Chinese legal experts have proposed a comprehensive overhaul of the country's legal framework to better combat cryptocurrency-related money laundering. In a paper titled Systematically Solve the Legal System Dilemma of Money Laundering Using Virtual Currency, prosecutors Yang Yingjie, Guo Shaoyou, and Liu Xinqi argue that current criminal laws and investigative practices are inadequate for blockchain-enabled financial crime.
The paper highlights how decentralized networks, pseudonymous transactions, and seamless cross-border transfers have made it easier for criminals to conceal illicit funds. It points to growing legal gaps in criminal classification, digital evidence collection, and asset recovery. The experts note that while China’s revised Anti-Money Laundering Law no longer restricts predicate offenses, Article 191 of the Criminal Law still limits standalone money laundering charges to only seven specific crimes, forcing prosecutors to rely on other statutes.
Key recommendations include broader judicial guidance to mandate money laundering reviews alongside underlying crime investigations, wider use of blockchain analysis to trace digital assets and strengthen evidence, and earlier involvement of prosecutors in major cases. The paper also urges courts to recognize blockchain records as authentic evidence when verified independently and to grant formal evidentiary status to blockchain forensic reports.
Challenges in recovering seized crypto assets are attributed to China’s restrictions on cryptocurrency circulation and the lack of unified procedures for handling digital assets, as well as cross-border legal inconsistencies. The authors call for stronger supervisory reviews and adjustments to prosecutorial performance metrics to emphasize asset recovery and standalone money laundering charges.
