Chinese Police Warn of Rise in CBDC-themed Money Laundering Schemes

Chinese police say there has been an increase in CBDC-themed money laundering schemes as the digital yuan rollout continues.

Per the Dushichen Newspaper Agency (va JSChina), officers in Suining, Sichuan Province, stepped in to thwart a scammer.

Detectives explained that a mobile phone store owner surnamed Wang came to the Suning Chengxi Police Station on November 3.

Wang told officers that their bank card had “been frozen by the police” in another part of the nation.

The police launched an investigation and found that on November 2, a man came visited Wang’s store and asked if he could use digital yuan tokens to buy handsets.

Wang said they agreed to the man’s request, and that the man said he wanted to buy two Apple iPhones.

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The two parties then agreed on a fee of around $2,670 for the two handsets, and then “added each other” as WeChat contacts.

But things took a suspicious turn, police said, when the man then overpaid for the handsets by over $140.

Wang then proceeded to send the “extra” $140 to the man’s Alipay account, thinking the customer had made a mistake.

The next day, the same customer returned to the mobile phone store, saying that he wanted to buy two more mobile phones – using the same payment method.

This arose Wang’s suspicions, so the store owner went to a local bank branch to check on the status of the payment.

The bank explained that the customer’s digital yuan wallet had been frozen by the police in Henan.

Officers then contacted the store’s CCTV surveillance provider, identified the customer, and then proceeded to make an arrest.

The customer, surnamed Wei, confessed that he had used his digital yuan wallet to “help other people launder money.”

Officers said Wei had used similar methods to “commit 14 fraudulent acts” in other cities, duping vendors out of over $28,100.

A rural part of Suning, Sichuan Province, China. (Source: landagent [CC BY_SA 3.0])

China’s CBDC: Digital Yuan Money Laundering on the Rise?

Police called on the public to avoid individuals who ask them to make “digital renminbi exchange” transactions.

They added that the public “should be wary of” attempts to obtain their login details and wallet passwords.

And officers said there had been a rise in “criminals impersonating bank and public security agency staff to obtain [CBDC] wallet passwords.”

Police began noticing a rise in CBDC-related fraud cases in 2021, with a major case of digital yuan-powered money laundering uncovered in March last year.

Also this week, Wuhan police arrested 27 individuals suspected of running a $140 million crypto-powered money laundering operation.

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