In October 2021, the prosecutor handling the case interrogated the suspect.
"After placing an order through the business sections of the website such as stored value and payment on behalf of the customer, the foreign currency will be paid to the designated overseas account. After that, we use the overseas account to purchase virtual currency in foreign currency, sell virtual currency in China, and pay the corresponding amount of RMB to the domestic third-party payment platform account designated by the customer at the agreed exchange rate, and earn the exchange rate difference and service fee. According to the confession of gang member Guo Mouzhao after arriving at the case, this underground bank used virtual currency as a medium to engage in illegal foreign exchange operations and disrupt the order of financial management.
On June 27, 2022, after the Shanghai Baoshan District Procuratorate initiated a public prosecution, the court sentenced Guo Mouzhao and Fan Mouwei to five years in prison and three years and three months in prison respectively for the crime of illegal business operation, and sentenced Zhan Mouxiang and Liang Mouzuan to one year and six months in prison and ten months in prison respectively for the crime of aiding information network criminal activities, and each was fined concurrently.
On December 27, 2023, the Supreme People's Procuratorate and the State Administration of Foreign Exchange jointly released a total of 8 typical cases of punishing foreign exchange-related violations and crimes, mainly involving cross-border illegal foreign exchange trading cases, and this case is one of them.
Account changes
Pull out the underground bank
......In May 2021, the public security organs received clues that a bank account had accumulated more than 20,000 transactions from January 2018 to April 2021, of which nearly one-fifth of the transactions were in the early morning and late at night. After investigation, the public security organs found that there were many similar accounts, and according to the account holders, an underground bank that used virtual currency to conduct illegal foreign exchange settlements for others surfaced.
According to the relevant regulations, there is a foreign exchange limit of $50,000 per person per year. As a result, some people began to look for informal and illegal ways to exchange foreign currency, and underground banks had a "broad market".
Underground banks refer to institutions that engage in cross-border remittance, fund payment and settlement business and other activities without the approval of the competent state authorities. As the boss, Chen Mouguo (handled in a separate case) opened a company, collected foreign currency by providing overseas customers with services such as recharging, and then used foreign currency to buy virtual currency, which was sold by Fan Mouwei and others through illegal channels in exchange for RMB, and then transferred RMB to the domestic accounts of overseas customers. In this way, the exchange is completed.
Prior Intervention
Guide and trace the fund interconnection link
"According to the provisions of the Measures for the Suppression of Illegal Financial Institutions and Illegal Financial Business Activities, such institutions that are established without the approval of the People's Bank of China to engage in or engage in financial business activities such as absorbing public deposits, issuing loans, and financing guarantees are illegal financial institutions, and the perpetrator uses virtual currency as a medium to realize the cross-border conversion of RMB and foreign currency, which is a new type of illegal foreign exchange trading. On September 18, 2021, the Baoshan District Procuratorate intervened in the case in advance in accordance with the law, and after consulting with the public security organs and the State Administration of Foreign Exchange for several times to determine the nature of the case, it was believed that "such acts make the corresponding foreign exchange transactions out of supervision and directly endanger the order of financial management." ”
Since most of the foreign exchange customers and accounts are overseas, it is difficult to obtain testimony and verify the flow of funds. Therefore, the procuratorial and public security organs put the key to collecting and consolidating evidence on the identification of cross-border capital links.
In order to establish the criminal behavior pattern of the underground bank, the procuratorate guided the public security organs to carry out investigation and evidence collection, and through obtaining the background account information, order records, bank transaction details, and third-party payment platform transaction records of the underground bank's website, focusing on interrogating the division of labor of the persons involved in the case, the method of making profits, and the operation methods and profit funds of each link, and ascertaining the cross-border circulation mode of "foreign currency-virtual currency-RMB" of the funds involved in the case and the degree of participation of each actor one by one.
"This case involves three currency flows: foreign currency, virtual currency and RMB, so how to trace the interconnection link of cross-border funds is the focus. According to the prosecutor, since the three currency flows usually do not occur synchronously, at the suggestion of the procuratorate, the public security organs retrieved the transaction records of the recharge and withdrawal of the virtual currency trading platform, and compared them with the transaction hash value, transaction time and quantity of the virtual currency in the background data of the exchange website, and confirmed that the three currency flows of foreign currency, virtual currency, and RMB were all controlled by the same gang, so as to find out the process of fund conversion and the amount of the crime.
Set up a website
The whole chain operates underground banks
After investigation, the public security organs found that in this underground bank, in addition to the boss Chen, Guo Mouzhao was responsible for setting up an illegal exchange website and daily maintenance and operation.
As the company's technical personnel, Guo Mouzhao and Chen Mouguo single-handedly planned and set up the website. When there are problems such as orders not being displayed, orders cannot be submitted, bank accounts not being displayed, and the website needs to be maintained, they will be handled by Guo Mouzhao.
"The website is aimed at overseas customers, mainly third-party payment platform recharge, shopping payment, video software recharge and other services. Guo Mouzhao explained that after overseas customers register as members on the website, they place orders to pay foreign currency through the business sections of the website such as stored value and payment. After Chen Mouguo and others convert the foreign currency into RMB through virtual currency, the customer service will transfer the RMB to the customer through the third-party payment platform to complete the charging service. Shopping payment means that the customer clicks on the "find someone to pay" function after selecting the items on the shopping account, and sends the link to the customer service, who uses the converted RMB payment to complete the transaction. Mobile phones, games, live recharge and other services are also similar operations.
According to the prosecutor, in addition to technical personnel, the case also involved finance, customer service for handling orders for customers, and staff for buying and selling virtual currency. The conversion of virtual currency to RMB is through Fan Mouwei and others. "My husband and I, along with a few relatives, formed a team to buy and sell virtual currency. Chen Mouguo often sells virtual currency to us, and he sells a large amount of currency, which can reach several million yuan in RMB, and is a big customer. According to Fan Mouwei's confession, the virtual currency account and bank account required for virtual currency trading activities were opened by him with relatives and friends such as Zhan Mouxiang and Liang Mouzuan.
As the account provider at the lowest level of this criminal chain, Zhan Mouxiang registered a virtual currency account with his real name, handled a number of bank cards, opened online banking, and handed over all these to Fan Mouwei and others for use. And Liang Mouzuan knew that his multiple bank cards were used for virtual currency transactions, but still acquiesced to the use of others, "The bank once reminded me that there was a problem with frequent bank account transactions, but I still did not withdraw the bank card." ”
Enhance collaboration
Work together to tackle new types of foreign exchange crimes
On January 13, 2022, after the case was transferred for review and prosecution, the procuratorate requested the State Administration of Foreign Exchange to make an administrative determination, clarifying that the use of virtual currency as a medium of exchange to realize the conversion of the monetary value of foreign exchange and RMB, including the exchange of RMB for virtual currency, and then into foreign currency, or the exchange of foreign currency into virtual currency, and then into RMB, is an illegal act of buying and selling foreign exchange.
"There are many people involved in the gang, and the handling of those involved in the case should ensure that the punishment is consistent, and comprehensively analyze and distinguish between their objective conduct and subjective knowledge. "After review, the prosecutor believes that from January 2018 to September 2021, Chen Mouguo and others set up a website and used foreign exchange trading methods to collect foreign currency from overseas accounts and pay RMB with domestic accounts for foreign exchange trading for profit, with a total amount of 220 million yuan in illegal operations.
Guo Mouzhao, as the builder of the exchange website, has constituted the crime of illegal business operation, and he provided technical assistance in the criminal gang, and did not participate in specific business activities and the sharing of illegal gains, and can be found to be an accomplice; Liang Mouzuan provided a large number of bank accounts to Fan Mouwei and others, and Zhan Mouxiang also provided identity information for Fan Mouwei and others to register a virtual currency trading account for the transactions involved in the case, and made a profit from it, although they did not directly participate in the illegal trading of foreign exchange, it can be proved that the two have a general understanding of helping information network criminal activities, so they were convicted and sentenced for the crime of aiding information network criminal activities. Chen Mouguo and others handled a separate case.
On February 11, 2022, the Baoshan District Procuratorate prosecuted the above-mentioned persons involved in the case.
"In this case, criminals used the anonymous transactions, decentralization, and borderless characteristics of virtual currencies to transfer assets across borders, which exacerbated the harm of financial crimes. "We will strengthen communication and cooperation with foreign exchange management departments and public security organs to jointly study and solve new situations and new problems in the handling of cases, and severely crack down on such new foreign exchange crimes." ”
Source: Procuratorate Daily