China Cracks Down on Money Laundering with Upcoming Amendments to Anti-Money Laundering Law: A Focus on Virtual Assets

In a bid to combat money laundering and illicit activities linked to digital assets, China’s State Council, led by Premier Li Qiang, has proposed an amendment to the outdated Anti-Money Laundering Law. This comes amidst growing risks associated with cryptocurrencies and other virtual assets (Xinhua Reports).

China’s Focus on Preventing Money Laundering in the Digital Asset Domain

The details of the proposed amendment are currently undisclosed, however, Chinese digital news media outlet Jiemian reports that the focus is on preventing money laundering in the context of digital assets. The following are some key insights:

1. Addressing New Threats: Reflecting other major nations’ efforts, China is aiming to update its legal framework against money laundering with a focus on virtual assets, as per Professor Wang Xin’s insights.
2. Compliance with FATF Recommendations: To avoid falling behind in the international landscape, China’s Amendment will follow guidelines provided by the Financial Action Task Force (FATF), a Paris-based watchdog.
3. Enhanced Enforcement Measures: Chinese authorities are planning to ramp up enforcement measures against money laundering and foreign exchange activities related to digital currencies.

Current Status of China’s Anti-Money Laundering Legislation

China’s Anti-Money Laundering legislation, unchanged for over 17 years, now requires an update. In their 2020 assessment report, China was rated as “largely compliant” with FATF recommendations related to virtual assets, despite its ban on crypto activities.

China’s Commitment to Combating Money Laundering Activities: A Proactive Approach

China’s efforts to combat money laundering activities in the digital asset domain come despite their current ban on crypto transactions. Following are some examples:

1. Stricter Enforcement: The Supreme People’s Procuratorate has announced plans to ramp up enforcement measures against money laundering and foreign exchange activities related to digital currencies.
2. Recent Case: In 2022, Chinese authorities successfully investigated and prosecuted a 12 billion yuan (US$1.7 billion) money laundering case in Inner Mongolia.
3. Mitigating Risks: Fei, a partner at law firm King & Wood Mallesons in Hong Kong, explains that despite the ban, China is taking a proactive approach to address the potential threats of money laundering in the digital asset domain.

Conclusion

The proposed amendments to China’s Anti-Money Laundering Law are expected to strengthen China’s legal framework against money laundering and effectively address new threats in the digital asset domain while maintaining the ban on crypto transactions.