China’s Supreme Court and public prosecutor have revised their interpretation of the country’s Anti-Money Laundering (AML) laws — now recognizing “virtual asset” transactions for the first time.
The country adopted its current Anti-Money Laundering Law on Jan. 1, 2007, making the latest revision its first significant update in almost two decades.
In an Aug. 19 conference, the Supreme People’s Court and the Supreme People’s Procuratorate said under their new interpretation of the law, “virtual asset” transactions are now listed as one of the recognized money laundering methods.
It comes amid recent speculation on X that the country could be looking to unban crypto soon — though many more are skeptical about it.
China’s Anti-Money Laundering laws have been revised by the Supreme Court and public prosecutor. Source: Supreme People’s Procuratorate
According to the courts, the transfer and conversion of criminal proceeds through digital transactions will now be covered under regulations that prohibit “covering up and concealing the source and nature of criminal proceeds and their benefits by other means.”
Penalties for lawbreakers include fines from a minimum of $1,400 (10,000 Chinese yuan) to $28,000 (200,000 Chinese yuan) for more severe offenses. Offenders could also face jail terms of between five and ten years.
The other amendments include clearer guidelines around “serious circumstances” in money laundering cases, such as refusal to cooperate with authorities or if the amount being laundered is more than $700,000 (5 million Chinese yuan).
The Supreme People’s Procuratorate said that 2,971 people were prosecuted for money laundering last year, a 20-fold increase from 2019.
Debate whether China is unbanning crypto
On July 14, Galaxy Digital CEO Mike Novogratz posted on social media platform X, in a now-deleted post, that he heard reports suggesting China is “likely to unban” Bitcoin (BTC) by late 2024.
On Aug. 19, Justin Sun, founder of Tron and Huobi (HTX), added fuel to the rumor after posting a throwaway comment on X asking what the best meme to suit China’s unbanning crypto would be.
Source: Justin Sun
However, several experts have also thrown cold water on the idea.
In July, Yifan He, CEO of major Chinese blockchain firm Red Date Technology, said he didn’t think China would ever allow its citizens to trade Bitcoin using local fiat currency freely.
Related: Crypto use in money laundering ‘far below’ cash — US Treasury
Mikko Ohtamaa, the co-founder of algorithmic investment protocol Trading Strategy, agreed, saying a U-turn from China on crypto would directly oppose the government’s political agenda.
The country enacted a ban on crypto exchanges in 2017 and an interdepartmental crackdown on crypto in 2021.
Qingdao police crack down on $1.1M USDT money laundering biz
According to a Chinese media report, Qingdao police are currently prosecuting a case involving a network caught using stablecoin Tether (USDT) to launder over $1.1 million (8 million yuan) for criminal enterprises.
Officials allege the three main individuals involved enlisted friends to use their business licenses and identification documents to open public accounts, which were used to receive money from criminals interested in laundering their ill-gotten gains.
The money was then converted into USDT and transferred back to criminals, with the money laundering syndicate receiving a commission for their efforts. Nine people are currently facing criminal charges and awaiting prosecution over the matter.
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