- China plans to enhance surveillance over the crypto sector
- Amending anti-money laundering laws to include crypto transactions
- Revised draft of AML regulations discussed by group chaired by Prime Minister Li Qiang
- First major amendment to China’s AML rules since 2007
- Focus on resolving crypto money laundering issues
- Amendment first proposed in 2021 and included in legislative work plan in 2023
- Expected to be passed in 2025
- China prohibits providing or receiving services for cryptocurrencies since 2021
- Increasing trend of cryptos in money laundering crimes
- Concerns about lack of operational guidance for seizing, freezing, and confiscating virtual asset money laundering crimes
- Need for legal authorization to combat crypto use for money laundering
- Lack of legal authorization creates ‘grey areas’ and law enforcement blind spots
- Hong Kong’s Securities and Futures Commission introduced similar amendment to AML regulations in April 2023
- Regulator plans to update framework on cryptocurrency sales and requirements
China is planning to amend its anti-money laundering laws to include crypto transactions in order to enhance surveillance over the burgeoning crypto sector.
The decision to amend the AML regulations was influenced by growing concerns of policymakers in the country and primarily focuses on resolving crypto money laundering issues. China prohibited providing or receiving services for cryptocurrencies in 2021, but the increasing trend of cryptos in money laundering crimes outperforms the already existing “strict prevention” of money laundering risks.
3. Amendment and Timeline
A group of executives, chaired by Prime Minister Li Qiang, discussed the “revised draft” of the AML regulations on January 22. The move marks the first major amendment to China’s AML rules since 2007. The current amendment to the AML regulations is expected to be passed in 2025.
4. Legal and Operational Challenges
Peking University professor Wang Xin emphasized the need to address the use of cryptos in money laundering at the legal level. The amendment lacks operational guidance on the subsequent seizure, freezing, deduction, and confiscation of virtual asset money laundering crimes. Yan Lixin, executive director of the China Anti-Money Laundering Research Center at Fudan University, also noted the need for legal authorization and improvements in the judicial relief work in China’s AML rule enforcement.
5. International Context
Hong Kong’s Securities and Futures Commission (SFC) introduced a similar amendment to its AML regulations in April 2023 and announced plans to update its framework on cryptocurrency sales and requirements in October. This highlights the international relevance and efforts to combat crypto money laundering crimes.
Overall, China’s planned amendment to its AML laws reflects the increasing importance of regulating and surveilling crypto transactions in the country, with implications for the international regulatory landscape.
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