China Recognises Crypto in Revised Anti-Money Laundering Laws

In a strict move, China has for the first time recognised cryptocurrency transactions as one of the methods of money laundering. 

China’s Supreme People’s Court and Supreme People’s Procuratorate have revised the country’s anti-money laundering (AML) laws and included “virtual asset” or crypto transactions, a per local news report.

AML laws in China restrict “covering up and concealing the source and nature of criminal proceeds and their benefits by other means.”  

The country’s current AML laws were legislated in 2007, the latest revision marking a significant departure.  

The Supreme People’s Court and the Supreme People’s Procuratorate said that as per the latest revision to the AML laws, even “virtual asset” transactions will be recognised as one of the methods of laundering funds. 

This means that transferring or converting funds, procured through criminal means, via crypto transactions will be considered a violation of AML laws, effective 20 August 2024.

Criminal actors have been found to be using crypto as a means of money laundering, taking advantage of the existing loopholes.

Penalties for those found to be violating the AML laws could range between $1,400 to $28,000.

The laws specify more severe offences too, such as refusal to cooperate with authorities, the amount being laundered exceeding $700,000, or causing losses worth $350,000. In such cases, offenders could even be jailed for 5 to 10 years.

In total, the latest interpretation has 13 articles which detail the type of crimes, penalties and jail sentences.

The Procuratorate mentioned that 2,971 people were prosecuted for money laundering in 2023, a 20x surge from 2019.

During the first half of 2024, 1,391 people were prosecuted for money laundering, a surge of 28.4% on a year-on-year basis.

The Procuratorate has been cooperating with the National Supervisory Commission and the Ministry of Public Security to combat crimes related to money laundering in China.

The revised interpretation of the AML laws is the latest step in the direction of legislating a comprehensive framework of combating money laundering.

The decision sparked a curiosity around the possibility of China lifting its ban on crypto.

Tron founder Justin Sun even asked on X (formerly Twitter) if there was a meme for the occasion. 

Image: Tron founder Justin Sun on X

But we believe that it’s another step on the part of China to follow up with its crackdown on any crypto activities, rather than a move in direction of unbanning crypto.