China’s Supreme Court and Supreme Procuratorate have updated the Criminal Law to include “virtual asset” transactions as a method of money laundering. This new interpretation reflects a growing concern about digital currencies and their role in financial crimes. In the first half of 2024 alone, 1,391 people were prosecuted for money laundering. This figure marks a 28.4% increase compared to the previous year.
The basic AML law was adopted on January 1, 2007, and since then, the most striking changes are expected in the near future. These changes, which were declared on August 19, incorporate virtual assets into the law and acknowledge them as possible means that could be used for money laundering. It is also important because it deals with the transfer and conversion of the proceeds of crime through electronic means.
China Raises Penalties: Up to $28,000 in Fines for Virtual Asset Offenses
The changes to the AML regulations allow for stiff measures for individuals who apply virtual assets to conceal the proceeds of criminal activities. The monetary penalty is between 10,000 and 200,000 Chinese Yuan ($1,400 to $28,000) while the custodial sentence is between five and ten years. New laws also describe “serious situations,” which consist of failure to provide information to the authority and transactions greater than 5 million Chinese yuan ($700,000).
The overall rise in the number of prosecutions from the previous year demonstrates China’s enhanced drive to combat financial crime, especially in the areas of technology. Such speculation is that these changes could be accompanied by the reversal of the Chinese ban on cryptocurrencies. Prominent personalities in the crypto space like Galaxy Digital CEO Mike Novogratz and the founder of Tron, Justin Sun, have also contributed to the spread of such rumors on social media.
The recent advent of the cryptocurrency market means that if China chooses to remove the ban it has placed on cryptocurrencies, it will bring about drastic changes globally. As China remains a leading economy around the globe, this shift may lead to high market fluctuations, new investments, and the development of new blockchain innovations. However, incorporating digital assets into China’s highly regulated financial sector will demand proactive steps toward compliance and investor safeguarding measures. Therefore, as China engages in these shifts, global players will closely monitor its regulations.
