China Expands AML Laws to Target Virtual Assets and Rising Money Laundering Cases

China’s Supreme People's Court and the Supreme Procuratorate have reviewed the nation's Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) laws. Interestingly, the recent review incorporated virtual asset transactions in the country.

Previous Law Reviews

During a joint conference on August 19, both parties reviewed the interpretation of the former AML laws. The outcome was expanding the laws to include transactions in digital assets, considering that they could pass as a potential means for money laundering. The new legislation will track the conversion transfer of proceeds from criminal activity. Henceforth, covering up criminal escapades amounts to breaking down rules, with punishments attached.

Notedly, defaulters would pay fines ranging from 10,000 ($1,400) Chinese yuan to 200,000 Chinese yuan ($28,000), as determined by the court. Penalties could also include jail terms ranging from five to ten years. It is worth noting that the punishments highlighted in this insight are not absolute. They could be relative, depending on the gravity of the offense and other external influences.

China Might Reverse Ban on Cryptocurrencies

Another significant point raised during the conference was the surge in defaulters prosecuted for laundering. According to the public prosecutor, the Supreme People's Procuratorate, money laundering had skyrocketed in the country by 20-fold between 2019 and 2023.

Hence, the new AML laws aim to checkmate virtual asset transactions as a portal for money laundering. Meanwhile, following the latest rule expansion, speculations have been making rounds about the possibility of China lifting its crypto ban. The Asian nation might emulate Russia in embracing cryptocurrencies and other digital assets to boost its economy.

On the contrary, some authorities do not share this opinion. In either case, the old AML laws entered the country in January 2007. For this reason, the recent review is a significant landmark in the timeline of China's virtual assets industry. Also, it was deemed necessary after about two decades of abandoning an old legislation.

Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence before making any trading or investment decisions.

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