China Revamps AML Law, Targets Crypto Crimes
Jessie A Ellis Jan 31, 2024 16:25
China is set to implement significant revisions to its Anti-Money Laundering Law by 2025, marking the first major overhaul since 2007. The amendments focus on including cryptocurrency transactions to combat rising crypto-related money laundering crimes.
China is gearing up to overhaul its Anti-Money Laundering (AML) laws, focusing significantly on cryptocurrency transactions. This move, set to be enacted by 2025, represents the first major amendment of the country's AML laws since their inception in 2007. The urgency of this reform was underscored at a recent State Council executive meeting chaired by Prime Minister Li Qiang, signaling the government's intensified focus on combating crypto money laundering crimes.
The revision of the Anti-Money Laundering Law of the People's Republic of China was initially proposed in 2021 and is part of the 2023 legislative work plan. It aims to address the increasingly complex landscape of financial crimes, particularly those involving virtual assets. Legal experts have raised concerns about the challenges in framing regulations around crypto transactions, noting the ambiguity in the draft due to the lack of a clear definition of virtual assets. This lack of clarity poses difficulties in establishing operational guidelines for law enforcement and judicial bodies, potentially creating gray areas in combating the use of cryptocurrencies in money laundering activities.
Key changes in the amended AML law include a broader definition of money laundering activities, encompassing any efforts to conceal or disguise criminal income and its sources. The law also extends AML obligations to non-financial entities such as property developers, accounting firms, and precious metal exchanges. Moreover, it imposes AML responsibilities on all individuals and organizations, requiring them to report large cash transactions and adopt special preventive measures against listed targets involved in terrorism or money laundering.
Significantly, the amended law also introduces higher penalties for AML violations, with fines up to CNY 200,000 for failure in adopting special preventive measures. Additionally, the law sets reciprocal requirements for international AML cooperation, restricting Chinese financial institutions from complying with foreign orders involving the seizure or transfer of assets without government approval.
This legislative move is in response to the global trend of digital currencies and the associated risks of money laundering. China's approach indicates a commitment to align with international practices and establish a risk-based approach to AML/CTF (Combating the Financing of Terrorism) efforts. However, the draft version of the law may still undergo changes before finalization.
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