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Thursday, December 21, 2023

Threat to India from Chat and Wallet applications from People’s Republic of China (PRC)

Executive Summary

There is an eminent threat to India’s sovereignty through Chat and wallet applications originally from Peoples’ Republic of China (PRC). PRC is known to use these mediums in for not just misinformation and disinformation campaigns, but can also use the inbuilt wallet facility to remit money to agents working on behalf of the CCP, to destabilize democracies like India. Such applications, which is not limited to but includes WeChat and Alipay  can serve as a tool for extending Beijing agenda in a country perceived “not friendly” by the Chinese Communist party (CCP). The wallets are specially problematic as it can be used to transfer huge sums of money without the knowledge of concerned authorities like RBI or SEBI. This report delves into the details of such possible nefarious activities from the CCP in India.

INTRODUCTION

Peoples’ Republic of China’s dramatic rise has now become a more serious concern for the world. PRC has long posed a threat to world peace, and with ample economic and technological resources, its challenge has grown more serious. The world has seen how PRC’s Debt Trap Diplomacy has brought numerous countries to the brink of collapse, and also how it has taken an expansionist stance towards its neighbours. Moreover, we have recently seen PRC actively engage in Digital Warfare, under which a hostile country (PRC in this case) uses its technologies to damage the economic, political and social status of the other country using techniques like Data theft, disinformation and misinformation campaigns & ransomware attacks. In recent times, these are being used by the Chinese Communist Party (CCP) for money laundering and illegal fund transfer.

 

Therefore, this report is an attempt to understand the PRC’s WeChat wallet and its potential threat to India.

  1. PRC’s Digital War

There’s no doubt that PRC has made a significant technological advancement but with these, the advancement of its digital threat has also been lingering all over the world. There are multiple incidents of PRC based digital apps or websites stealing data or spreading misinformation. Moreover, with the arrival of PRC promoted digital wallets; the financial threats and attacks have also become part of their strategy.  Below are some vivid evidences of such PRC induced digital threat.

Disinformation in Taiwan, aided by WeChat:

https://www.npr.org/2019/12/06/784191852/taiwan-gets-tough-on-disinformation-suspected-from-PRC-ahead-of-elections

 

Misinformation activities in Canada, aided by WeChat:

https://www.voanews.com/a/PRC-accused-of-meddling-in-canada-s-elections/7026562.html

 

Money laundering in USA, supported by WeChat:

https://home.treasury.gov/system/files/136/2022-National-Money-Laundering-Risk-Assessment.pdf  [The U.S. Department of the Treasury in 2022 National Risk Assessments (NRAs) on Money Laundering (NMLRA) named WeChat as a Money Laundering Aid. (on Page 24)]

Role of WeChat, in aiding movement of black money for illicit Fentanyl trade in the US: https://www.theepochtimes.com/PRCs-role-in-illicit-fentanyl-running-rampant-on-us-streets_4967062.html

 

  1. WeChat Threat

When the PRC state-owned business, Tencent, first published WeChat in 2011, it was just a simple texting app. WeChat, however, rapidly expanded into a “mega-platform,” offering a tonne of helpful features in addition to its popularity. The list of services it provides includes public social media, food delivery services, Uber/Lyft-like functions, money transfers to friends, appointment scheduling for medical appointments, bill payment, conducting business conversations, and even using government services. As the app’s monopoly expanded, it has come to play a critical role in Chinese people’s lives. Aside from missing out on the convenience of all of its other features, “leaving WeChat means leaving social life in PRC,” even though it may sound exaggerated to someone who has never used the app.  But beneath its apparent simplicity and openness lies a darker side, one that the CCP closely monitors and controls: i.e. censorship. Beijing exerts significant pressure on Tencent to implement real-time censorship that is effective for both text and images posted to users’ shared moments on WeChat as well as in group and one-on-one chats. WeChat’s social features in particular have made it possible for technology to be used as a potent tool for tightening censorship and state control in PRC.

Nevertheless, these are domestic concerns for PRC. But if we look at the other aspects of WeChat and its wide user base along with its shadowy activities coupled with unnecessary and often widespread personal data stolen from the users, we can easily ascertain that WeChat has become a tool for Misinformation campaigns, Data Theft and Ransomware attacks. [Check the evidence provided in section 1] Moreover, with the inclusion of a wallet system without much of KYC verification this can also be used for money laundering and to fund unrest in other countries.

  1. WeChat Threat to India

No doubt the Indian government has been strict on PRC promoted apps and has taken steps to check them including banning few of the apps but still, many of these apps continue to operate in India because of some technical loopholes. WeChat does not permit new users from India to create accounts, however if one has a sim card from another nation, including Nepal, one can simply create a WeChat account. On the other hand, there are tens of thousands of Indians who do business with PRC (both large and small), study Chinese, or interact with PRC for other reasons. All of them currently have active WeChat accounts that are used through a VPN because they created them before the app was outlawed. So what if one has a WeChat account? What can they do? Here’s the answer: Through WeChat and Alipay, thousands of dollars can be sent online without any KYC on the part of the Indian side. Once someone has a WeChat account, one does not need to link any bank accounts to it in order to receive payments (only sending funds from a bank account to another user’s WeChat wallet requires linking). WeChat features a built-in wallet that may be used to send money. No matter what country the account is from, you can receive these funds in PRC’s currency Renminbi (RMB) from any other WeChat account. There are certain limitations on the amount that may be received: WeChat permits transactions up to 50,000 RMB (6 lakh rupees approx.) per day and 2,00000 RMB (about 24 lakh rupees) per year. Although, it may be noted that since WeChat is closely operated by CCP itself, such limits can be waived off if doing so facilitates the interests of Beijing in any manner. Therefore, a WeChat wallet may be created without a PRC bank account (or any other bank account) and without adding any cards to it, money can be received on it and transmitted from it to another WeChat account. This makes increasing the money’s liquidity or redeeming its worth simple. There are hundreds and thousands of individuals in India who frequently do business with Chinese dealers and vendors. Manufacturers, distributors, or even companies that can handle work linked to the Chinese language (voiceover, translation, transcription) may fall under this category. These people either import goods from PRC or hire Chinese people to do services (voiceover, translation, transcription). They use RMB in their wallets to pay the Chinese in full or in part for the goods or services they receive from PRC. Therefore, it won’t be difficult in the slightest manner for anyone to exchange RMB for INR and give to these folks if they have RMB in their digital wallet. Then, INR is transferred to them via bank transfers, UPI, or cash. In reality, virtually daily requests for RMB are made to the groups on various platforms that are exclusively composed of members of the Chinese language-knowing community. This demonstrates the persistent demand for RMB among businesspeople in India. Therefore, if someone does receive money in their digital wallet from PRC, they may easily convert it to Indian rupees. Besides WeChat, Alipay is also being used by Indians with a daily transfer cap of 50,000 RMB (about 6 lakh rupees) per recipient. The annual cap is 2,90,000 RMB (about 34 lakh rupees) per recipient.

Now, this may sound as a normal money laundering process but imagine a situation like Manipur.  During the Manipur violence (News18 report dated 30.5.23) and earlier as well, there have been some hawkish Weibo posts that call for “helping” the protestors (financially) in the troubled regions agitating against Indian authorities because unrest in border regions will relieve pressure on the People’s Liberation Army (PLA) in the Sino-Indian border. Even if there haven’t been any reports of the use of Chinese money for a secret agenda, given the border tensions with PRC, knowing or being aware that there is a conduit may be useful. Because it is simple to convert RMB to INR in India after it is in a person’s digital wallet, it may be done without raising suspicion. Only 10 Wechat accounts can get a total of 5,00,000 RMB (or around 60 lakhs rupees) in a single day. Such revenue streams can also be used for influence operations and create chaos in India.

  1. Way Forward

WeChat is a venue for fraud, money laundering, and widespread criminal activities. Additionally, the ability to conduct RMB transactions on Indian soil poses a serious threat to the country’s financial independence, and since these transactions are not reported to anti-money laundering agencies like the RBI, SEBI, and IRDAI, the possibility of abuse is unstated.

India needs to understand that WeChat isn’t a social media platform in the traditional sense of the word. It is an all-encompassing platform that offers payments, communications, food delivery, and a variety of other services in the form of mini-programs that, depending on the industry, may or may not be regulated in India. Through tax avoidance and interference, social media companies make a mockery of Indian law and regulations. This is especially true for PRC companies, which frequently operate covertly by working in small groups.

For instance, platforms like WeChat and Alipay can operate in India via VPN and offer payment services in RMB via middlemen, but what Indian politicians should know is that:

  • The use of RMB on Indian soil, whether through WeChat Pay, Alipay, or any other payment platform, poses a threat to the country’s financial sovereignty and the Indian Rupee as its sole official currency.
  • Social media and social-electronic payment provider regulations must keep up with technological advancements. To the fullest extent possible, transact in INR rather than RMB when on Indian territory, or at the very least report all such suspicious transaction activities to concerned authorities. Anti-money laundering legislation needs to be updated immediately. This includes platforms like WeChat Pay and Alipay (Including any other application which helps to connect to such services).

Therefore, Indian law urgently needs to be changed to accommodate the following points –

  • Completely forbid PRC payment wallet software from being used in India.
  • Since the transactions occur on Indian soil and involve a foreign currency (notably RMB), these must be reported to the RBI, SEBI, IRDAI, and any other regulatory agencies.
  • A through investigation on people and organisations having exposure of WeChat Pay in the past, and if they have indulged in dubious financial activities.

Any less than the aforementioned must result in the outlawing of such platforms, specifically WeChat from operating in India, because doing so poses a fundamental threat to the country’s democratic institutions as it creates a parallel world where the party exerts control and censors messages that it does not agree with, harming social cohesion and the multicultural society.

In order to prevent the Communist Party of PRC’s digital authoritarianism, censorship, and financial imperialism from being exported into Indian society, along with every other nation on the planet, India must assert sovereignty over its data and its fundamental economic system.

Red Lantern Analytica worries that Chinese businesses, and Chinese social media companies in particular, have received far too much leniency from the Indian government. In the strongest terms possible, we implore the lawmakers to act on the issues mentioned above.

Through the export of the CCP’s censorship and financial system under the guise of the spread of Chinese payment and communication systems, the CCP’s economic and financial expansion is not just a form of interference but also a form of financial and digital imperialism. If Indian politicians and committee members fail to grasp this, it might already be too late and India might be running out of time.

References

  1. https://www.bloombergquint.com/politics/china-passes-law-to-strengthen-control-over-tech-firms-data
  2. https://en.wikipedia.org/wiki/Cybersecurity Law of the People’s Republic of China
  • https://en.wikipedia.org/wiki/Data Security Law of the People%27s Republic of China
  1. https://www.theepochtimes.com/PRCs-role-in-illicit-fentanyl-running-rampant-on-us-streets_4967062.html
  2. https://www.npr.org/2019/12/06/784191852/taiwan-gets-tough-on-disinformation-suspected-from-PRC-ahead-of-elections
  3. https://www.voanews.com/a/PRC-accused-of-meddling-in-canada-s-elections/7026562.html

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(Report prepared by Team Red Lantern Analytica)

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