China is preparing to introduce significant amendments to its Anti-Money Laundering (AML) regulations to encompass cryptocurrency-related transactions, reflecting calls for increased oversight of the burgeoning crypto industry. Prime Minister Li Qiang chaired an executive meeting of the State Council on Jan. 22 to discuss the revised AML law, which is expected to be signed into law by 2025. This marks the first substantial revision to China’s AML regulations in 17 years since their inception in 2007.
The proposed amendments aim to address the challenges posed by the use of cryptocurrency and virtual assets for money laundering, which has become increasingly prevalent. However, scholars and financial experts involved in the discussion note that the scope of the AML law is broad, necessitating a framework approach to initially address urgent issues. While the revised draft includes provisions for preventing virtual asset money laundering, there is a lack of operational guidance for subsequent actions such as seizure, freezing, and confiscation of virtual assets involved in money laundering crimes.
Despite China’s blanket ban on cryptocurrency use and mining, mainland users have found ways to access the crypto market, posing money laundering risks. The amended regulations seek to impose stricter guidelines to mitigate these risks and enhance oversight of crypto-related activities.
