China to Revise AML Law to Address Risks Associated with Virtual Assets

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China to Revise AML Law to Address Risks Associated with Virtual Assets
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China is set to revise its outdated Anti-Money-Laundering (AML) law in a bid to tackle the increasing risks associated with virtual assets.

The draft amendment, discussed at a State Council meeting chaired by Chinese Premier Li Qiang, will soon undergo review by the national legislature, according to a report by South China Morning Post.

While the full text of the proposed amendment has not been disclosed, legal scholars have indicated that its primary objective is to combat money laundering involving virtual assets.

The urgency to address money laundering related to virtual assets is emphasized in a report by Chinese digital news media Jiemian, citing Yan Lixin, executive director at the China Centre for Anti-Money-Laundering Studies at Fudan University in Shanghai.

China Takes Proactive Measures Against Crypto

China’s latest initiative in the fight against money laundering reflects the government’s determination to stay abreast of developments in the Web3 space, including non-fungible tokens and other virtual assets.

This effort aligns with the country’s steadfast ban on cryptocurrency operations, such as mining and trading.

The forthcoming amendment to the AML law, expected to be passed next year, aims to address emerging forms of money laundering risks.

Peking University Law School professor Wang Xin, involved in the discussions surrounding the law’s revision, highlights the need to adapt to evolving practices.

Zhang Xiaojin, a senior prosecutor with the Supreme People’s Procuratorate, expressed a commitment to intensify efforts against money laundering and illegal foreign exchange trading crimes, particularly those involving digital currencies for transferring assets abroad.

Chinese authorities have heightened their scrutiny of money laundering cases related to cryptocurrencies in recent years.

In 2022, police in the Inner Mongolia Autonomous Region arrested 63 individuals for laundering 12 billion yuan (US$1.7 billion) using cryptocurrency.

China’s AML Remained Unchanged for 17 Years

China’s AML legislation has remained largely unchanged since its enactment over 17 years ago, failing to account for the advent of cryptocurrencies like Bitcoin ( BTC).

According to Andrew Fei, a partner at law firm King & Wood Mallesons in Hong Kong, revising China’s AML law to address risks associated with virtual assets is deemed necessary, given the significant evolution of international standards and best practices.

The Financial Action Task Force (FATF), an intergovernmental body combatting money laundering and terrorist financing, has already provided detailed recommendations to address virtual assets in the proposed AML law amendment.

Although the FATF rated mainland China as “largely compliant” with virtual asset-related AML recommendations, the country’s prohibition of crypto activities exempted it from several criteria.

Fei said that China should incorporate the relevant FATF recommendations into the amended AML law.

He proposed granting authorities additional powers and tools to specifically target the unique challenges arising from virtual assets and new technologies.

Despite China’s ban on virtual currencies and related activities, the borderless and decentralized nature of virtual asset transactions can still have direct or indirect impacts on the country, especially when exploited for illicit purposes.

The post China to Revise AML Law to Address Risks Associated with Virtual Assets appeared first on Cryptonews.

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