China Escalates Anti-Money Laundering Initiatives to Tackle Virtual Currency Crimes

China has unveiled plans to strengthen its anti-money laundering strategies, improve oversight of crimes linked to virtual currencies, and enhance international collaboration as it prepares its financial security framework for the new five-year policy cycle.

The People’s Bank of China outlined in a policy document summarizing anti-money laundering initiatives during the 14th Five-Year Plan that officials will uphold a strong stance against money laundering offenses, especially focusing on virtual currency laundering, cross-border fund transfers, telecom fraud, online gambling, drug-related crimes, illegal fundraising, and underground banking networks.

The central bank emphasized that China has entered a new phase in anti-money laundering efforts after implementing comprehensive legal, regulatory, enforcement, and international cooperation strategies over the past five years. Future initiatives will focus on enforcing the updated Anti-Money Laundering Law, enhancing risk-based supervision, improving beneficial ownership reporting, and strengthening cross-border enforcement cooperation.

Virtual currency laundering retains priority status

The People’s Bank of China has underscored that authorities have increased actions against money laundering crimes in recent years, driven by a collaborative campaign initiated in 2022 involving the central bank, the Ministry of Public Security, and nine other governmental bodies.

This effort has resulted in the adoption of a “dual investigation” approach, examining both the criminal activities at their core and the laundering networks associated with them. The central bank highlighted that agencies have worked together to address challenges related to evidence collection, case management, and legal application while intensifying actions against professional money laundering groups, virtual currency laundering operations, and cross-border laundering schemes.

The report revealed that courts in China issued over 2,000 judgments under Article 191 of the Criminal Law, which addresses money laundering offenses, throughout 2025.

Authorities have warned that criminal organizations have devised new methods to conceal illicit funds. The central bank noted that emerging technologies and innovative business models have opened new avenues for potentially abusive money transfers, complicating detection and transaction tracing efforts.

Chinese officials have recognized cross-border laundering networks as an increasing concern. The report indicates that organized crime groups are increasingly exploiting discrepancies in legal and regulatory frameworks across jurisdictions, using underground banks, nominee accounts, offsetting transactions, and virtual currencies to obscure financial movements.

Broadened legal and regulatory framework

The central bank announced the completion of a significant revision to its Anti-Money Laundering Law, effective from 2025. The updated legislation adopts a risk-based approach and mandates the monitoring of money laundering threats related to new technologies and emerging industries.

In 2024, authorities established a national beneficial ownership reporting system through collaborative measures from the People’s Bank of China and the State Administration for Market Regulation. Officials described this system as essential for preventing shell companies from being used in illicit activities.

The report further indicated that regulators introduced new rules mandating financial institutions to identify and verify beneficial owners of their clients, while improving information quality through a differentiated reporting mechanism.

China has also expanded its anti-money laundering oversight beyond banks and financial institutions. The central bank worked alongside the Ministry of Justice, Ministry of Finance, Ministry of Housing and Urban-Rural Development, and other agencies to create oversight frameworks for lawyers, notaries, accountants, real estate businesses, precious metals dealers, gemstone traders, and company registration agents.

This document is released against the backdrop of tightening oversight on cryptocurrency-related activities in China.

In February, the People’s Bank of China, the China Securities Regulatory Commission, and other bodies issued a notice extending regulatory restrictions to offshore renminbi-pegged stablecoins and tokenized real-world assets. This framework clarified that cryptocurrencies such as Bitcoin, Ether, and Tether do not possess the same legal status as sovereign currency and cannot circulate as money within China.

The notice categorized crypto trading, token issuance, market-making services, and crypto-linked financial products as illegal financial activities. It further stated that civil legal acts related to cryptocurrency investments would be null and void, placing accountability for any resultant losses on investors.

The central bank stated that future anti-money laundering efforts will involve enhanced international cooperation on intelligence sharing, investigations, asset recovery, and enforcement coordination, especially in cases of cross-border criminal activities and illicit fund transfers.

In May, Liu Guixiang, a member of the judicial committee at China’s Supreme People’s Court, indicated that courts would further explore standards for adjudicating disputes related to virtual currencies and cross-border financial activities.

Despite these ongoing challenges, Wang Xin, director-general of the Research Bureau at the People’s Bank of China, highlighted that policymakers are closely monitoring stablecoins and central bank digital currencies. At the Lujiazui Forum on June 17, Wang remarked that stablecoins may play a larger role in international payments in the future, stressing the importance of ongoing regulatory coordination and international cooperation regarding their usage.