China is strengthening its fight against financial crime by expanding anti-money laundering (AML) enforcement and increasing scrutiny of virtual currency-related activities. The move comes as authorities prepare the country’s financial security framework for the next stage of economic development under its long-term policy plans.
According to a new policy document released by the People’s Bank of China (PBOC), regulators will continue targeting virtual currency laundering, cross-border money laundering networks, underground banking operations, telecom fraud, illegal fundraising schemes, online gambling, and other financial crimes that threaten economic stability.
Virtual Currency Laundering Remains a Key Concern
Chinese authorities have identified virtual currencies as one of the growing tools used by criminal organizations to conceal and move illicit funds.
The central bank stated that criminals increasingly rely on digital assets, underground banking networks, nominee accounts, and sophisticated cross-border transaction methods to hide the origin and destination of funds. These techniques make financial investigations more complex and create challenges for law enforcement agencies attempting to trace suspicious transactions.
As a result, virtual currency laundering has become a major enforcement priority within China’s broader anti-money laundering strategy.
Stronger Enforcement Through Multi-Agency Cooperation
China has significantly increased its efforts to combat money laundering over the past several years.
In 2022, the People’s Bank of China partnered with the Ministry of Public Security and nine additional government agencies to launch a nationwide campaign targeting money laundering activities.
Under this initiative, investigators adopted a “dual investigation” approach that focuses on both the underlying criminal activity and the financial networks used to launder illicit proceeds.
Authorities have expanded cooperation in:
- Evidence collection
- Criminal investigations
- Asset tracing
- Legal enforcement
- Cross-border financial crime monitoring
The campaign has also specifically targeted professional money laundering organizations and virtual currency laundering operations.
More Than 2,000 Money Laundering Convictions
The report highlighted the scale of China’s enforcement efforts.
According to the People’s Bank of China, courts across the country issued more than 2,000 money laundering convictions during 2025 under Article 191 of China’s Criminal Law.
These convictions reflect the government’s continued focus on disrupting criminal financial networks and strengthening compliance throughout the financial system.
Authorities believe emerging technologies and digital assets have created new opportunities for criminals to transfer and conceal funds, making stronger enforcement increasingly necessary.
Cross-Border Money Laundering Networks Under Scrutiny
Chinese regulators have also identified cross-border laundering operations as a growing threat.
The report noted that criminal groups often exploit differences in legal systems and regulatory frameworks between countries to move funds internationally.
Common methods include:
- Underground banking services
- Offsetting transactions
- Shell companies
- Nominee accounts
- Virtual currencies
- Cross-border payment networks
Officials warned that these techniques allow criminal organizations to disguise fund movements and avoid traditional financial monitoring systems.
As a result, China plans to deepen cooperation with foreign regulators and law enforcement agencies to improve investigations and asset recovery efforts.
Revised Anti-Money Laundering Law Expands Oversight
A major component of China’s strategy is the implementation of its revised Anti-Money Laundering Law, which officially took effect in 2025.
The updated legislation introduces a more risk-based regulatory framework and places greater emphasis on monitoring emerging technologies and new financial sectors.
Key objectives include:
- Strengthening risk-based supervision
- Improving beneficial ownership transparency
- Expanding reporting requirements
- Enhancing cross-border enforcement cooperation
- Addressing risks linked to new technologies
The law aims to modernize China’s AML framework and improve the country’s ability to respond to evolving financial crime threats.
Beneficial Ownership Reporting Becomes a Priority
In 2024, China introduced a national beneficial ownership reporting system through joint measures issued by the People’s Bank of China and the State Administration for Market Regulation.
The system is designed to prevent criminals from using shell companies and complex corporate structures to hide ownership and move illicit funds.
Financial institutions are now required to identify and verify the ultimate beneficial owners behind accounts and transactions while maintaining higher standards for customer due diligence.
Authorities view transparency around ownership structures as a critical component of combating financial crime.
AML Oversight Expands Beyond Banks
China’s anti-money laundering framework is no longer limited to traditional banks and financial institutions.
Regulators have expanded oversight to several non-financial industries that could potentially be used for money laundering purposes.
These sectors include:
- Lawyers
- Accountants
- Notaries
- Real estate companies
- Precious metals dealers
- Gemstone traders
- Company formation agents
The broader supervision framework is intended to close regulatory gaps and reduce opportunities for criminals to move illicit funds through alternative channels.
China Maintains Tough Stance on Cryptocurrencies
The latest AML initiative follows a series of regulatory actions targeting cryptocurrency-related activities.
Earlier this year, Chinese authorities reinforced restrictions on digital assets, extending oversight to offshore renminbi-backed stablecoins and tokenized real-world assets.
Regulators reiterated that cryptocurrencies such as Bitcoin, Ethereum, and Tether do not possess the legal status of sovereign currency within China.
The framework also classifies activities such as:
- Crypto trading
- Token issuance
- Market-making services
- Crypto-linked financial products
as illegal financial activities under Chinese law.
Authorities have further stated that cryptocurrency investment contracts may not receive legal protection, leaving investors responsible for any resulting losses.
International Cooperation Becomes Increasingly Important
While China maintains strict domestic controls on cryptocurrencies, policymakers continue monitoring developments in global digital asset markets.
The People’s Bank of China emphasized that future AML efforts will involve greater international cooperation, including:
- Intelligence sharing
- Joint investigations
- Asset recovery efforts
- Regulatory coordination
- Cross-border enforcement actions
Officials believe stronger international collaboration is essential as financial crimes increasingly operate across multiple jurisdictions.
Interestingly, some Chinese policymakers have also acknowledged the growing role that stablecoins and central bank digital currencies could play in future international payment systems.
Recent comments from senior central bank officials suggest China remains attentive to developments in global digital finance while maintaining strict controls on private cryptocurrency activities.
Conclusion
China’s latest anti-money laundering strategy demonstrates the government’s determination to strengthen financial security and combat increasingly sophisticated criminal networks.
By targeting virtual currency laundering, expanding beneficial ownership reporting, broadening regulatory oversight, and deepening international cooperation, Chinese authorities are building a more comprehensive framework to address modern financial crime.
As digital assets continue to evolve, virtual currency-related enforcement is expected to remain a central focus of China’s financial regulatory agenda in the years ahead.
