A group of individuals in China has been sentenced by a court for engaging in money laundering using the country’s central bank digital currency, the yuan. According to local reports, three people from Yuecheng District, Shaoxing City, Zhejiang Province have been handed prison terms ranging from seven to 16 months for their involvement in the illegal activity. The exact date of the trial was not disclosed.
The individuals involved in the money laundering scheme were only identified by their last names. They managed to launder 200,000 Chinese yuan (equivalent to $27,580) in digital form within four days in mid-September in Shaoxing. Another person was also arrested in connection to the case, but details regarding their fate remain unknown.
The group, led by Yuan, who had arrived in Shaoxing seeking work, discovered an opportunity to earn a commission by exchanging digital yuan with local businesses. Yuan, along with his girlfriend Zhang and their friend Kuo, collaborated to carry out the operations.
By offering commissions ranging from 1% to 1.5%, the gang persuaded merchants in various cities to convert digital yuan into cash. They utilized “overseas niche chat tools” to communicate with their superior. Zhang and Kuo received a commission of 0.5% for their involvement in the scheme.
Despite the limited acceptance of digital yuan by stores, the illegal activities of the gang were noticed by law enforcement agencies following abnormal digital yuan transactions among merchants. Prompt action led to the apprehension of the group members.
The digital yuan, which offers “controllable anonymity” according to officials from the People’s Bank of China, was exploited by the group for their criminal activities. While instances of digital yuan-related crimes are uncommon, a previous case in Shanghai in May 2023 involved eight individuals, including merchants, who were convicted for money laundering and fraud. The implementation of the scheme was aided by the ease of opening digital yuan accounts using only phone numbers.
Overall, the use of digital yuan for illicit activities poses a challenge for authorities, highlighting the need for robust prevention measures. The potential impact of digital yuan on the global financial landscape remains a topic of interest, with both positive and negative implications.