China targets cryptocurrencies, online game coins in intensified money-laundering crackdown
In recent years, there has been growth of online platforms being used for money laundering through virtual rewards via live streaming and gaming.
Virtual currency, game coins, internet platforms and payments through live streaming have become new money-laundering channels, showing more complex and hidden networking and chainlike characteristics, the statement said.
In February, authorities in Shanghai charged four live streamers with money laundering after they exchanged virtual gifts and rewards that were found to be part of an illegal fundraising scheme totalling 1.2 billion yuan (US$168 million).
The crackdown on money-laundering crimes continued to intensify
In 2021, authorities in Shanghai also found that an “underground bank” had engaged in illegal exchange of foreign currencies worth 2.5 billion yuan over six years using game cards – prepaid cards that allow users to buy virtual currency for online games.
Regulators have sought to revamp China’s anti-money-laundering laws to bolster a crackdown on illegal activities and address risks related to virtual assets.
A draft amendment to the anti-money-laundering law, which was enacted in 2006 and took effect in 2007, was discussed at a State Council meeting chaired by Premier Li Qiang in January, with the law later submitted for review by the national legislature.
In 2023, 2,971 people were prosecuted for money laundering, representing a nearly twentyfold increase from 2019, Zhang Jianzhong, an official from the top prosecuting body said on Monday.
Zhang added that in the first half of 2024, 1,391 people had been prosecuted for money laundering, up by 28.4 per cent year on year.
“The crackdown on money-laundering crimes continued to intensify,” Zhang said.
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Other amendments announced on Monday included clearer guidelines around “serious circumstances” in money-laundering cases, such as refusal to cooperate with authorities or if the amount being laundered was more than 5 million yuan.
Offenders could face between five and 10 years in prison and a minimum fine of 200,000 yuan (US$28,000).
Criminals use virtual currencies and game coins to make transfers across China’s borders through underground banks, making the cases difficult to investigate and prosecute, the statement said, adding that the transaction amounts were often sizeable.
Smuggling, corruption and bribery and financial crimes committed through cross-border transfer of assets were among the most common money-laundering cases investigated by authorities between 2022 and 2023, the Supreme People’s Court statement said.
China’s central bank has previously urged banks and mobile payment providers to be vigilant and stop providing services related to virtual currency activities.
Prosecutors in the likes of Beijing, Zhejiang, Fujian, Henan and Hubei have actively worked with relevant departments to strengthen the coordination between law enforcement and anti-money-laundering through measures such as information sharing, regular joint meetings and the setting up of a financial judicial coordination centre.