In a historic shift, China’s Supreme People’s Court and the Supreme People’s Procuratorate have formally acknowledged cryptocurrency transactions within the framework of the country’s anti-money laundering (AML) laws. This development marks a significant step in China’s legal landscape, reflecting the government’s increasing focus on regulating the burgeoning digital asset sector.
At a joint press conference held on August 19, officials from the Supreme People’s Court and the Supreme People’s Procuratorate announced the latest reinterpretations of China’s AML legislation. These changes, which are set to take effect on August 20, 2024, underscore the government’s intent to clamp down on the use of cryptocurrencies in illicit financial activities.
A central feature of the revised AML interpretation is the inclusion of virtual asset transactions as a recognized method for laundering money. According to the authorities, the conversion and transfer of criminal proceeds through cryptocurrencies will now be classified as actions that conceal the source and nature of illegal funds. This broadens the legal scope of activities considered to be money laundering and brings cryptocurrency firmly under the purview of China’s financial crime laws.
“The conversion and transfer of criminal proceeds through crypto will now be considered as concealing the source and nature of criminal proceeds and their benefits ‘by other means,’” explained a spokesperson during the press conference.
Under the new legal framework, individuals found guilty of using cryptocurrencies to launder money face a range of penalties. These include fines starting from 10,000 Chinese yuan (approximately $1,400) to 200,000 Chinese yuan (around $28,000 at current exchange rates). In more severe cases, offenders could face imprisonment ranging from five to ten years, signaling the authorities’ determination to enforce the law rigorously.
The amendments comprise 13 articles and aim to provide greater clarity in identifying money laundering crimes. They also delineate specific circumstances under which regulations prohibiting the concealment and cover-up of criminal proceeds may apply. This legal update responds to earlier calls from Chinese Premier Li Qiang, who urged a comprehensive revision of the country’s AML laws to include cryptocurrency-related activities.
Furthermore, Chinese authorities have reiterated their commitment to cracking down on the misuse of crypto and blockchain technologies for criminal purposes. The People’s Procuratorate has emphasized that cryptocurrency-related money laundering has emerged as a significant channel for criminals to obscure their illicit wealth.
Earlier reports indicated a surge in crypto-related criminal activities in China, with the issue becoming a focal point at the Chinese Association for the Study of Integrity and Law’s annual conference in late 2023. The inclusion of cryptocurrency in the AML laws is seen as a necessary response to this growing challenge.
In related news, China Pacific Insurance Group (CPIC), the second-largest property insurance company in China, has entered into a strategic partnership with Swiss crypto bank AMINA Group. The collaboration, which involves CPIC’s Hong Kong-based investment arm CPIC Investment Management (CPICIMHK), is aimed at expanding its expertise in the crypto sector across the Asia Pacific region.
Through this partnership, CPICIMHK will offer investment advisory services, while AMINA will provide crypto trading and custodial services as part of an integrated solution for the Pacific Waterdrip Digital Asset Funds. This move highlights the growing institutional interest in the crypto space within China, despite the country’s stringent regulatory environment.
As China continues to refine its regulatory approach to cryptocurrencies, the inclusion of digital assets in AML laws represents a critical development. This landmark decision reflects a broader trend of global financial regulators grappling with the challenges posed by the rise of digital currencies.
