Chinese espionage operatives are allegedly running “underground banks and casinos” in Taiwan as part of efforts to gather military intelligence and coerce active military service members to defect, a recent report by Taiwan’s security intelligence states.
Taiwan’s security bureau has released a comprehensive report titled “Analysis on the Infiltration Tactics Concerning China’s Espionage Cases,” highlighting the increasing sophistication and variety of tactics employed by China to infiltrate Taiwan’s sectors and recruit local nationals.
The report claims to inform the public about the channels and methods of Chinese espionage and the Taiwanese government’s efforts to counteract these threats.
Recent data reveal a significant uptick in prosecutions related to Chinese espionage, with 48 individuals prosecuted in 2023 and 64 in 2024, a stark contrast to just three cases in 2021 and five in 2022.
The report indicates that active and retired service members are primary targets, with 15 retired and 28 active service members prosecuted in 2024, accounting for 23 percent and 43 percent of total cases, respectively.
The analysis identifies five primary infiltration channels utilized by Chinese operatives, including gang groups, underground banks, front companies, religious organizations, and civilian associations.
Reported Chinese tactics involve leveraging retired service members to recruit active personnel, establishing online networks, offering financial incentives, and coercing individuals by exploiting their debts.
The report outlines how retired service members have established shell companies, underground banks, and casinos to entice active service members into providing sensitive intelligence.
Aside from state-run lotteries, gambling in Taiwan is prohibited by the Criminal Code of the Republic of China.
In some instances, these operatives have coerced individuals into filming defections to China while in military uniform, further blurring the lines between loyalty and betrayal.

These methods aim to penetrate Taiwan’s military units, government agencies, and pro-China organizations to access sensitive national defense information and influence local democratic processes.
Chinese operatives have reportedly collaborated with gang groups to form internal co-optation teams for potential military aggression against Taiwan.
Additionally, gangsters have allegedly been used to recruit retired service members to organize “sniper teams” for planned attacks against Taiwan’s military and foreign embassies.
During election cycles, Chinese operatives have reportedly organized trips for Taiwanese village leaders to mainland China, using local associations to create a United Front Work Committee aimed at influencing electoral outcomes.
Furthermore, with the rise of social media, China has exploited platforms like Facebook, LINE, and LinkedIn to offer financial assistance to military personnel in need, often in exchange for sensitive information or recruitment of fellow service members.
In response to these infiltration tactics, Taiwan’s national security agencies, military counterintelligence units, and judicial departments have implemented a collaborative framework to enhance detection and prosecution of alleged espionage activities.
This has resulted in increased indictment and conviction rates for espionage cases, including the dismantling of a significant espionage network involving 23 individuals in 2024, leading to a 20-year prison sentence for key operatives.
China’s Ministry of State Security, which oversees intelligence and counterintelligence both within China and overseas, has also previously accused Taiwan of conducting spying activities.
Last August, the ministry said it had uncovered over a thousand Taiwanese espionage cases in recent years and dismantled a number of espionage networks, and launched a high-profile campaign against what it says is a surge in espionage activities by foreign nationals.