China’s Enhanced Framework for Combating Money Laundering
China is gearing up to enhance its framework for combating money laundering as it prepares for the next five-year policy cycle, with a particular emphasis on tackling crimes associated with virtual currencies. The People’s Bank of China recently released a policy review concerning anti-money laundering efforts during the current 14th Five-Year Plan period, outlining the government’s renewed commitment to combating financial crimes.
Key Focus Areas
Key focus areas identified include:
- Virtual currency laundering
- Cross-border fund transfers
- Telecom fraud
- Online gambling
- Trafficking in drugs
- Illegal fundraising activities
- Underground banking operations
The central bank indicated that the country is transitioning into a new phase of anti-money laundering enforcement, having laid down essential legal and regulatory foundations over the past five years.
Future Initiatives
Future initiatives will revolve around enforcing the newly revised Anti-Money Laundering Law, which incorporates a risk-based approach and sets out new guidelines for monitoring money laundering threats tied to emerging technologies. Additionally, a national beneficial ownership reporting system was established in 2024 to restrict the misuse of shell companies for hiding illegal activities.
Coordinated Enforcement Actions
In concert with various government agencies, the People’s Bank has stepped up enforcement actions against money laundering, particularly through a coordinated campaign initiated in 2022. This campaign employs a dual investigation method that scrutinizes both criminal activities and related laundering networks, reflecting an organized approach to tackling professionalism within money laundering organizations.
Judicial Developments
A striking development is the significant increase in court judgments related to money laundering offences, with over 2,000 decisions made under Article 191 of the Criminal Law in 2025. The report highlights the evolving techniques employed by criminal entities to conceal illicit proceeds, exacerbated by the rise of new business models and technologies that complicate tracking and monitoring financial transactions.
Concerns Over Cross-Border Laundering
Chinese authorities are particularly concerned about cross-border laundering operations, as organized crime takes advantage of varying regulations across different regions. By utilizing underground banking and virtual currencies, these groups engage in sophisticated schemes to obscure the origin of funds.
Scrutiny of Cryptocurrency Activities
The ongoing scrutiny of cryptocurrency-related activities has also intensified recently. In February, regulatory bodies, including the People’s Bank of China and the China Securities Regulatory Commission, issued a notice expanding restrictions to offshore renminbi-pegged stablecoins and tokenized assets. The circular clarified that cryptocurrencies like Bitcoin and Ether lack the legal status of traditional currencies in China, thereby declaring various associated financial activities illegal.
International Collaboration and Future Outlook
Looking forward, plans for stronger international collaboration in areas such as intelligence sharing, investigations, asset recovery, and coordination in enforcement actions are on the agenda, especially regarding cross-border financial crimes. Moreover, Liu Guixiang, a judicial committee member of the Supreme People’s Court, announced ongoing efforts to set clearer adjudication standards for cases involving cryptocurrencies.
Despite these challenges, there remains cautious optimism within the regulatory framework as Wang Xin, a senior official at the People’s Bank of China, acknowledged ongoing scrutiny of stablecoins and central bank digital currencies, recognizing their potential impact on global payment systems and calling for enhanced regulatory cooperation to manage their implications.
