China’s Supreme Court labels virtual assets as money laundering tools
The Supreme People’s Court of China, in conjunction with the Supreme People’s Procuratorate, has officially classified virtual asset transactions as a potential means for money laundering in a newly issued legal interpretation.
This joint document, titled “Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Money Laundering,” aims to clarify and update the application of China’s money laundering laws.
The interpretation lists virtual assets as one of the methods criminals might use to launder money, specifically through the transfer or conversion of criminal proceeds via virtual asset transactions or financial asset exchanges.
This update is intended to help lower courts more accurately identify and prosecute money laundering activities that involve digital currencies and virtual assets.
The inclusion of virtual assets in the legal framework reflects China’s ongoing efforts to strengthen its financial regulations amid the growing use of digital currencies and Blockchain technology.
Article 191 of China’s Criminal Law, which addresses money laundering, has been expanded to include the use of virtual assets as a method to conceal or obscure the origin and nature of illicit funds.
The interpretation came into effect on August 20, 2024, marking a significant step in China’s regulatory approach to combating financial crimes involving cryptocurrencies and other virtual assets.
The decision to include virtual assets as a money laundering tool follows a significant rise in money laundering prosecutions in China, with a reported 20-fold increase in convictions from 2019 to 2023.
In the first half of 2024 alone, 1,391 individuals were prosecuted for money laundering, reflecting a 28.4% increase from the previous year.
This legal update underscores China’s commitment to tightening financial regulations and cracking down on illegal activities that exploit the anonymity and decentralisation of virtual assets.
The move may have broad implications for the use and regulation of cryptocurrencies in China, where the government has already imposed stringent restrictions on crypto-related activities.
As China continues to enforce and expand its anti-money laundering laws, this latest interpretation could serve as a model for other countries grappling with the regulation of virtual assets in the fight against financial crime.
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