The price of gold keeps rising, and gold bars have become tools for fraud and money laundering in China.

This year, the price of gold has risen by 30%. As a hedge asset, gold is a particularly attractive investment. Data from the World Gold Council shows that in China, the world's largest gold consumer, demand for gold bars and coins in the first half of this year reached the highest level in ten years. However, the difficulty of tracking, portability, and high liquidity of gold also make it a tool for fraud and money laundering in China.

Gold becomes Money Laundering and fraud tools

According to Bloomberg, jewelry stores across China have been receiving mysterious and unusually large orders for gold bars, with customers requesting the precious metal be shipped to distant domestic addresses.

An online romance scammer convinced a woman in Hangzhou to purchase gold bars worth 19 million RMB (approximately 2.6 million USD) as part of an investment plan. She never saw the gold bars, her money, or her so-called love interest again.

In Shaanxi Province, another woman was deceived out of 38,000 yuan by a fake relative's online account. Five minutes after she transferred the funds, a Money Laundering group used it to buy gold.

These scams are one of the focus of the Chinese police and security departments this year. They continue to issue warnings to the public about how scammers use gold to transfer assets and Money Laundering.

These carefully designed schemes also involve hiring individuals as couriers to help retrieve gold from stores or the homes of the deceived victims. These individuals receive a small commission but help conceal the identity of the fraudsters. Authorities warn that couriers could become accomplices in Money Laundering.

The economic downturn and lack of financial awareness are the reasons for the escalation of fraud.

Due to the sluggish economy, China lacks employment and investment opportunities, leading people to seek other ways to make money. For scammers, gold is very attractive because it is difficult to trace and provides a simple method for Money Laundering.

Michael Levi, a criminology professor at Cardiff University, said: "Epidemics and economic downturns will increase fraudulent behavior, as people facing economic downturns will become more desperate and difficult to resist temptation. The sluggishness of China's real estate market has exacerbated people's desperation as they see their money and dreams disappear."

Other reasons for the increase in fraudulent activities are the fear of missing opportunities and lack of financial awareness. People believe that investment is the only way to get rich, which makes them easily influenced by fraudster storylines.

According to the report of the People's Bank of China, the number of people convicted of Money Laundering in various parts of China has increased from 13,900 in 2019 to about 69,200 in 2022, a fivefold increase.

Fu Chengchen, a criminal defense lawyer specializing in Money Laundering in China, said that in the past two years, he has received five times more inquiries from individuals accused of Money Laundering.

Gold has high value, portability, and liquidity. When the economy is unstable, investors and criminals often convert their funds into more stable forms of value storage, thereby increasing the risk of Money Laundering.

This article, the price of gold keeps rising, and gold bars have become tools for fraud and money laundering in China, first appeared in Chain News ABMedia.