The intersection of cryptocurrency and anti-money laundering (AML) efforts has become a focal point for legal scholars and policymakers globally. In China, the urgency to address the challenges posed by money laundering involving virtual assets has prompted significant legislative efforts. Chinese scholars emphasize that the evolving landscape of financial crimes demands a comprehensive response, with the most recent development being the anticipated passage of the revised Anti-Money Laundering Law in 2025.
As technology advances, criminals exploit new avenues, including cryptocurrencies, for illicit activities. The revised draft of China’s Anti-Money Laundering Law, discussed extensively since its first public solicitation for opinions in 2021, reflects the nation’s commitment to staying ahead of financial crimes. Prime Minister Li Qiang’s executive meeting on January 22, 2024, marked a pivotal moment in the legislative process, highlighting the arduous journey of refining AML laws.
Historically, money laundering, a term born in the United States during the 1930s, was closely linked to upstream crimes such as drugs, organized crime, and corruption. However, with the evolving global landscape and the recognition of money laundering as a channel for terrorists, its scope has expanded. Chinese experts emphasize the escalating threat, characterizing money laundering as a non-traditional weapon that can influence and invade nations.
China’s commitment to combating money laundering is evident in its increased crackdown on financial crimes. From January to November 2023, procuratorial organs prosecuted 2,435 individuals for money laundering crimes, reflecting a year-on-year increase of 16.6%. The legislative efforts also align with global standards, as China became a formal member of the Financial Action Task Force (FATF) in 2007.
The FATF, in its 2019 mutual assessment report on China, acknowledged positive progress but highlighted areas for improvement. One significant focus is the inclusion of specific non-financial institutions in supervision. Chinese scholars emphasize that these institutions, including lawyers and auditors, are increasingly favored by criminals, requiring regulatory attention to curb money laundering activities.
Preventive Crypto Measures: Drafting Defense Against Financial Crimes
The revised draft aims to address challenges posed by virtual assets and cryptocurrencies. The ban on Bitcoin in China reflects the country’s cautious approach to digital currencies. The draft mandates financial institutions to assess money laundering risks associated with new technologies and products, emphasizing preventive measures.
Despite these strides, scholars argue that the legal framework should also provide operational guidance on seizing, freezing, and confiscating virtual asset money laundering proceeds. Additionally, improvements in the judicial relief mechanism are deemed crucial to protect citizens’ rights and interests, preventing unintended consequences of account freezes or deductions.
As China prepares for the fifth round of FATF assessment, the revised Anti-Money Laundering Law is positioned as a pivotal component to demonstrate the nation’s commitment to combating financial crimes effectively. The evolving nature of money laundering, particularly in the realm of crypto assets, necessitates continuous legislative adaptation to maintain financial security in an ever-changing global landscape.