Operator of underground, international financial institution pleads guilty to operating unlicensed money transmitting business

 

Date: October 7, 2020

Contact: newsroom@ci.irs.gov

San Diego – Liang Zhou pleaded guilty in federal court today to operating an unlicensed money transmitting business. His guilty plea is the third in this ongoing investigation targeting operators of unlawful underground financial institutions that transfer money between the United States and China, thereby circumventing domestic and foreign laws regarding monetary transfers and reporting, including United States anti-money laundering scrutiny and Chinese capital flight controls.

As part of his agreement to plead guilty, Zhou agreed to forfeit $446,330 to the United States as property involved in the operation of his unlicensed money transmitting business.

As admitted in the plea agreement entered today before U.S. Magistrate Judge Karen S. Crawford, Zhou sold hard currency in U.S. dollars that he collected from various, and occasionally unknown, third parties. His customers were typically individuals with bank accounts in China who could not readily access cash in the United States due to capital controls that cap the amount of Chinese yuan that an individual can convert to foreign currency. Often these customers needed the money to gamble at the casinos in Las Vegas. Upon receiving U.S. dollars, the customers would transfer from a Chinese bank account an equivalent value in yuan, over their mobile phones in the United States, to a separate bank account in China designated by Zhou.

Sentencing is scheduled for January 8, 2021 before U.S. District Court Judge Dana Sabraw.