China Tightens Grip on Virtual Assets with New Stringent AML Rules

• The primary goal of the new regulations is to prevent the laundering of illicit funds.
• This highlights China’s increasing endeavors to tackle the proliferation of the virtual asset market.

New steps to address anti-money laundering regulations have been announced by China’s Supreme People’s Court and Supreme People’s Procuratorate. The legal interpretation sets very stringent standards for the prosecution of offenses relating to money laundering as of August 20, 2024.

The primary goal of the new regulations is to prevent the laundering of illicit funds via the use of virtual assets. The legal loopholes and revenues from illegal operations may be hidden via virtual asset transfers, according to this understanding. As a result, this highlights China’s increasing endeavors to tackle the proliferation of the virtual asset market. And also the rising modern financial crimes.

Combating Money Laundering

Moreover, the new reasoning is that dealing in virtual assets constitutes “suppressing and hiding the source” of illicit monies. For example, if a person launders more than 5 million yuan or suffers losses of more than 2.5 million yuan, these scenarios are deemed to constitute “serious circumstances” according to the standards.

In order to achieve this goal, China plans to implement numerous steps to strengthen the legal framework against financial crimes. China prosecuted about 3,000 instances of money laundering in 2023, a significant rise from the previous year.

The activity in combating money laundering has increased, as seen by a 20-fold rise compared to 2019. A 28.4 percent increase in prosecutions in the first half of 2024 demonstrated that the war against financial crimes was ongoing.

Since 2020, when it began to promote collaboration amongst agencies, the Supreme People’s Procuratorate has spearheaded the battle against money laundering.

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