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Addressing Virtual Asset Risks
China, one of the world’s largest economies, is taking proactive steps to revise its outdated Anti-Money-Laundering (AML) law, targeting the escalating risks associated with virtual assets.
Draft Amendment Discussions
At a recent State Council meeting chaired by Chinese Premier Li Qiang, discussions were held regarding a draft amendment to the existing AML law. The proposed revision, aimed at strengthening regulations, will soon undergo review by the national legislature, marking a significant move in the country’s regulatory landscape.
Focus on Money Laundering Involving Virtual Assets
Legal experts have pointed out that the primary focus of the amendment is to combat money laundering activities involving virtual assets. With the proliferation of cryptocurrencies and other digital tokens, there’s an urgent need to update regulations to mitigate the risks posed by illicit financial activities facilitated through these mediums.
Proactive Measures Against Crypto
China’s decision to revise its AML law reflects the government’s proactive stance against cryptocurrencies and their potential misuse in criminal activities. Despite the ban on crypto operations such as mining and trading, authorities recognize the evolving nature of the digital asset space and are taking preemptive measures to safeguard the financial system.
Intensifying Efforts
Senior officials, including Zhang Xiaojin, a senior prosecutor with the Supreme People’s Procuratorate, have reiterated the government’s commitment to intensify efforts against money laundering and illegal foreign exchange trading crimes. In particular, there’s a growing focus on addressing the use of digital currencies for illicit fund transfers across borders.
China’s AML Legislation Evolution
China’s AML legislation has remained largely unchanged for over 17 years, leaving significant gaps in addressing the challenges posed by virtual assets. However, the proposed amendment signals a shift towards modernizing regulations to keep pace with technological advancements and global standards in combating financial crimes.
Incorporating FATF Recommendations
Andrew Fei, a partner at law firm King & Wood Mallesons in Hong Kong, emphasized the importance of incorporating recommendations from international bodies like the Financial Action Task Force (FATF) into the amended AML law. By aligning with global standards, China aims to enhance its regulatory framework and effectively tackle the unique challenges posed by virtual assets and emerging financial technologies.
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