Chinese gamblers have increasingly switched to using digital currencies to process funds to illegal gambling and casino platforms abroad. Due to the ‘anonymity’ property of cryptocurrency, security experts in the country find it difficult to trace such transactions. As a result, large funds move out of the country through cryptocurrencies.
This has significantly heightened the outflow of a significant amount of money in the country on a yearly basis.
A Threat to Chinese Economy
Speaking on the illegal transactions, a senior official at the Ministry of Public Security, Liao Jinrong, said that at least one trillion in Chinese Yuan leaves the country yearly to illegal gambling and casino platforms. This amount roughly translates to over $145 billion outflows of funds by Chinese gamblers. As Jinrong explained in a recently held in Beijing on payment and clearing, this is not healthy for the Chinese economy.
The security expert warned that such a massive outflow of funds will possibly disrupt the stability of the Chinese economy and equally raise more financial security risks. The worst part being that these funds are sent to illegal gambling and casino platforms outside the country through cryptocurrencies. Security practitioners find it challenging to track these transactions in order to fish out the people or group of people behind it.
While emphasizing on the possible risks, an official from Tsinghua University’s National Institute of Financial Research said:
“The volume and speed of cross-border capital flows are unprecedented. This will not only result in sustained fluctuations in major world currencies but will also lead to higher volatility in global financial markets. Therefore, we must be prepared for potential risks.”
Cracking Down on Illegal Gambling and Casino Platforms
For increasing outflow of funds, Jinrong blamed poor security measures in many payment institutions as the major factor. He argued that most institutions do not operate with an adequate measure to inspect suspicious transactions and risk controls. He opined that some institutions in the payment industry are in collaboration with these gamblers.
Having encouraged the payment industry to raise their security measures, Jinrong acknowledged that enforcing the use of real names in opening payment accounts at non-financial platforms, and other measures, were effective in calming the rate at which these funds were moved out in the previous years.