Author: Zhang Yonghai

What is "Self-Laundering"?

Recently, we have noticed that many clients are inquiring about the same question: According to the latest legal provisions, the act of a perpetrator laundering their own criminal proceeds, known as "self-laundering," now constitutes an independent money laundering offense. Previously, we often said "no punishment after the fact," meaning that if a criminal took the illicit funds and hid or spent them, it was considered a "natural continuation" of the upstream crime and should not be separately charged as a money laundering offense.

However, with the introduction of the "Criminal Law Amendment (XI)" and the latest judicial interpretation (2024 judicial interpretation), this old rule has been completely overturned. Now, if a suspect handles their own criminal proceeds, under certain circumstances, it may also constitute an independent "money laundering offense." This is equivalent to charging the upstream crime (such as financial fraud) and then additionally charging a money laundering offense, with both charges subject to cumulative punishment.

Core Challenges and Risk Boundaries

In judicial practice, distinguishing "self-laundering" from the "natural continuation" of upstream crimes has always been a key and difficult point in defense.

In simple terms, if a user merely holds, conceals illicit funds, or uses them for general living expenses, it is usually regarded as a "natural continuation" of the upstream crime and does not yet constitute a money laundering offense; however, once your disposal actions "exceed the natural scope of the upstream crime" and "violate new legal interests"—primarily the national financial management order and the judicial authorities' asset recovery efforts—it may be recognized as a money laundering offense.

The core judgment point for constituting "self-laundering" lies in whether the perpetrator has the subjective intent to "conceal or disguise" the criminal proceeds and their source. For example, actions such as transferring illicit funds to friends' accounts, engaging in complex transactions using virtual assets, exchanging currency through underground money houses, or transferring to accounts of enterprises with no substantial connection, pose higher risks; whereas depositing illicit funds into a personal fixed-term account, using them only for daily consumption, or directly transferring between one's own different bank cards generally poses lower risks.

It is worth noting that with the increasingly stringent legal provisions, both individuals and enterprises currently face unprecedented criminal risks, necessitating an enhancement of legal awareness and a careful clarification of behavioral boundaries.

Risk Prevention and Defense Strategies

For Enterprises

To avoid being involved in "being laundered" or actively "laundering," the first priority is to establish compliance awareness and prepare in advance. Enterprises should comprehensively build an anti-money laundering internal control culture from management to grassroots employees, improve internal policies and processes, and strengthen due diligence on customer identities, ensuring that services are not provided to individuals with unclear identities or using pseudonyms, while implementing enhanced management measures for high-risk customers and transactions.

For high-risk businesses such as virtual assets, third-party payments, and large cross-border transactions, a professional monitoring mechanism must be established to promptly identify and report abnormal transaction behaviors; once suspicious situations such as short-term large or high-frequency transactions are detected in accounts, immediate investigation and restriction measures should be taken, and regulatory authorities should be proactively informed.

For Individuals

The core of avoiding the "self-laundering" trap lies in not engaging with funds of unknown origin, ensuring that fund handling is natural and reasonable, including never using others' accounts for transactions, avoiding transaction behaviors that are obviously inconsistent with one's income and consumption habits, and being cautious with cash to prevent concealing fund flows through dispersed deposits or frequent transfers.

If unfortunately accused of "self-laundering," the choice of defense strategy by a lawyer should focus on the two key points of "independent legal interest infringement" and "subjective intent," for example: arguing that the fund disposal actions did not substantially hinder the state's recovery of illicit funds or infringe upon financial order, and should only be regarded as a natural continuation of the upstream crime, thus not warranting separate conviction; providing reasonable justifications to refute the intent to "conceal or disguise," or proving that the perpetrator lacked knowledge of the illegal nature of the funds; also invoking the "principle of proportionality between crime and punishment," emphasizing that if the money laundering behavior is closely related to the upstream crime and is of minor circumstances, it should be treated as an aggravating circumstance of the upstream crime to reflect the principle of criminal law restraint, striving for a reduction in the overall sentence.

Why Are the New Regulations So Important?

The importance of these new regulations lies in the three fundamental changes they bring:

First, the intensity of the crackdown has been unprecedentedly enhanced, fundamentally changing the previous notion of "heavy on upstream crimes, light on subsequent laundering," achieving "double punishment" through the independent criminalization of "self-laundering," greatly enhancing the deterrent effect of the law;

Second, there has been a profound change in law enforcement strategies, with the Supreme People's Procuratorate implementing a "dual investigation" mechanism that requires simultaneous examination of money laundering clues when handling upstream cases, directly driving an explosive increase in the number of money laundering prosecutions, with the number of prosecutions in 2023 having surged to nearly 20 times that of 2019;

Finally, this marks China's full alignment with international standards in the field of anti-money laundering, with the independent criminalization of "self-laundering" not only being an inevitable requirement for fulfilling international obligations but also a core measure for actively safeguarding national financial security and integrating into the global governance system.

Conclusion

The criminalization of "self-laundering" is an irreversible legal trend, and both individuals and enterprises must remain vigilant. For lawyers, this is one of the main battlegrounds for future criminal defense, and it is essential to deeply understand the judicial boundaries of "independent legal interest infringement" in order to secure the maximum legal rights for clients in the face of dual charges.

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