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Ruholamin Haqshanas
Author
Ruholamin Haqshanas
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China has revised its Anti-Money Laundering (AML) laws to include virtual asset transactions in the first major update to the country’s AML framework since its adoption on January 1, 2007.
On August 19, the Supreme People’s Court and the Supreme People’s Procuratorate announced that their new interpretation of the AML laws now officially recognizes virtual asset transactions as potential vehicles for money laundering.
The move comes amid China’s efforts to strengthen its regulatory framework in response to the growing use of digital currencies and other virtual assets.
Offenders Can Face Fines of Up To $28,000
The regulations now prohibit “covering up and concealing the source and nature of criminal proceeds and their benefits by other means,” thereby closing a significant loophole that had previously existed in the country’s AML efforts.
The penalties for those found guilty of using virtual assets for money laundering are severe.
Offenders can face fines ranging from a minimum of 10,000 Chinese yuan (approximately $1,400) to a maximum of 200,000 Chinese yuan (around $28,000), depending on the gravity of the offense.
In more serious cases, individuals could face prison sentences of five to ten years.
The revised AML laws also introduce clearer guidelines for what constitutes “serious circumstances” in money laundering cases.
These include situations where individuals refuse to cooperate with authorities or when the amount being laundered exceeds 5 million Chinese yuan (approximately $700,000).
These amendments underscore China’s commitment to cracking down on financial crimes in all forms, including those involving virtual assets.
In 2023 alone, the Supreme People’s Procuratorate reported that 2,971 individuals were prosecuted for money laundering, marking a twentyfold increase since 2019.
The sharp rise in prosecutions highlights the growing prevalence of money laundering activities and the urgent need for regulatory measures that address new methods of financial crime.
China Might Lift Crypto Ban
The timing of these revisions has sparked debate and speculation within the industry.
Some believe that China could be moving towards lifting its long-standing ban on cryptocurrency trading.
The speculation gained traction in mid-July when Mike Novogratz, CEO of Galaxy Digital, suggested on social media that China might unban Bitcoin by late 2024.
Although the post was later deleted, it fueled ongoing rumors.
Adding to the speculation, Justin Sun, founder of Tron and Huobi (HTX), made a cryptic comment on August 19, asking what meme would best suit China’s potential unbanning of crypto.
However, not all industry insiders are convinced.
Yifan He, CEO of Red Date Technology, a major Chinese blockchain firm, expressed skepticism, stating that China is unlikely to allow its citizens to trade Bitcoin freely using local fiat currency.
China’s stance on cryptocurrencies has been stringent, with the country enacting a ban on crypto exchanges in 2017 and launching an interdepartmental crackdown on crypto activities in 2021.
Recent reports indicate that Qingdao police are currently prosecuting a case involving the laundering of over $1.1 million through the stablecoin Tether (USDT).
The case further underscores the ongoing challenges China faces in regulating virtual assets and preventing their misuse in financial crimes.
