May 29, 2024
China Targets Cryptocurrency AML Regulations by 2025
Policy & Regulation

China Targets Cryptocurrency AML Regulations by 2025

China is gearing up for a substantial amendment to its Anti-Money Laundering (AML) regulations, targeting cryptocurrency transactions. The move comes in response to growing calls for increased scrutiny of the burgeoning crypto industry within the country. Prime Minister Li Qiang presided over an executive meeting of the State Council on January 22, discussing the revised AML law.

The first draft of the revised AML regulations was proposed in 2021, and it has been included in the legislative work plan of the State Council for 2023, with an expected enactment into law by 2025. This marks a significant update to China’s AML regulations, the last major revision of which occurred in 2007.

Experts and scholars involved in the discussions on the revised draft emphasized the broad scope of the AML law, making it challenging for the draft to be fully comprehensive. The urgency of certain issues is expected to be reflected in a preliminary framework.

Wang Xin, a professor at Peking University Law School who participated in the discussions, stressed the imperative need to address cryptocurrency money laundering at the legal level. He pointed out that the use of digital assets for money laundering has become a mainstream trend, and current Chinese laws lack a clear definition of digital assets.

While the revised draft incorporates measures to prevent digital asset money laundering, it reportedly lacks operational guidance on subsequent actions such as asset seizure, freezing, deduction, and confiscation related to money laundering crimes, creating a notable gap. Xin suggested that there is still room for improvement in combating digital asset-related money laundering.

China instituted a comprehensive ban on cryptocurrency use in 2021, restricting off-shore exchanges from providing services and prohibiting all forms of mining. Despite these measures, mainland users have found ways to access the crypto market, posing money laundering risks. The upcoming amended regulations aim to impose more stringent guidelines to curb such activities.

Image by wirestock on Freepik

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