A report by Taiwan’s intelligence forces accused China of using casinos and banks run by shell companies to coerce Taiwanese military personnel into espionage and defection.
Taiwan has accused China of using underground casinos and banks to conduct espionage, alleging a sharp increase in related prosecutions.
According to a report by Taiwan’s state intelligence forces, retired military members are recruited to establish shell companies operating these businesses, which are then used to target active-duty personnel. "China recruits retired Taiwanese service members to establish shell companies as footholds, and operates underground banks and casinos, to coerce or entice active service members to gather military intelligence, sign pledges to demonstrate loyalty, or pilot military helicopters to defect to China,” the report states.
This alleged strategy focuses on cultivating insiders to access sensitive information, with promises of debt relief or financial incentives used to target vulnerable individuals. Prosecutions for Chinese espionage have reportedly risen sharply, from 3 cases in 2021 to 15 in 2024, with individual prosecutions increasing from 48 in 2023 to 64 in 2024 (excluding cases under the Anti-Infiltration Act).
The report also identifies other alleged Chinese tactics, including using gang groups, temples, front companies, and local associations. Gang members are reportedly offered debt relief for recruiting financially troubled servicemembers for intelligence gathering and potential disruptive activities. Temples are allegedly used to approach servicemembers under the guise of religious activities, pressuring them to provide classified documents or produce pro-China propaganda. Online platforms are also reportedly used to offer loans in exchange for intelligence or recruitment. “Those individuals are coerced or enticed to film videos of defecting to China while wearing military uniforms and holding the Chinese five-star flag. They are also asked to hand over military defense planning documents...China instructs Taiwan’s local associations to establish the United Front Work Committee in Taiwan,” the report adds.
Taiwanese authorities have reportedly responded with increased counterintelligence efforts, leading to more prosecutions and convictions. Collaboration between agencies and increased public awareness have also reportedly improved threat assessment and response.
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