Cross-Border Virtual Currency Transaction Monitoring

AML Training Session - Lan’s Enterprise Limited

Angela Ji, Compliance Officer January 2025

Overview

  • International FATF standards implementation
  • Cross-border compliance requirements
  • New Zealand regulatory framework
  • Chinese regulatory requirements
  • Detection and monitoring approaches
  • Cross-jurisdictional reporting obligations

Regulatory Framework

International Standards:

  • FATF Recommendations on Virtual Assets
  • FATF Travel Rule requirements
  • International cooperation frameworks

New Zealand Regulations:

  • Anti-Money Laundering and Countering Financing of Terrorism Act 2009
  • Financial Markets Authority (FMA) cryptocurrency guidelines
  • Reserve Bank of New Zealand (RBNZ) requirements
  • Department of Internal Affairs (DIA) guidance

Chinese Regulations:

  • New Anti-Money Laundering Law (2024)
  • Criminal Law Amendment (XI)
  • “924 Notice” on virtual currency activities
  • Supreme Court & Supreme Procuratorate guidance

Cross-Border Considerations

Key Requirements:

  1. Dual Jurisdiction Compliance

    • Meeting both NZ and Chinese standards
    • Understanding jurisdictional differences
    • Applying stricter standards where applicable

  2. Transaction Reporting

    • NZ suspicious transaction reporting
    • Chinese large-value transaction reporting
    • Cross-border transaction declarations

  3. Customer Due Diligence

    • Enhanced CDD for cross-border activities
    • Beneficial ownership requirements
    • Source of funds verification

Mining Operation Risks

Key Indicators:

  • Transaction memos containing terms like “graphics card”, “mining equipment”
  • Concentrated activities in areas with low industrial electricity costs
  • Connections to mining pool operators
  • NZ: Financial Markets Conduct Act requirements
  • China: “924 Notice” Article 4(7) prohibition
  • China: Virtual Currency Mining Rectification Notice
  • NZ: FMA guidance on mining operations

Telecom Fraud Patterns

Common Characteristics:

  • Cross-border nature of operations
  • Use of encrypted messaging apps
  • Cryptocurrency as primary payment method
  • NZ: Crimes Act 1961 provisions
  • NZ: Financial Markets Authority warnings
  • China: Supreme Court guidance on telecom fraud
  • China: New AML Law provisions

Online Gambling & Virtual Currency

Typical Patterns:

  • Offshore server infrastructure
  • USDT as primary settlement method
  • Pattern-based transaction amounts
  • NZ: Gambling Act 2003 requirements
  • NZ: DIA online gambling guidelines
  • China: Criminal Law provisions
  • China: Cross-border gambling prevention regulations

MLM & Pyramid Schemes

Detection Points:

  • References to specific crypto tokens
  • Structured recruitment levels
  • High-yield promises
  • NZ: Fair Trading Act provisions
  • NZ: Commerce Commission guidelines
  • China: Criminal Law Article 224
  • China: Regulations on Banning Pyramid Selling

Drug Trafficking & Virtual Currency

Risk Patterns:

  • “Virtual Currency + Express Delivery” model
  • Dark web marketplace transactions
  • Multi-layer transfer chains
  • NZ: Misuse of Drugs Act provisions
  • NZ: Customs and Excise Act requirements
  • China: Criminal Law Amendment (XI)
  • China: Anti-Drug Law provisions

General Money Laundering Techniques

Common Methods:

  • Specific decimal amount patterns
  • Multiple wallet address transfers
  • Platform-hopping transactions
  • NZ: AML/CFT Act requirements
  • NZ: FMA cryptocurrency guidelines
  • China: New Anti-Money Laundering Law
  • China: PBOC virtual asset guidance

Cross-Border Compliance

Key Focus Areas:

  • Transaction monitoring across jurisdictions
  • Regulatory reporting to both countries
  • Information sharing protocols
  • Enhanced due diligence requirements

Best Practices:

  • Apply stricter standard when requirements differ
  • Maintain comprehensive documentation
  • Regular staff training on both jurisdictions
  • Clear escalation procedures

Impact Analysis

Current Environment:

  • Complex cross-border regulatory landscape
  • Enhanced international cooperation
  • Technology-enabled monitoring requirements
  • Focus on information sharing

Future Considerations:

  • Harmonization of international standards
  • Enhanced blockchain analysis capabilities
  • Stronger cross-border cooperation
  • New detection technologies

Summary & Key Takeaways

  • Understand both NZ and Chinese requirements
  • Monitor for jurisdiction-specific indicators
  • Follow proper reporting procedures
  • Maintain comprehensive documentation
  • Stay updated on regulatory changes

Contact Information

New Zealand AML Compliance Team

Chinese Operations Contact

  • Local Compliance Representative
  • Follow internal escalation procedures
  • Refer to compliance manual for contact details

Questions & Discussion