In China, local lawmakers intend to monitor and analyze new risks in the financial area related to such practices as money laundering.
The media of the mentioned Asian country report that Beijing will pay special attention to new technologies as part of the announced efforts. In this case, cryptocurrency is primarily meant.
Also, Chinese media report that new measures to control processes occurring in the financial area are contained in a draft revision to the Anti-Money Laundering Law that will undergo its second round of review during this week’s session of the Standing Committee of the National People’s Congress, the country’s top legislative body.
Wang Xiang, spokesman for the Legislative Affairs Commission of the Standing Committee, said that the proposed monitoring standards provide for a set of control requirements for new types of activities related to the practice of money laundering.
The media also reported that the specified legislative initiative clarified the definition of such a concept as combating money laundering. In this case, attention is drawn to such types of crimes that are characterized by a higher level of complexity in terms of the specifics of planning and implementation of the process. Such practices are most often used for money laundering and are, in a sense, a method of organized crime.
According to media reports, the new legislative initiative, which will be considered by the Chinese authorities this week, provides for a comprehensive provision on expanding the list of offenses. In this case, it is implied that the level of compliance of the criminal legislation of the Asian country with modern challenges is increased.
The proposed changes will help Beijing increase the level of effectiveness of the fight against illegal activities carried out in the financial area. Also, in the context of the transformed approach, China intends to address the risks associated with cryptocurrency. Successful implementation of these intentions will make the Asian country’s practice of combating financial crimes more in line with international standards. In this context, it is worth noting that China is facing stricter international scrutiny.
Beijing does not identify virtual currencies as legal tender. There is also a ban on the circulation of such currencies on the market in China.
Wang Xiang says that the rapid development of new technologies and business models complicates the detection and investigation of circumstances related to such illegal practices as money laundering. In the relevant context, it was also noted that this issue refers to a general problem faced by countries around the world.
The development of new technologies, which is a process characterized by a high rate of intensity, has become a serious challenge in the area of ensuring security in the financial industry. It is worth noting that the corresponding circumstance of the current historical moment is global and extends not only to such a sector of criminal activity as money laundering. For example, the development of artificial intelligence contributes to the fact that the fraudulent methodology applied in the virtual space is gradually becoming more sophisticated. Criminals have access to AI technologies, which makes it more difficult to solve such a problem as detecting their activity. In the context of the corresponding challenge in the security area, personal awareness of users is important. For example, a query in the Internet search system, such as how to know if my camera is hacked, will allow anyone to obtain information about the signs of unauthorized access to the device. It is worth noting that digital literacy is one of the tools to combat cybercrime. In the era of big data, information has practical value that can be used to achieve specific results in the space of functional processes that have material consequences and affect what is happening outside the digital environment.
Returning to the problem of money laundering, it is worth noting that the corresponding practice is used in cases where there is a need to hide the origin of money. Such a need is associated with the receipt of funds illegally. Money laundering schemes usually involve front organizations that form what can be described as the appearance of legality. Terrorist structures are often interested in such practices. Money laundering is also typical for attempts to hide the facts of corrupt activities. Moreover, the corresponding practice is often used in the gambling area.
Money laundering has already become a subject of discussion in the legal space, political plane, and economic sphere. This is because the algorithms for committing financial crimes are becoming more complex. Against this background, financial intelligence is becoming increasingly important as a tool for combating international crime and terrorism. In the context of public debate, there are periodic disagreements regarding the scale of combating money laundering from the point of view of the right to privacy and the right to confidentiality.
At the same time, money laundering is becoming an increasingly large-scale and sensitive threat. Preliminary estimates of online platforms specializing in the study and analysis of processes occurring in the financial industry indicate that, for example, in the United States in 2017, the volume of the mentioned practice amounted to more than $200 billion. It is worth noting that more than 6 billion dollars of this amount is related to illegal goods and services sold by almost 355,000 unregistered sellers. In this context, it is important that over time, the scale of the problem in terms of damage caused has increased.
The International Monetary Fund notes that countries exporting illicit financial flows are experiencing reduced opportunities, increased inequality, rising illegal immigration, growing poverty, misuse of resources, and environmental degradation.
China’s new anti-money laundering measures stipulate that the Asian country’s central bank should be obliged, in cooperation with relevant authorities, to issue guidelines to monitor the corresponding risks.
Wang Xiang says that financial institutions are also required to assess and address the threats of the mentioned crimes related to new business models.
Last month, the Supreme People’s Court and the Supreme People’s Procuratorate listed cryptocurrencies, online game coins, and tipping during live streaming as money laundering channels. Also this year, a criminal group involved in the illegal practice was dismantled in Beijing. The mentioned gang used virtual money to trade foreign currencies in violation of the law. The total amount of financial operations carried out by the criminal group dismantled in Beijing amounted to more than 2 billion yuan ($281 million).
In 2022, authorities in the Inner Mongolia autonomous region indicted 63 people involved in using blockchain networks to exchange virtual currencies for money laundering purposes in a case worth up to 12 billion yuan.
The new measures to combat financial crime that will be considered in China also provide conditions for improving the balance between risk management and optimization of financial services, in particular for data protection and information security, said Wang Xiang.
Anti-money laundering measures should be proportionate to the risk associated with ensuring the normal flow of capital and the provision of financial services, according to the proposed changes. It was stated by Wang Xiang. According to him, financial institutions are required to conduct due diligence on customers based on the nature of the transaction and the associated money laundering risks, with simplified procedures used in cases when the threat is lower.
Last year, the amount of virtual currencies involved in criminal cases in China amounted to 430.72 billion yuan. It is worth noting that in 2022, the corresponding figure was 12 times lower. This information was released by the Beijing-based Safeis, a Chinese technology service firm specializing in global blockchain ecosystem security.
