The report reveals new tactics of China's "shadow banking": encryption casinos and online games become hotbeds for cross-border Money Laundering.

The blockchain intelligence company TRM Labs' latest report warns that China's "shadow banking" is using crypto asset casinos and online games to build a covert cross-border money laundering network. These illegal financial channels are referred to as "flying money", which can bypass traditional banking systems and AML monitoring, allowing criminal funds to flow freely around the world. Experts point out that this trend may exacerbate risks related to drug trafficking, tax evasion, and organized crime.

Report Core Findings: Encryption Technology Fuels Cross-Border Money Laundering

TRM Labs points out that technological advancements and the popularity of Crypto Assets have made the cross-border Money Laundering activities of China's shadow banking more efficient and discreet. In the past, organized crime relied on physical casinos and intermediaries to launder drug trafficking and other criminal proceeds; during the pandemic lockdown, these activities quickly shifted online and combined with encryption, forming a global network of illegal funds.

Shadow Banking Operating Model: Flying Money System Bypasses Regulation

The so-called "flying money" is an underground remittance network that allows funds to flow quickly across borders through casino accounts, betting credits, and encryption transfers, bypassing international bank wire transfers and AML alerts.

According to research by the Forum on Foreign Affairs, the commissions charged by these illegal brokers are usually less than 2% of the principal, and the transfer speed is extremely fast, making it nearly impossible to trace funds during cross-border flows.

The Role of Crypto Assets and Online Casinos

The combination of online casinos and crypto assets provides an ideal money laundering channel for shadow banking. The anonymity, global coverage, and instant settlement features of crypto assets make them the preferred tool for criminals.

TRM Labs pointed out that these platforms have built a complete "Crypto Assets financial ecosystem," allowing criminals to complete cross-border fund transfers in minutes and conceal the source of funds.

Law Enforcement Challenges and Countermeasures Strategies

Despite the covert nature of shadow banking, it is not without traces. TRM Labs emphasizes that blockchain analysis, inter-agency collaboration, and cyber operations are key to combating such crimes.

Law enforcement agencies have begun taking action in the "home ground" of hackers and criminal groups—cyberspace, utilizing the transparency of Blockchain to track the flow of funds and freeze illegal assets when necessary.

Future Impacts and Risks

The Afghan Financial Management Agency warns that the spread of such underground financial networks may exacerbate drug proliferation, tax evasion, and organized crime in the coming years. For global financial regulators, how to prevent the abuse of Crypto Assets while ensuring financial innovation will be a long-term challenge.

Conclusion

The phenomenon of China's shadow banking using crypto casinos and online gaming for Money Laundering highlights the regulatory challenges of the digital financial era. Although the technical characteristics of Crypto Assets provide convenience for criminals, they also offer law enforcement agencies unprecedented tracking methods. In the future, international cooperation and technical regulation will be key to curbing the "fly money" system. Gate will continue to monitor such cross-border Money Laundering dynamics, providing users with the latest on-chain security and regulatory trend analysis.