China in the forefront: Cryptocurrency in the crosshairs of the fight against money laundering

As calls for tighter control of the cryptocurrency industry grow, China, despite its persistent ban on crypto transactions, is preparing a major revision of its anti-money laundering regulation. Crucial adjustments discussed within the Chinese government signal the first significant revision since 2007. Faced with the global rise of cryptocurrencies, Chinese authorities are mobilizing to plug the gaps in their defense against money laundering, underscoring the imperative for immediate action.

Crypto: China Strengthens Its Fight Against Money Laundering

China, which has just suffered a 6 trillion dollar loss in its stock market, is considering revisiting its anti-money laundering laws to include digital assets. The proposed changes, recently discussed by the Chinese cabinet, constitute the first significant revision since 2007. As global adoption of cryptocurrencies continues to increase, even in spite of the Chinese ban, the authorities are looking to address the shortcomings in the fight against money laundering, highlighting the urgency of an official action.

Responding to calls for stricter oversight of the burgeoning crypto industry, China is gearing up for a significant overhaul of its Anti-Money Laundering (AML) regulations.#Regulation #antimoneylaundering #Crypto pic.twitter.com/vs2uQYfmyM

— The Coin Republic (@TCR_news_) January 31, 2024

On January 22, 2024, Prime Minister Li Qiang chaired an executive meeting of the State Council to review the revised draft of the anti-money laundering law. The amendments, although not finalized, reflect China’s efforts to adapt to the evolution of financial technologies. With money laundering and terrorist financing becoming more sophisticated and global, China is looking to strengthen its defenses against these crimes, even within the context of a national ban on crypto transactions.

Rapid technological development provides criminals with new opportunities for financial abuse, especially with the advent of virtual currencies like bitcoin (BTC) and Ethereum (ETH). The first major revision since 2007 underscores the growing importance of cryptocurrencies in the global financial landscape. However, these changes are not without challenges. Legal experts have pointed out the need to clearly redefine digital currencies and property rights in the context of evolving anti-money laundering laws.

« The process of revising the anti-money laundering law is relatively challenging. The first revised draft from 2021 was publicly solicited for opinions; in 2023, the revised draft was included in the State Council’s legislative work plan for the same year. The legislative plan of the Permanent Committee of the 14^th National People’s Congress finds that the anti-money laundering law (revision) is listed as a relatively mature bill and will be submitted for review during the legislature. According to the legislative plan, the revised project is expected to be adopted in 2025. », says Wang Xin, a professor at the law faculty of Peking University and a major player in this revision.

China on Alert: Cryptocurrencies Threaten Financial Security

China, already in a posture of defiance towards cryptocurrencies, is intensifying its fight against money laundering. A threat looming over financial stability because, despite the ban on crypto transactions, the country notes an increasing adoption of these digital assets.

China is striving to seal the gaps in its system, aware that money laundering is evolving and finding refuge in new channels, risking national financial security. Its adherence to the Financial Action Task Force (FATF) in 2007 is proof of this. And at the same time, the call to action by specific non-financial institutions will intensify this struggle.