Originally published on: August 20, 2024
China’s legal landscape is evolving as the country’s Supreme Court and public prosecutor recently updated their interpretation of the Anti-Money Laundering (AML) laws to integrate transactions involving “virtual assets.” This move marks a significant development, as the existing AML law, in effect since January 1, 2007, has seen its first major revision in almost twenty years. During a pivotal conference held on August 19, the Supreme People’s Court and the Supreme People’s Procuratorate highlighted that the newly reinterpreted law now explicitly identifies “virtual asset” transactions as a recognized form of money laundering.
Recognizing Virtual Assets in AML Regulations
Under the revised law, the illegal transfer and conversion of illicit funds through digital transactions will be more closely monitored and regulated. The amendment aims to prevent the concealment of the source and nature of criminal proceeds and their benefits through alternative methods. Those found violating these regulations could face penalties ranging from 10,000 Chinese yuan ($1,400) to 200,000 yuan ($28,000) for severe infractions, along with potential prison sentences spanning five to ten years.
Enhanced AML Guidelines and Prosecution Statistics
The updated AML legislation also incorporates clearer directives regarding the identification of “serious circumstances” in money laundering cases. These circumstances include scenarios like unwillingness to cooperate with law enforcement and laundering amounts surpassing 5 million yuan ($700,000). Recent statistics from the Supreme People’s Procuratorate revealed a substantial rise in money laundering prosecutions, with 2,971 individuals prosecuted in 2023, a twenty-fold increase compared to 2019.
Speculation on Crypto Regulation in China
Amidst hints of potential regulatory changes in the crypto space, industry figures have speculated on China’s stance towards cryptocurrencies. Speculation intensified following statements from prominent voices like Galaxy Digital CEO Mike Novogratz and Tron founder Justin Sun, triggering discussions on a potential unbanning of cryptocurrencies in the country. Despite these speculations, experts remain cautious, emphasizing the complexities and uncertainties surrounding crypto regulation in China.
Cold Water on Crypto Unbanning Speculations
Several experts, including Yifan He, CEO of Red Date Technology, and Mikko Ohtamaa, co-founder of Trading Strategy, have expressed skepticism about the likelihood of China allowing unrestricted Bitcoin trading using local fiat currency. This skepticism is rooted in historical actions by the Chinese government, which previously imposed bans on crypto exchanges and conducted crackdowns on cryptocurrencies. Recent reports of money laundering cases involving stablecoin Tether further underscore the regulatory challenges within the crypto ecosystem in China.
In conclusion, the evolving regulatory landscape and the integration of virtual assets in China’s AML laws signal a proactive approach towards combating illicit financial activities. While debates on crypto regulation continue to unfold, the enforcement of stringent AML measures reflects the government’s commitment to uphold financial integrity and curb financial crimes.
