Considering the rapid growth of the cryptocurrency industry, China is stepping up its efforts to revise the anti-money laundering (AML) regulations to cover crypto transactions.
On January 22, Prime Minister Li Qiang held a meeting with a team of executives to go over the ‘updated draft’ of the AML regulations. According to a report published on IFC, this represents a significant leap for China, marking its first update to its AML regulation since 2007.
The focus of this resolution is to eliminate the laundering concerns surrounding crypto money, as indicated by the nation’s legislators. Following the public demands, the amendment was first put forward in 2021. Subsequently, the State Council featured the updated draft in the legal plan of action in 2023. As declared by Peking University professor Wang Xin, the new amendment to the AML rules is projected to come into effect in the year 2025.
China Strives to End Money Laundering Crimes
From a legal perspective, Xin stated that nothing is more crucial than tackling the issue of exploiting cryptocurrencies in money laundering. China has enacted a law that bans facilitating or obtaining services regarding cryptocurrencies since 2011. The law proved insufficient to suppress the escalating instances of cryptocurrency use in money laundering offenses.
“Although the revised draft of the Anti-Money Laundering Law has included the prevention of virtual asset money laundering, there is a lack of operational guidance on the subsequent seizure, freezing, deduction, and confiscation of virtual asset money laundering crimes, resulting in a ‘disconnect.’” The professor stated.
The Importance of Legal Authorization in Cryptocurrency Regulation
Yan Lixin, executive director of the China Anti-Money Laundering Research Centre at Fudan University, spoke about the importance of legal authorization leads to challenges in tackling the use of cryptocurrencies for money laundering. Furthermore, he added, “there is still room for improvement” when it comes to the process of law enforcement of AML’s regulations in China.
In April 2023, another amendment related to the AMLs was proposed by Hong Kong’s Securities and Futures Commission (SFC). Later in October, the regulator disclosed plans to update the crypto market regulations in the light of new market developments.
In this new amendment, five key areas were covered concerning crypto market. These areas include distributing virtual assets (VA)-related products, facilitating crypto dealing services, providing platform assistance, consultation services, and execution steps.
The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) have received a growing volume of inquiries from agents, in relation to dispersing virtual asset-related products (VA-related products) to investors.
