China Revises AML Law to Meet FATF Standards

February 2024

China has revised its Anti-Money Laundering (AML) Law, aiming to tackle the rising challenge of financial crime. The financial world is transforming rapidly, and criminals are exploiting new technologies to launder illicit funds. With virtual currencies and other digital tools becoming more complex and global, the need for robust AML measures is vital.

On January 22, 2024, Prime Minister Li Qiang convened an executive meeting of the State Council to examine the Anti-Money Laundering Law of the People’s Republic of China, as noted by Jiemian News. The revision seeks to address several crucial issues and boost China’s position in the fight against financial crime. <br>

The motivations behind Beijing’s revision of the AML Law include changing strategies to reflect the digital era, meeting global obligations and removing loopholes in the law. Criminals have adjusted with technological development, using virtual assets to conceal their illicit gains. The Chinese leadership believes the existing AML law lacks provisions to effectively deal with these emerging risks. As a member of the Financial Action Task Force (FATF), China is also committed to complying with international standards. Recent internal evaluations identified areas for improvement, triggering the need for decisive action. In particular, the existing AML law has loopholes, especially regarding non-financial institutions. These gaps create opportunities for money laundering, and transparency around beneficial ownership remains insufficient.

Revisions to the law include provisions for widening of coverage of the law, attention on digital currencies (described as virtual currencies), and international cooperation, as well as protecting vulnerable citizens. In terms of coverage, the updated law now covers specific non-financial institutions, significantly extending its scope and adherence to the latest FATF guidelines. By closing off channels for illicit activities, China aims to create a more comprehensive approach to combating money laundering. In terms of digital currency focus, the revised law recognizes that, despite the outlawing of digital currencies in China, there is still a need to address money laundering that utilizes them. This will likely pave the way for future regulations targeting digital assets. Although the revamped law empowers domestic institutions to resist unfair foreign measures, it also emphasizes a commitment to fighting financial crime on a global scale and working with FATF and other countries to counter money laundering. Lastly, the revised law seeks to improve safeguards for victims, including individuals or groups “inadvertently involved in money laundering cases.” <br> Through its AML reform, China underscores its determination to stay ahead of financial criminals and uphold international standards. As the financial landscape continues to evolve, this firm stand is designed to send a clear message: illicit gains will not be tolerated within China’s borders.  <br> Fortunately, solutions exist for those seeking security and safety whilst conducting business in regulated and vulnerable business sectors. Blockpass provides regulatory-compliant KYC and AML solutions to everyone - not just financial institutions or crypto-businesses. Using and building innovative technology to enable businesses to meet new AML challenges and standards, Blockpass enables adherence to any government regulations as companies seek to onboard new organizational and individual customers who are real, lawful users seeking to conduct business in a remote but fair and safe environment.  <br>

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