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In the first half of 2024, the Chinese government reported that 1,391 individuals were prosecuted on charges related to money laundering. In response to the growing complexity of financial crimes, lawmakers are considering revisions to the country’s anti-money laundering (AML) law to better address risks posed by emerging financial technologies, including cryptocurrencies.
A statement from Wang Xiang, spokesperson for the Legislative Affairs Commission, revealed that the proposed changes were introduced on September 9. The revisions aim to enhance detection and analysis of money laundering activities amid the “rapid development of new technologies.” According to Wang, the legal adjustments will empower authorities to more effectively monitor financial systems and address the challenges presented by fintech innovations.
The proposal also emphasizes the need for collaboration between the People’s Bank of China (PBoC) and financial regulators to develop comprehensive guidelines for managing risks associated with these technologies. Additionally, financial institutions will be required to assess the money laundering risks posed by new business models linked to fintech advancements.
China’s Supreme People’s Court Expands Definition of Money Laundering
On August 19, the Supreme People’s Court, China’s highest legal authority, broadened the legal definition of money laundering to include virtual assets. The court stated that digital transactions, financial exchanges, and the transfer or conversion of illicit proceeds could be considered methods to conceal the source and nature of criminal gains.
According to the court, money laundering offenses involving amounts exceeding 5 million yuan ($705,000), repeat offenses, or cases resulting in losses of 2.5 million yuan ($352,000) or more would be classified as “serious” and subject to harsher penalties.
China’s Firm Stance Against Cryptocurrencies and Virtual Assets
China has long maintained a stringent stance on digital assets. In 2017, regulators in Beijing mandated the shutdown of all virtual asset exchanges operating within the country, causing significant disruption to the cryptocurrency market. The crackdown also forced foreign exchanges, such as Coinbase, to cease services in China, contributing to a drop in Bitcoin’s (BTC) value to around $3,000.
In 2021, the Chinese government intensified its efforts against cryptocurrencies by implementing stricter regulations on domestic crypto operations. This initiative involved a coordinated approach between the PBoC, the Cyberspace Administration of China, and the Ministry of Public Security, aiming to curb the use of cryptocurrencies within the country.
As China continues to monitor fintech innovations, the latest legislative measures signal a stronger focus on addressing financial crimes while keeping a tight grip on the use of virtual assets.
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