Why is it difficult for OTC merchants in the cryptocurrency world to be convicted of the crime of concealing or hiding criminal proceeds?

Regarding the recent card freezing trend, Renrenbit spoke out through the Planet Daily yesterday, saying that Zhao Dong did not directly participate in illegal transactions. Due to the supervision of card freezing, a Beijing OTC team (in which Zhao Dong once participated in the investment) is cooperating with the police in the investigation and evidence collection for suspected fraudulent fund transactions.

Today, a cryptocurrency self-media outlet published an article claiming that Zhao Dong or the OTC team he invested in may be suspected of "concealing criminal proceeds."

Indeed, the crime of "covering up and concealing criminal proceeds and the proceeds of criminal proceeds" can be regarded as the sword of Damocles for the OTC business in the cryptocurrency circle. What is the crime of "covering up and concealing criminal proceeds and the proceeds of criminal proceeds"? How are the laws regulating some of the main issues involved in this crime? What should be paid attention to in practice? See below for details.

The crime of "concealing or hiding criminal proceeds and proceeds from criminal proceeds" is stipulated in Article 312 of the Criminal Law of the People's Republic of my country. It means that if a person knowingly conceals, transfers, purchases, sells on behalf of others, or conceals or hides criminal proceeds and the proceeds from them, he shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance, and shall be fined or fined alone; if the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall be fined.

If an entity commits the crime in the preceding paragraph, the entity shall be sentenced to a fine, and the directly responsible supervisor and other directly responsible persons shall be punished in accordance with the provisions of the preceding paragraph.

In fact, the words "cover up" and "conceal" appear twice in my country's criminal law, and the other time is in Article 191 of the Criminal Law, which refers to the crime of money laundering.

"Money laundering" is also the main reason for the recent wave of card freezing in the cryptocurrency circle.

According to the provisions of my country's Criminal Law, the crime of money laundering refers to knowing that the proceeds and the proceeds generated from drug crimes, organized crimes of a mafia nature, terrorist activities, smuggling crimes, corruption and bribery crimes, crimes that undermine the financial management order, and financial fraud crimes, and any of the following acts are committed in order to conceal or hide their sources and nature. The proceeds and the proceeds generated from the above crimes shall be confiscated, and the person shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall be fined not less than 5% but not more than 20% of the amount of money laundering; if the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years, and shall be fined not less than 5% but not more than 20% of the amount of money laundering:

(1) Providing a funding account;

(2) Assisting in converting property into cash, financial instruments or securities;

(3) Assisting in the transfer of funds through account transfer or other settlement methods;

(iv) assisting in remitting funds abroad;

(5) Covering up or concealing the source and nature of criminal proceeds and their proceeds by other means.

If an entity commits the crime in the preceding paragraph, the entity shall be sentenced to a fine, and the directly responsible supervisor and other directly responsible persons shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention; if the circumstances are serious, they shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years.

Looking at the two crimes together, it is not difficult to see that the various forms of money laundering can be classified as "covering up or concealing by other means" in Article 312. However, there are also differences between the two. The object of the crime is the main criterion for judging whether it constitutes money laundering and the crime of concealing or concealing the proceeds of crime or the proceeds of crime.

If a person conceals or hides the source and nature of specific criminal proceeds, it constitutes the crime of money laundering; otherwise, it constitutes the crime of concealing or hiding criminal proceeds or the proceeds of criminal proceeds.

The former refers to drug crimes, organized crimes of mafia nature, terrorist crimes, smuggling crimes, corruption and bribery crimes, crimes that disrupt financial management order, and financial fraud crimes. The reverse refers to other crimes.

It should be noted that both can be corporate crimes, that is, a company can be the subject of a crime.

Therefore, if someone in this incident is suspected of concealing the proceeds of crime, then the funds deposited and withdrawn in OTC are the proceeds of crime other than the seven types of crimes mentioned above, such as the funds involved in fund-raising fraud and fraud.

So how should we understand the crime of "concealing and hiding the proceeds of crime and the profits from the proceeds of crime"?

According to the interpretation of the Legislative Affairs Commission of the Standing Committee of the National People's Congress:

The law on concealing and hiding criminal proceeds and profits from criminal proceeds has been revised twice.

The first amendment was made in accordance with the "Sixth Amendment to the Criminal Law of the People's Republic of China" adopted at the 22nd Session of the Standing Committee of the Tenth National People's Congress on June 29, 2006.

The original article reads: "Whoever knowingly conceals, transfers, purchases or sells stolen goods obtained through crime shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance, and shall also be fined or fined alone."

This is the second amendment based on the "Seventh Amendment to the Criminal Law of the People's Republic of China" adopted at the Seventh Session of the Standing Committee of the Eleventh National People's Congress on February 28, 2009.

The Legislative Affairs Commission of the National People's Congress also pointed out in its interpretation of the law that stolen property is often the ultimate goal and value pursued by criminals in their criminal activities, and is also an important piece of physical evidence in criminal proceedings. Tracking down and obtaining stolen property is of great significance for obtaining evidence of the crime and preventing criminals from obtaining economic benefits.

With the development of the economy and society, the scale of some profit-seeking crimes is also expanding. Some criminals have obtained huge amounts of property through criminal activities, and have invested and operated the proceeds from crime, generating new income, which has provided more favorable conditions for further expanding the scale of crime.

When the Criminal Law was amended in 1997, in order to adapt to the needs of the situation and further crack down on money laundering crimes, the crime of money laundering was specifically stipulated. Considering that the upstream crimes of money laundering are limited to a limited number of crimes, the acts of harboring, concealing and disguising the illegal proceeds and their proceeds from other crimes and such acts by units also need to be cracked down according to law. Therefore, the "Criminal Law Amendment (Six)" and "Criminal Law Amendment (Seven)" made amendments and supplements to Article 312 of the 1997 Criminal Law, mainly in four aspects:

First, the criminal objects stipulated in this article are expanded from "stolen property obtained from crime" to all "proceeds of crime and the proceeds generated from it."

Second, the criminal acts stipulated in the original provisions of the Criminal Law were expanded from "harboring, transferring, purchasing or selling on behalf of others" to all "covering up and concealing".

Third, the punishment for this crime has been increased, with an additional level of punishment, namely, "if the circumstances are serious, the offender shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined."

Fourth, provisions on corporate crimes have been added.

The above-mentioned amendments supplement and tighten the legal network to combat the crime of concealing and hiding the proceeds of crime and their proceeds. The acts of concealing and hiding the proceeds and proceeds of seven serious crimes such as drug crimes will be combated as money laundering crimes; the acts of concealing and hiding the proceeds and proceeds of other crimes will be subject to criminal liability for the crimes stipulated in this article.

The first paragraph is about the crime of concealing and hiding the proceeds of crime and the income generated by it and its punishment. The crime stipulated in this paragraph requires the following conditions:

1. The perpetrator is committing a crime intentionally. That is, knowing that the proceeds of crime and the profits generated therefrom are intentionally concealed or hidden. The scope and meaning of "proceeds of crime and the profits generated therefrom" stipulated in this article are the same as those stipulated in Article 191 of this Law.

2. The perpetrator concealed, transferred, purchased, sold on behalf of others, or used other methods to cover up and hide the proceeds of crime and its benefits.

Therefore, because this article is a deliberate crime, it is necessary to know that it is the proceeds of crime. In fact, usually many OTCs are unaware of this when it comes to this aspect, and they need to cooperate with the police investigation.

But it is well known that OTC business is also strictly illegal, which has been made clear in the 1994 regulations. Chain Law Research | The 1994 Announcement that has been misinterpreted Therefore, for "companies" doing OTC, they are very afraid of touching this money, which is also the most important risk control issue to consider when doing OTC business.

How are “harboring,” “transferring,” “purchasing,” “selling on behalf of others,” and “covering up or concealing by other means” defined in law?

According to the interpretation of the Legislative Affairs Commission of the National People's Congress, the term "harboring" here is broad and refers to using various methods to hide the proceeds of crime and their proceeds from discovery by others, or keeping them for criminals so that judicial authorities cannot obtain them, as well as illegal possession and use.

"Transfer" refers to the transfer of criminal proceeds and their profits to other places so that the investigative authorities cannot detect them.

"Acquisition" refers to the purchase of criminal proceeds and their proceeds for the purpose of selling them.

“Selling on behalf of others” refers to the act of selling the proceeds of crime and their profits on behalf of criminals.

"Other methods of concealing and hiding" refers to concealing and hiding the proceeds of crime and its benefits by various methods other than harboring, transferring, purchasing, and selling on behalf of others, such as bank transfers, investment operations, and remitting abroad.

The second paragraph of this article stipulates the crime committed by an organization.

This paragraph stipulates that if an entity commits the crime in the preceding paragraph, the entity shall be sentenced to a fine, and the directly responsible supervisor and other directly responsible persons shall be punished in accordance with the provisions of the preceding paragraph.

The following four points should be noted in practice:

1. Criminal gangs or groups that divide the responsibilities for concealing and hiding the proceeds of crime and their profits shall be treated as accomplices in the crime.

2. If the criminal conceals or hides the proceeds of crime and its gains, he shall be punished only according to the crime he committed and shall not be punished for multiple crimes as provided for in this article.

3. If the perpetrator conspires with the criminal in advance and conceals or hides the proceeds of the crime afterwards, he shall be held criminally liable as an accomplice to the crime.

4. The determination of the crime of concealing or hiding the proceeds of crime or the proceeds of crime is premised on the establishment of the facts of the upstream crime. If the upstream crime has not yet been adjudicated in accordance with the law, but it is verified to be true, it will not affect the determination of the crime of concealing or hiding the proceeds of crime or the proceeds of crime. If the facts of the upstream crime are verified to be true, but the perpetrator is not held criminally liable in accordance with the law for reasons such as not reaching the age of criminal responsibility, it will not affect the determination of the crime of concealing or hiding the proceeds of crime or the proceeds of crime.

In other words, only when the upstream crime is verified to constitute a crime, will the downstream crime constitute a crime.