China’s Supreme Court and public prosecutor have made a significant update to the country’s Anti-Money Laundering (AML) laws by officially recognizing virtual asset transactions as a method of money laundering. This revision, announced on August 19, marks the first major change to China’s AML framework since its adoption on January 1, 2007, signaling the government’s increasing focus on digital transactions.
Virtual Assets Now Under AML Scrutiny
In the newly revised interpretation, the Supreme People’s Court and the Supreme People’s Procuratorate have included virtual asset transactions as part of the activities covered under the Anti-Money Laundering law. The updated regulation targets the transfer and conversion of criminal proceeds through digital means, emphasizing the need to track and control these transactions to prevent money laundering.
Under the new rules, individuals found guilty of using virtual assets for laundering purposes could face severe penalties, including fines ranging from $1,400 to $28,000, depending on the severity of the offense. Additionally, offenders may be sentenced to prison terms of five to ten years. The revision also clarifies what constitutes “serious circumstances” in money laundering cases, such as large sums exceeding $700,000 or refusal to cooperate with authorities.
Surge in Money Laundering Prosecutions
This legal update comes amid a dramatic rise in money laundering cases in China. The Supreme People’s Procuratorate reported that 2,971 people were prosecuted for money laundering in 2022, a staggering 20-fold increase from 2019. This surge reflects the growing complexity and prevalence of financial crimes, particularly those involving digital assets.
Speculation on Crypto Ban Reversal
The revision of China’s AML laws coincides with ongoing speculation about the country potentially lifting its ban on cryptocurrency. Some industry figures have hinted that China might be reconsidering its strict stance on crypto, with Galaxy Digital CEO Mike Novogratz and Tron founder Justin Sun both suggesting that changes could be on the horizon. However, these claims remain unconfirmed, and many experts believe that China is unlikely to reverse its crypto ban.
In July, Yifan He, CEO of Red Date Technology, expressed skepticism about China allowing its citizens to trade Bitcoin freely, citing the government’s political agenda. Similarly, Mikko Ohtamaa, co-founder of Trading Strategy, noted that a policy reversal would contradict the Chinese government’s broader objectives. China has maintained a ban on crypto exchanges since 2017 and intensified its crackdown on crypto activities in 2021.
