New Audit Report Reveals Rise in Covert Chinese Financial Corruption in Crypto

New Audit Report Reveals Rise in Covert Chinese Financial Corruption in Crypto

Viktoriya Chernenko
2 min read

Unveiling New Forms of Corruption in China using Crypto

Recently, Auditor General Hou Kai released a report during a conference, detailing the audit of the central budget execution and other fiscal revenues and expenditures for the year 2023. The report highlighted that since May 2023, over 310 major disciplinary and legal violation clues were identified and forwarded for further action, involving more than 1,200 individuals. These corrupt activities have become increasingly concealed, with examples including senior officials in financial regulatory departments leveraging their positions to support specific private enterprises, receiving substantial sums of money and equity in return, and hiding the origins of these funds through virtual currency transactions.

These new corruption techniques exploit advancements in information technology and regulatory loopholes, making such activities more challenging to detect. The report emphasized that these actions not only harm national interests but also impede policy implementation, particularly at the grassroots level, where the nature of corruption is severe.

The publication of this audit report serves as a reminder to all sectors of society to remain vigilant against new and hidden forms of corruption. It calls for strengthened regulatory and legal frameworks to effectively combat such illegal activities.

Key Takeaways

  • The audit report reveals new forms of corruption, including the use of virtual currencies to conceal fund sources.
  • Senior financial regulators use technology to hide illicit funds, such as through virtual currency transactions.
  • Corruption is becoming more concealed, involving over 1,200 individuals and 310 clues to major issues.
  • Collusion between government and business forms interest groups, leading to regional corruption.
  • Innovative corruption techniques include withdrawing and then depositing funds, using relatives' accounts, and other technical methods.


The audit report's exposure of sophisticated corruption tactics, including the use of virtual currencies, has significant implications for financial regulators and tech firms in China. This situation is likely to prompt increased scrutiny and legal reforms in the short term. In the long term, it may lead to enhanced technological surveillance and stricter financial controls to combat corruption, reshaping regulatory landscapes and potentially imposing increased compliance burdens on the tech sector.

Did You Know?

  • Virtual Currency:
    • Explanation: Virtual currency refers to digital assets used as a medium of exchange, often operating independently of a central authority. Examples include Bitcoin and Ethereum. These currencies are decentralized and can be used for transactions anonymously, making them attractive for illicit activities like hiding the source of illegally obtained funds.
  • Collusion between Government and Business:
    • Explanation: This term describes a situation where government officials and business entities collaborate to exploit their positions for personal or collective gain. This often leads to corruption and can result in the formation of regional or sector-specific monopolies or cartels, distorting market competition and economic fairness.
  • Withdraw-then-Deposit Technique:
    • Explanation: This method is used to obscure the origin of funds, commonly employed in financial fraud or corruption. It involves withdrawing funds from one account and subsequently depositing them into another, often through multiple intermediary accounts, to create a complex trail that is difficult to trace back to its original source. This technique complicates audits and investigations, making it harder to detect illegal financial activities.

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