China Tightens Laws on Crypto Use in Money Laundering Crimes

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As a seasoned crypto investor with over a decade of experience navigating the volatile and ever-evolving landscape of digital currencies, I find China’s recent crackdown on money laundering activities through virtual assets to be both reassuring and slightly amusing. Reassuring, because it indicates that China is taking steps to address the growing issue of financial crimes in the crypto space. Slightly amusing, because if you’ve been around as long as I have, you know that the cat-and-mouse game between regulators and crypto enthusiasts is part of the fun!

The Higher Courts of China (Supreme People’s Court and Supreme People’s Procuratorate) have rolled out new strategies to enforce anti-money laundering regulations, effective August 20th, 2024. These measures set forth stringent requirements for the prosecution of crimes related to money laundering.

China Focus on Virtual Assets in Money Laundering

1. The recently introduced regulations primarily aim at preventing the misuse of digital currencies in money laundering operations. These rules redefine digital transactions as means for disguising illicit earnings and filling previous legal loopholes. This underscores China’s increasing focus on tackling the growth of the digital currency market and modern financial crimes.

As a researcher, I’ve observed that China’s highest court and prosecution office have identified “virtual asset” transactions as potential methods for money laundering within the interpretation of their Criminal Law. In the first half of 2024, it was reported that a staggering 1,391 individuals were indicted for money laundering activities, marking a significant year-on-year increase of 28.4%.

— Wu Blockchain (@WuBlockchain) August 19, 2024

As an analyst, I’d rephrase the given statement like this: “Under the revised perspective, transactions involving virtual assets may be regarded as means to conceal and disguise the origin of ill-gotten funds. Furthermore, these guidelines define ‘serious circumstances’ in money laundering cases, such as laundering over 5 million yuan or suffering losses exceeding 2.5 million yuan.”

As a researcher delving into the realm of financial crimes, I am sharing that my focus is on China’s strategic approach to strengthen its legal system in combating such offenses. Here are some targeted actions they plan to implement:

Rise in Money Laundering Prosecutions 

Chinese authorities have significantly boosted their money laundering investigations and prosecutions, with nearly 3,000 cases handled in the year 2023. This is a staggering 20-fold increase compared to the number of cases from 2019, suggesting an escalating commitment to curb money laundering activities. Furthermore, during the first half of 2024, there was a 28.4% rise in prosecutions, demonstrating ongoing efforts to combat financial crimes.

Since 2020, the Supreme People’s Procuratorate has been leading the charge in curbing money laundering activities. It has also encouraged collaboration among various departments, such as the National Supervisory Commission and the Ministry of Public Security, demonstrating China’s comprehensive strategy against corruption and money laundering. The recently announced legal interpretation reflects this multifaceted approach, enhancing the effectiveness in prosecuting these illicit activities.

The explanation further clarifies terms like ‘self-laundering’ and ‘laundering by others’, detailing specific instances where money laundering is deemed especially serious. It also offers guidance on the simultaneous punishments if money laundering occurs alongside other offenses.

Additionally, the guidelines provide a clearer picture of certain methods of money laundering that the prosecution may use to bring charges. Furthermore, it clarifies penalties and allows for lenient punishments in certain situations, which seems just when applied.

$2 Billion in Ethereum Shifted Amid Crackdown

At the same time as these improvements, approximately $2 billion in Ethereum tied to the Plus Token Ponzi scheme has been recently shifted. Originally seized by Chinese authorities, these funds were transferred from wallets connected to the fraudulent activity, indicating potential involvement of the government.

Since April 2021, there’s been no activity observed on the cryptocurrency wallets under discussion, fueling rumors that the Chinese government might be disposing of the confiscated digital assets.

The assets tied to the Plus Token scam, a significant crypto Ponzi scheme, have been confiscated during China’s efforts to combat financial offenses. This action shows an effort to tighten control over cryptocurrency exchanges, which is one strategy in the ongoing battle against money laundering.

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2024-08-19 19:23