtual currency exchange abroad, so it certainly falls under the second item. The amount of money laundering is calculated by the amount of funds actually paid to exchange virtual currency, not by the amount of virtual currency exchanged for legal currency. The use of virtual currency for cross-border exchange will undoubtedly increase the difficulty of investigation and evidence collection. Not only is it necessary to clarify the conversion process between legal currency and virtual currency, but it is also necessary to collect transaction records, keys, Bitcoin addresses, etc. of the perpetrators converting stolen money into virtual currency or using virtual currency. This has put forward new requirements for economic investigation personnel to understand and grasp the transaction characteristics of virtual currency money laundering crimes. Chen Moubo, the perpetrator of the upstream crime in this case, is still at large. However, after the upstream crime is verified, whether it is adjudicated or held accountable according to law does not affect the identification and prosecution of money laundering. Money laundering is still an independent crime as a downstream crime. Therefore, as long as there is relevant evidence to identify the facts of the upstream crime, the fact that the upstream crime has not been tried in criminal court does not affect the identification of money laundering.
Final Thoughts The crime of money laundering is undoubtedly the target of severe punishment by the public security, procuratorial and judicial organs. Understanding the characteristics of the upstream crime of money laundering is the first step to reasonably avoid money laundering. Since the terminology of the downstream criminal behavior described in the criminal law is relatively broad, it is difficult to exceed its scope and the possibility of national prediction through expanded interpretation, so even the new means of crime in this case cannot escape the framework of the criminal law. |
