China Proposes Legislative Overhaul to Combat Crypto Money Laundering

The current legal environment is constrained by inconsistencies between the revised Anti-Money Laundering Law and Article 191 of the Criminal Law. Because the latter restricts money laundering charges to only seven specific upstream crimes, authorities frequently rely on broader, less precise statutes regarding the concealment of criminal proceeds. Experts from the Yuhu District People’s Procuratorate and Xiangtan University argue this gap allows sophisticated criminal groups to exploit the decentralized, anonymous nature of digital currencies with minimal legal friction.

To bridge this divide, the proposed reforms advocate for a mandatory dual-investigation approach, where prosecutors must simultaneously examine underlying criminal activity and associated financial layering. The recommendations call for the formal recognition of blockchain transaction hashes and analytical reports as self-authenticating evidence. Furthermore, the proposal suggests that courts should be permitted to infer criminal intent when suspects utilize privacy-focused tools like mixers or engage in high-value, rapid-fire transactions that lack a clear economic rationale.

Beyond investigative tactics, the authors urge the creation of a nationalized asset recovery mechanism. Currently, China lacks standardized procedures for the custody, valuation, and disposal of seized crypto assets. A centralized platform, supported by expert committees to oversee blockchain-based asset pricing, would replace the existing ad hoc approach. These measures align with the People’s Bank of China’s recent commitment to prioritize crypto-related financial crime, signaling an intent to tighten control over illicit capital flows despite the country's broader ban on cryptocurrency circulation.