A Fundamental Change in Chinese AML Regulations for Cryptocurrencies on the Horizon
Revising Anti-Money Laundering Rules
China, which banned the use of #cryptocurrencies in 2021, is now planning to reassess its anti-money laundering (AML) rules to include transactions related to cryptocurrencies. This change comes in response to calls from politicians for greater control over the rapidly growing cryptocurrency industry in the country.
According to local media, Premier Li Qiang presided over an executive meeting of the State Council on January 22nd to discuss a revised law on combating money laundering. The first draft of these regulations was introduced back in 2021, and the new revised proposal is expected to be part of the State Council's legislative plan for 2023, with final approval anticipated by 2025.
This revision represents the first significant change in Chinese anti-money laundering regulations since 2007.
Challenges and Expert Opinions
Scientists and financial experts participating in discussions on the revised proposal have emphasized the need for a comprehensive approach to combating money laundering in the context of cryptocurrencies. Wang Xin, a professor at the Law School of Peking University, pointed out the increasing use of cryptocurrencies for money laundering and the insufficiently clear definition of digital assets in Chinese law. While the revised proposal is expected to encompass money laundering prevention in the digital sphere, operational guidelines for seizure, freezing, deduction, and confiscation of assets in cases of money laundering-related crimes are still missing, posing certain challenges. Wang Xin also highlighted room for improvement in the fight against money laundering associated with digital assets.
Money Laundering Risks and New Measures
China banned the use of cryptocurrencies in 2021, which included a prohibition on offshore exchanges and cryptocurrency #mining . However, due to technological advancements and the decentralized nature of cryptocurrencies, mainland users have been attempting to find ways to re-enter the crypto markets, raising concerns about money laundering. The goal of the new revision of AML regulations is to introduce stricter measures to limit such activities.
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