Money launderers are using Chinese online shopping sites to funnel billions of dollars to offshore gambling accounts using fake transactions
Financial Times : Tweets: @briefnorris and @rshorsey Tweets: Michael Norris / @briefnorris : Sketchy $PDD: “Several gamblers said they had used $PDD to transfer money. Zhao Yongdong, who became addicted to online games during the lockdown, said he had transferred RMB 110,000 through Pinduoduo purchases.” https://www.ft.com/... Richard Horsey / @rshorsey : Another dimension of Asia's illicit online gambling industry, estimated to be worth $24bn last year. Lucrative revenues driving shift to online gambling in Myanmar's borderlands. Also why shady outfits trying to build multi-$bn “new cities” in these areas https://www.ft.com/...
Context & Ripple Effects
This is the latest turn in a decade-long laundering arms race. The template goes back at least to networks of dummy online stores posing as household-goods sellers built to hide gambling payments from card issuers — what has changed is that the disguise now runs through mainstream consumer platforms like Pinduoduo, with gamblers themselves moving money by buying real goods, as in gambler Zhao Yongdong's RMB 110,000 in purchases used as transfers.
The demand side was set years earlier: Beijing's inability to curb its citizens' online gambling appetite pushed casinos offshore to Cambodia, the Philippines and Myanmar's borderlands, while Chinese police have already shown willingness to strike the payment rails themselves, shutting down one platform that moved $1.5B in crypto.
First-order effects
- Pinduoduo faces immediate compliance and reputational exposure: its transaction volume is being repurposed as a settlement rail for an industry estimated at $24bn, forcing tighter scrutiny of purchase patterns on the platform.
- Chinese regulators and payment processors get a named, domestic chokepoint to police — fake-transaction detection moves from niche merchant fraud to a gambling-laundering enforcement priority.
Second-order effects
- As e-commerce rails tighten, laundering pressure rotates to less-policed channels — the earlier crypto-platform shutdown shows operators already alternate between fiat-disguise and token routes, so each crackdown shifts mix rather than shrinking flows.
- Offshore gambling hubs documented in the coverage — Philippine POGO-style operations and Myanmar's Kokang scam economy detailed in the investigation of Chinese gangs, officials and the junta — absorb displaced demand, deepening the crime-and-money-laundering problems those jurisdictions are already reporting.
Third-order effects
- If everyday consumer platforms keep doubling as payment fronts, the structural line between legitimate commerce infrastructure and illicit finance blurs, pushing regulators toward transaction-surveillance mandates on marketplaces rather than just banks.
- The pattern points to enforcement migrating upstream to the borderlands hosting the casinos — meaning the endgame is less about Chinese payment apps than about which jurisdictions will tolerate the industry, as the Philippines' experience suggests tolerance carries its own costs.
The trend: As China walls off formal payment channels from gambling, illicit funds migrate into ordinary consumer platforms and permissive borderland hubs, making laundering a moving target across e-commerce, crypto, and Southeast Asian jurisdictions.