China is reportedly planning significant revisions to its anti-money laundering (AML) regulations, with a focus on including cryptocurrency-related transactions. Premier Li Qiang chaired an executive meeting of the State Council on January 22 to discuss these revisions to the Anti-Money Laundering Law. The first draft of the national AML regulations was proposed in 2021 and was included in the 2023 State Council Legislative Work Plan. The revised law is expected to be signed into effect in 2025. This marks the first major update to China's AML regulations since 2007.
During the discussion of the revised draft, scholars and financial experts pointed out the challenges of making the AML law comprehensive given its wide scope. The urgency of addressing cryptocurrency-related money laundering was emphasized during the discussions. Wang Xin, a professor at Peking University Law School, highlighted the pressing need to address cryptocurrency money laundering from a legal perspective. Xin noted that the use of cryptocurrencies and digital assets for money laundering has become a mainstream trend. He also mentioned that the current Chinese law lacks a clear definition of digital assets.
Professor Wang Xin pointed out that although the revised draft includes content aimed at preventing money laundering of digital assets, it lacks operational guidance on subsequent actions, such as the seizure, freezing, deduction, and confiscation of criminal assets related to money laundering. He described the current state as "disjoint" and stressed the need for improvement in combating money laundering involving digital assets. China had imposed a complete ban on the use of cryptocurrencies in 2021, prohibiting offshore exchanges from offering services and banning all forms of mining. Despite the ban, mainland users have found ways to enter the cryptocurrency market, leading to increased money laundering risks. The upcoming revisions aim to establish stricter guidelines to curb such activities.
