This year, gold prices have risen by 30%, making gold an especially attractive investment as a safe-haven asset. Data from the World Gold Council shows that in China, the world's largest gold-consuming country, demand for gold bars and coins reached its highest level in a decade in the first half of this year. However, the difficulty of tracking gold, its portability, and high liquidity also make it a tool for fraud and money laundering in China.

Gold has become a tool for money laundering and fraud.

According to Bloomberg, jewelry stores across China have been receiving mysterious, unusually large orders for gold bars, with customers requesting the gold be shipped to remote addresses within the country.

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

In Shaanxi Province, another woman was scammed out of 38,000 RMB by an online account impersonating a relative. Five minutes after she transferred the funds, a money laundering group used it to buy gold.

These scams are among the key focuses of Chinese police and security departments this year, as they continuously issue announcements warning the public about how fraudsters use gold to transfer assets and launder money.

These meticulously designed schemes also involve hiring people as couriers to help pick up gold from stores or the homes of scammed victims. These individuals receive a small commission but help to conceal the identity of the fraudsters. Police warn that couriers could become accomplices in money laundering.

Economic downturns and a lack of financial awareness are reasons for the increase in fraud.

Due to the economic downturn, China lacks employment and investment opportunities, leading people to seek other ways to make money. For fraudsters, gold is attractive because it is hard to track and provides a simple method for laundering money.

Michael Levi, a criminology professor at Cardiff University in Wales, said: "Pandemics and economic downturns increase fraudulent activities, as people facing economic decline become more desperate and susceptible to temptation. The real estate slump in China has intensified people's despair as they see their money and dreams vanish."

Other reasons for the rise in fraud include fear of missing out on opportunities and a lack of financial awareness. People believe that investing is the only way to get rich, which makes them easily influenced by the plots of fraudsters.

According to a report from the People's Bank of China, the number of people convicted of money laundering across China 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, stated that inquiries from individuals accused of money laundering have increased fivefold over the past two years.

Gold has high value, is portable, and has liquidity. When the economy is unstable, investors and criminals often convert their funds into more stable stores of value, thereby increasing the risk of money laundering.

This article about rising gold prices and gold bars becoming tools for fraud and money laundering in China first appeared in Chain News ABMedia.