An illegal online gambling payment platform was set up in the Philippines, 11.8 billion was laundered, and more than 66 million was earned. The main culprit was sentenced to 13 years in prison!

An illegal online gambling payment platform was set up in the Philippines, 11.8 billion was laundered, and more than 66 million was earned. The main culprit was sentenced to 13 years in prison!

In 2016, Wang worked at a gaming company in the Philippines and was exposed to the Internet payment business. He found that there was a lot of profit in overseas QR code payment, so he spent 40,000 yuan to buy the backend source code of the payment system online, rented a server from Microsoft in the United States for data storage, and tried to do overseas payment business.

In February 2017, Wang found his high school classmates Shan and Gu, and together they went to the Philippines to set up Duobao Payment Company to engage in “fourth-party payment” business. Shan was responsible for technology and Gu was responsible for operations.

Wang targeted illegal websites such as gambling and private lotteries in his business development. Since third-party platforms such as Alipay and WeChat Tenpay have strict regulatory mechanisms, illegal websites cannot access them, which became a business opportunity for “Duobao Payment”.

Duobao purchased a large number of business licenses and account opening permits of companies that were not actually operating through illegal means, and bound bank cards to third-party payment platforms such as Alipay, WeChat, Taobao, Pinduoduo, and Suning.com to open “merchant accounts”. It then connected Philippine gambling websites with third-party payment platforms through payment codes to provide top-up services for gamblers. This type of business is known in the industry as “fourth-party payment.”

When a gambler wants to top up on a gambling website, Duobao Payment will pass the information to a third-party payment platform, which will generate a payment code. After the gambler scans the code and pays, the third-party platform will transfer the money to the “merchant account” applied for by Duobao Payment. Duobao Payment will then transfer the money from the “merchant account” to the gambler’s gambling platform account, thus completing the gambling fund top-up. If the gambler wants to withdraw cash, he or she can do the reverse operation.

In more than three years, Duobao Payment has purchased more than 6,000 sets of company information and opened 1,174 merchant accounts. It has grown from a profit of more than 7 million yuan a year when it first started to an annual profit of nearly 40 million yuan. The office location has also moved from a private house in Manila, Philippines to a high-end office building.

As of the time of the incident, the amount involved in Duobao Payment reached more than 11.8 billion yuan. By charging 0.14%-0.3% in handling fees and account opening fees from the amount recharged by gamblers, the “total profit” was as high as more than 66 million yuan. Wang personally also made an illegal profit of more than 40 million yuan.

After trial, the Intermediate People’s Court of Yiyang City, Hunan Province sentenced Wang to 13 years in prison and a fine of 43.29 million yuan for illegal business operation. The other gang members were sentenced to prison terms ranging from 8 years to 1 year and 6 months and fines of varying amounts.

Article 225 (3) of the Criminal Law of the People’s Republic of China stipulates that anyone who illegally operates securities, futures, or insurance business, or illegally engages in fund payment and settlement business, without the approval of the relevant state authorities, shall be guilty of illegal business operation.

Upon investigation, it was found that after the defendant built the Duobao payment platform, he obtained a payment channel by opening merchants on the third-party payment platform, and carried out technical docking with illegal websites such as gambling and the third-party payment platform respectively, so that the fund recharge information of the gambling website was connected with the third-party payment platform, and a payment channel was built between the gambling website and the third-party payment platform, so that the fund recharge and withdrawal of gamblers and gambling websites could be completed, realizing the payment settlement of funds.

The defendant’s illegal payment and settlement activities without the approval of the financial regulatory authorities and without obtaining a “Payment Business License” are in line with the provisions of Article 1 (4) “Other circumstances of engaging in fund payment and settlement business” of the “Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Illegal Engagement in Fund Payment and Settlement Business and Illegal Foreign Exchange Trading”, and with reference to Article 18 of the “Minutes of the Symposium on Handling Internet Financial Crime Cases” of the Supreme People’s Procuratorate, it should be determined as the crime of illegal business operation.