Attorney Shao Shiwei | Real Case Study | Consequences of Private Currency Exchange: Frozen Bank Accounts, Wanted Status, and Suspected Fraud...

Introduction:

Some individuals, considering that official channels such as banks involve high handling fees, long processing times, and the requirement to visit designated branches, opt for private currency exchange.

This is particularly common among friends living abroad for extended periods, such as those conducting business overseas or international students, who frequently encounter situations involving mutual currency exchange among acquaintances.

However, Attorney Shao has recently received numerous inquiries regarding frozen bank accounts resulting from private currency exchanges. Therefore, it is deemed necessary to provide legal education on the potential legal risks associated with private currency exchanges. (Note: This article shares real cases, but certain details such as countries, names, and occupations have been altered to protect the privacy of the parties involved.)

Lili has lived in Thailand with her mother for many years. Her mother operates a stall selling egg-filled pancakes in Bangkok's Chinatown, and the business has always been prosperous.

One day, Lili saw a message in a WeChat group from someone urgently seeking to exchange Thai baht equivalent to RMB 150,000, offering an exchange rate slightly higher than the bank rate. Having engaged in private exchanges several times before, Lili saw an opportunity to profit from the exchange rate difference and added the individual on WeChat. After agreeing on a time and location, Lili handed over the Thai baht equivalent to RMB 150,000 to the counterparty, who agreed to transfer the RMB directly to her father's domestic bank account in China.

Unexpectedly, a few days later, her father, residing in Location A in China, informed her that his bank card had been frozen. At this point, Lili discovered that her own card had also been frozen. Lili asked her father to inquire at the local bank about the situation. The bank stated that the funds received in her father's account were linked to telecommunications fraud, and the freezing authority was the Criminal Investigation Detachment in Location B. Her father then visited the local police station to ask how to unfreeze the card. The police station explained that since the freeze was imposed by Location B, only the public security authorities in Location B could lift it.

As the frozen account was her father's salary account, he hurriedly traveled 2,000 kilometers from Location A to Location B to meet with the investigating officer.

The investigating officer informed him that out of the RMB 150,000 received, RMB 80,000 consisted of proceeds from telecommunications fraud. A victim had reported the case in Location B. Furthermore, due to the transaction history between the father and Lili, Lili's card was also frozen.To unfreeze the cards, full restitution of the RMB 80,000 defrauded from the victim was required.

Upon hearing this, the father refused: "This money was received by my daughter in exchange for currency. She gave genuine Thai baht to the counterparty. We had no knowledge that the funds received were involved in fraud. We are also victims; why should we compensate another party RMB 80,000 out of our own pocket? This amount represents my entire annual salary."

Due to the persistence of the father and daughter, their bank accounts remain frozen after more than three years.

[Attorney Shao's Analysis]

Such cases involving account unfreezing are actually very common and not isolated incidents.

Although the normal logical principle is,"If you believe I am guilty, you must provide evidence to prove it,"in the context of unfreezing bank accounts, the prevalent approach is often,"Because I believe you are guilty, you must return the illicit gains; otherwise, your account will remain frozen."

In this case, although more than three years have passed, the balance in the father's frozen bank account has not been deducted. Generally, criminal cases involving victim reports, from arrest to judgment, take only about half a year. Therefore, the situation in this case suggests either that the fraudsters or those directly assisting them in laundering funds have not been caught, or that although they were caught, they lack the funds to compensate the victims. Regardless, this at least indicates that the father's account was not a primary account directly involved in the crime. Otherwise, the judicial authorities could have directly deducted the funds to compensate the victim or even criminally detained the father.

Bao'er was pursuing graduate studies in Australia. During a holiday break back in China, while relaxing at home and browsing her phone, she received a friend request from someone in an international student chat group who wanted to exchange Australian dollars. They agreed on the exchange rate and amount. Bao'er calculated that she could earn a difference of RMB 3,000, enough to buy a bottle of La Mer cream for her mother, so she proceeded with the transaction. After the holiday, Bao'er returned to Australia and resumed her busy academic life.

However, shortly thereafter, Bao'er received a call from the police in Location C, informing her that:You are listed as a fugitive involved in telecommunications network fraud. Please return to China as soon as possible to undergo investigation.(Bao'er felt as if struck by lightning!)

Upon inquiry, Bao'er learned that the RMB 50,000 she received for facilitating the currency exchange had been frozen by police in three different locations, and the frozen balance showed a negative value of tens of thousands. It was then that Bao'er realized, albeit belatedly, that the person who sought her out for the exchange was problematic. However, when she attempted to contact this person for clarification, she discovered that she had already been blocked.Yes, the counterparty had disappeared.

Bao'er was deeply conflicted about whether to return to China. She was about to graduate and had planned with her boyfriend to work in Australia after graduation, having already received job offers from several companies. If she returned to China, she might be criminally detained immediately and would certainly be unable to leave the country in the short term. However, leaving the matter unresolved meant her cards would remain frozen, causing significant inconvenience. Additionally, her parents were still in their hometown in China; surely she could not stay in Australia forever without returning? Torn by these conflicting considerations and too afraid to tell her family, she felt extremely distressed.

More serious than the previous case, the party involved faces not only the issue of frozen cards but also potential suspicion of the crime of aiding information network criminal activities ("Bangxin" crime) or the crime of concealing or disguising the proceeds of crime ("Yanyin" crime)!

Attorney Shao has mentioned these two charges multiple times in previous articles (→ "Can the Crime of Concealing Proceeds Be Reclassified as Aiding Information Network Criminal Activities? Which Carries a Lighter Sentence?》《Case Analysis | Tactics and Traps of the Crime of Aiding Information Network Criminal Activities》《A Comprehensive Review: Potential Charges for Providing Accounts to Facilitate Transfers for Others"). The crime of aiding information network criminal activities carries a maximum sentence of three years, while the crime of concealing or disguising proceeds carries a maximum sentence of seven years. How Bao'er will be handled upon her return to China depends on the specifics of the victim's case involving fraud.

Xiao Zhi's wife is from Macau, so Xiao Zhi moved to Macau to settle down several years ago. Xiao Zhi has a childhood friend named Da Xiong, and they have always had a close relationship. Xiao Zhi's wife often jokes that Xiao Zhi and Da Xiong are truly soulmates.

However, Da Xiong has a bad habit: he loves gambling. Every year, he travels from mainland China to Macau casinos several times, and Xiao Zhi occasionally helps him exchange Macau patacas. On one occasion, Da Xiong visited Xiao Zhi and his wife's home in Macau. He asked Xiao Zhi to provide his receiving account details, stating that he had arranged for someone to transfer RMB 500,000 directly into Xiao Zhi's account. Upon receipt, Xiao Zhi was to give the corresponding amount in Macau patacas to Da Xiong. Da Xiong had good luck and won RMB 1 million at the casino! He then returned to mainland China.

Later, after a considerable period, Da Xiong did not contact Xiao Zhi. Additionally, Xiao Zhi discovered that his bank card, which had previously received funds for Da Xiong, had been frozen. Attempts to contact Da Xiong via phone or WeChat were unsuccessful; it was as if he had vanished. Through various inquiries, Xiao Zhi learned that Da Xiong had been criminally detained by the police in Location D for fraud.

[Attorney Shao's Analysis]

After communicating with the client, there is no doubt that Xiao Zhi is suspected of fraud. Why is this the case? (Xiao Zhi placed unquestioning trust in his friend [facepalm].)

How was the payment received? Xiao Zhi handed his mobile phone to Da Xiong. Da Xiong changed Xiao Zhi's WeChat display name to "President Zhao," changed the profile picture, and added a contact named "President Li." In the conversation between "President Zhao" and "President Li":

President Zhao said, "Just transfer the money to this account (Account Name: Xiao Zhi, Bank: XX Bank, XX Branch, Card Number: XXX), and the matter will definitely be handled properly." President Li replied: "OK, thanks, Brother!"

The reason Da Xiong was arrested was that the aforementioned "President Li" in the WeChat conversation reported to the police: "I was previously arrested by the police for drunk driving and released on bail pending trial. The judgment has now taken effect. At the time the case initially occurred, fearing a criminal record, I sought help through introductions and found a person named Da Xiong. Da Xiong claimed he could use connections to ensure I would not have a criminal record, but required RMB 500,000 for 'greasing palms.' Now I realize I was defrauded by this person." Da Xiong also provided chat records between himself and "President Zhao."

 In this case, if Xiao Zhi and Da Xiong are determined to be joint offenders in the crime of fraud, even as an accessory, Xiao Zhi would face a sentence of more than three years, while Da Xiong would undoubtedly face a sentence of more than ten years.

Although Attorney Shao handles various cases daily and has become accustomed to many unusual situations, one cannot help but occasionally remark: They say fiction originates from reality, but reality is often even more absurd.

04

Based on Attorney Shao's experience in handling cases, in recent years, and especially since last year,the state's crackdown on illegal foreign exchange trading has intensified.

The public security organs have been carrying out the "Card Breaking Campaign" for several years. Receiving illicit funds through private currency exchange makes itdifficult to claim status as an innocent victim, because private currency exchange itself is illegal.At best, it results in administrative penalties; at worst, it leads to criminal liability.

However, although receiving illicit funds unfortunately led to the freezing of the bank card by public security authorities, it is crucial to resolve the matter promptly. Relevant evidence must be provided to the investigating officer to demonstrate that the purpose of receiving the funds was currency exchange, and not that the recipient subjectively knew the upstream funds were illicit proceeds and still assisted upstream criminals in laundering money.The most important aspect of unfreezing a bank card is to first exclude one's own criminal risk;this is the prerequisite. Only then should one communicate with the investigating officer regarding the unfreezing issue.

If your bank card is frozen, what should you do? For practical solutions, please refer to this article → "What to Do If Your Bank Card Is Frozen? How to Unfreeze It Promptly?》。

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