On August 19, 2024, the Supreme People's Court and the Supreme People's Procuratorate stated that according to their new interpretation of the Anti-Money Laundering Law, "virtual asset" transactions are now listed as one of the recognized methods of money laundering. This is the first time that China has taken such a move for this asset class, indicating that China is working hard to strengthen its regulatory framework in response to the growing use of cryptocurrencies and other virtual assets.
China adopted the current Anti-Money Laundering Law on January 1, 2007, and the recent revision includes virtual asset transactions, which means that "virtual asset" transactions are recognized for the first time. This is the first major update to the country's anti-money laundering framework in nearly two decades. At the press conference, the Supreme People's Court and the Supreme People's Procuratorate jointly issued a judicial interpretation on the handling of criminal money laundering cases, which stipulates the application of laws related to money laundering crimes and clarifies the identification standards for money laundering-related crimes. The interpretation will come into effect on August 20, 2024.
According to the latest revision, the Supreme Court of China clearly pointed out that virtual assets, especially cryptocurrency transactions, have become an important channel for money laundering due to their anonymity and cross-border liquidity. In order to effectively combat money laundering, the Supreme Court of China has added regulatory provisions for virtual asset transactions when revising the Anti-Money Laundering Law. This means that all trading activities involving virtual assets, including the purchase, sale, and transfer of cryptocurrencies, will be subject to stricter monitoring and review.
The new legal interpretation classifies virtual asset transactions, including those conducted through cryptocurrency exchanges, as acts of “covering up or concealing the source and nature of criminal proceeds and their proceeds by other means,” thus closing a major loophole in China’s anti-money laundering efforts. Those who use virtual assets to launder money will be severely punished.
Depending on the severity of the violation, offenders could face fines ranging from as low as 10,000 RMB (about $1,400) to as high as 200,000 RMB (about $28,000). In more serious cases, individuals could face five to ten years in prison.
The revised Anti-Money Laundering Law also provides clearer guidelines for determining “serious circumstances” in money laundering cases. These include situations where an individual refuses to cooperate with authorities, or where the amount of money laundered exceeds RMB 5 million (US$685,000) or the loss caused exceeds RMB 2.5 million (US$343,000) as serious violations. These thresholds ensure that large-scale money laundering activities face stricter legal scrutiny and harsher penalties.
These revisions highlight China’s determination to combat all forms of financial crime, including those involving virtual assets, as in 2023 alone, the Supreme People’s Procuratorate reported 2,971 people were prosecuted for money laundering, a 20-fold increase from 2019. The sharp rise in prosecutions highlights the growing prevalence of money laundering and the urgent need for regulatory measures targeting new financial crime methods.
It is worth noting that although China has adopted stricter regulatory measures on cryptocurrency transactions, the revised Anti-Money Laundering Law also recognizes the legality of cryptocurrency transactions. This shows that China is not completely banning cryptocurrency transactions, but is using legal means to regulate market order and prevent money laundering risks. This change in position is undoubtedly a positive signal for the global cryptocurrency market.
However, China's revision of the Anti-Money Laundering Law has also brought new challenges. Enterprises and service providers in the cryptocurrency industry need to quickly adapt to the new legal environment, strengthen internal management, and ensure compliance operations. In addition, users of cryptocurrency transactions also need to pay attention to protecting personal privacy and asset security to avoid legal sanctions due to improper operations.
In addition, China's revision of the Anti-Money Laundering Law has also received widespread attention in the international community. International anti-money laundering organizations and experts generally believe that China's move will help strengthen global anti-money laundering cooperation and enhance the transparency and security of the international financial market. At the same time, it also provides a reference for other countries in dealing with cryptocurrency trading supervision issues.
In general, China's revision of the Anti-Money Laundering Law formally includes cryptocurrency transactions in the regulatory scope, which is an important measure for the Chinese government to strengthen financial supervision, maintain financial security and social stability. This measure will not only help combat illegal activities such as money laundering using cryptocurrency, but will also promote the healthy development of the cryptocurrency market, marking that China's regulation of cryptocurrency transactions has entered a new stage. We look forward to China's continuous exploration and innovation in future regulatory practices, and to contributing more wisdom and strength to the standardized development of the global cryptocurrency market.
