China warns about crypto mixers and privacy coins in money laundering

The Supreme People’s Procuratorate of China, the country’s highest public prosecutor’s office, has published a research article calling for a stricter approach to crypto-related money laundering. The use of crypto mixers, privacy coins and conspicuously large transactions should henceforth be regarded as an indication of money laundering behaviour, the researchers argue.

Crypto mixers and privacy coins under fire

In the article, published on the official website of the Chinese public prosecutor’s office, the authors describe how criminals are increasingly using digital currencies to conceal money flows. According to the researchers, crypto mixers, tools that blend transactions to mask their origin, and privacy coins such as Monero are typical instruments for such practices.

The authors call for the establishment of clear guidelines that legally qualify this type of behaviour as an indication of money laundering intent. In doing so, the prosecutor’s office aims to give judges and prosecutors more guidance when assessing cases involving cryptocurrency. This applies not only to the use of mixers and privacy coins, but also to transactions that deviate from normal behaviour because of their size or structure.

On-chain evidence and seizure of crypto

In addition to focusing on suspicious transaction patterns, the research article also advocates better use of on-chain evidence in court cases. Blockchain transactions leave permanent traces, and according to the researchers, this information can be used much more effectively in criminal proceedings.

The handling of confiscated cryptocurrencies also warrants attention, the authors state. They call for standardised procedures for the management and processing of seized digital assets. At present, China lacks clear protocols for this, causing practical problems in the handling of criminal cases. The article comes at a time when governments worldwide are seeking ways to gain control over the use of crypto in financial crime.