[forkLding]

Just a note: The money-laundering system this criminal is part of is called a 地下钱庄 in Chinese or "underground banks" (https://fintrac-canafe.canada.ca/intel/advisories-avis/bank-...), originally started in the 1980s in Mainland China when free-market reforms brought non-regulated "banks" (more just a group of people calling themselves a bank) and informal "loan" companies/loan sharks, they were soon co-opted by corrupt officials to bring money out of the country and since about 2018 any Chinese citizen who wishes to bring money for big purchases like real estate investment outside of China uses a form of underground banking since China puts an annual limit of $50,000 USD on money that can be taken out of the country (https://nhglobalpartners.com/moving-money-in-and-out-china-r...).

Technically speaking, if you want to exceed the limit, you can send in an application form to explain and hopefully get approved to take out more money than that $50,000 limit but the original intent of this law was to restrict money flowing out of China and it is very hard to get approved beyond the limit.

[somebody3]

It can be simpler than that even without banks. My own Chinese family “launders” money using similar mirror transactions, but a bit simpler. They often have cash coming from US restaurants and rentals, and they want to send that cash to their family in China, sometimes to invest into Chinese businesses. So first they find a Chinese person in Los Angeles (let’s call him Mr X Lee) who wants to receive cash from his family in China (let’s call them Lee family). My family gives Mr X the cash, at the same time asking his Lee family in China to give the same amount of cash to my relatives in China.

[chaostheory]

How can this still survive the constant crackdowns from Xi? The reason I ask is because I have relatives trying to move money out, and it seems near impossible now except for the allowable yearly amount, which is low.

[hbbwebw]

If you’re willing to pay there are always ways to move value out. For example, buy $1M worth of t-shirts inside China. Sell for a 5% loss outside of China but say you sold at a 20% loss. Now you have money outside of China. You had to pay a decent fee and have a partner outside of China to do it but hey, that’s what gangs are for.

[nl]

Ever wonder why both Chinese investors and the Saudi sovereign fund were prepared to pay huge premiums in valuations when investing in companies, even though it was apparent it was likely they'd make a loss?

This is it. If you have $100M inside China, can take a 30% loss but end up with $70M in the US that isn't a bad deal.

[helen___keller]

> Ever wonder why both Chinese investors and the Saudi sovereign fund were prepared to pay huge premiums in valuations when investing in companies, even though it was apparent it was likely they'd make a loss?

This is totally unrelated. If you’ve got money outside the country you’ve already won, the point is that Chinese people can’t freely participate in foreign funds.

For example, many funds (sequoia, light speed, etc) maintain separate independent China funds to which the Chinese are restricted. It should be obvious to say, but a Chinese person cannot easily get wealth out of the country using a Chinese investment fund.

> If you have $100M inside China, can take a 30% loss but end up with $70M in the US that isn't a bad deal.

That’s not what GP is describing. GP is describing fraud wherein you lie about your losses (take 5% loss, report 20% loss). Everything you claim you earned goes back to China, but the gap between reported losses and true losses stays outside the country.

Note that you still want to be investing in a somewhat successful business for this scheme, to minimize loss of capital.

[nl]

> For example, many funds (sequoia, light speed, etc) maintain separate independent China funds to which the Chinese are restricted.

Indeed. And look at the valuations those specific funds pay.

> It should be obvious to say, but a Chinese person cannot easily get wealth out of the country using a Chinese investment fund.

It's not easy for a rich person to move $100M either.

[fragmede]

What challenges are there in moving that kind of money around? I imagine if you're that rich you have a private banker that deals with any AML reporting that has to be done on $100M

[refurb]

I mean there are rules but the corruption is rampant.

I know folks who set up companies who export. They get an invoice from a US company for $1M in goods, then cancel after sending “the company” money.

[armini]

Why don’t they use crypto to take money out?

[bigiain]

Because despite what crypto MLM shills claim their “market caps” are, there’s no way to turn any amount of Bitcoin into serious amounts of money like hundreds of millions of actual dollars. Any attempt to liquidate that sort of dollar value out of crypto will quickly show what a sham the whole pyramid scheme of inflated value is.

[bhawks]

Tesla sold nearly a billion dollars of Bitcoin in Q2 2022 and took home over 60 million of profit.

https://blockworks.co/tesla-sells-bitcoin-for-profit-still-p...

I think most people would consider a billion dollars as a serious amount of money. Inflation isn't that bad yet ;)

[from]

Tether volumes on Tron and Ethereum would suggest that perhaps you may be incorrect. Probably not hundreds of millions of dollars at once if you aren't working with legitimate OTC desks who can handle that size but even if you work with the more sketchy p2p types it is possible to do 7-8 figure transactions.

[rahimnathwani]

IIRC until recently over 20% of Bitcoin's hashing was performed in China. Spend CNY to buy electricity. Get Bitcoin. Sell Bitcoin for USD.

[csomar]

China had more than 50% of Bitcoin's hashing rate. Most of it probably was to launder CNY out of the country. I suspect there is still some underground mining despite the clampdown. The days of large scale mining seems to be over, though.

[nomay]

The authorities actively hunt down those who do it

[cm2187]

With the massive trade surplus that China runs, why is it concerned about people taking currency out of the country? Is it purely a question of control of the population?

[powerapple]

Not only taking currency out of the country, the same limit applies to bringing money into the country. The control is over foreign exchange. If you have a valid reason, buying a house abroad, going to study, go traveling, you can exchange foreign exchange beyond the $50k limit.

I'd say it has something to do with the policy placed when the country needed dollars in 70s and 80s, and no one is taking the risk of removing it. China doesn't want to free foreign exchange on Chinese Yuan, mainly because it has shielded its financial institutes from western hedgefunds attacks. The Chinese financial institutes are new, and not as sophisticated as the western counterparts, IMO, this has been something working well for China, and I would hope it can continue to serve this purpose.

[nomay]

The property market is way over-priced during the fast and furious two-decades quest to blow a credit tsunami.

Now that the credit tsunami looks to inexorablly ebb under its own weight, a looming population implosion, the party will have to prevent a collective cashing-out from the speculators they once rolled out the red carpet for. esp. in the form of offshore currency.

By trapping them in, to keep people from panic dumping.

[from]

The policy is pretty old at this point and there is no momentum behind changing it. It also helps curtail "hot money" (https://en.wikipedia.org/wiki/Hot_money) flows which can cause banking crises. Obviously there's the control thing you mentioned to keep elites in check.