China Tightens AML on Crypto: Broader Global Enforcement

China doubles down on AML enforcement targeting virtual currency laundering

China has announced a major escalation in its anti-money laundering (AML) strategy, with a renewed focus on virtual currency laundering, cross-border money flows, and broader financial crime. The People’s Bank of China (PBoC) outlined measures to deepen regulatory oversight, improve beneficial ownership transparency, and strengthen international cooperation as the country prepares its financial security framework for the next five-year policy cycle.

Policy review and strategic direction

In a policy paper reviewing AML achievements during the 14th Five-Year Plan, Chinese authorities said they have reached a new phase of AML development after enacting a series of legal, regulatory, and enforcement reforms. The document highlights priorities for the coming years: full implementation of the revised Anti-Money Laundering Law, risk-based supervision, improved beneficial ownership reporting, and enhanced cross-border enforcement collaboration.

The PBoC emphasized that criminals are increasingly leveraging virtual currencies, underground banking networks, and emerging technologies to conceal and move illicit funds. As a result, regulators will sustain pressure on money laundering channels including virtual currency laundering, telecom fraud, online gambling, drug-related crimes, illegal fundraising, and underground banking networks.

Enforcement intensifies: convictions and investigative approach

Chinese courts issued more than 2,000 convictions under Article 191 of the Criminal Law in 2025, the provision that targets money laundering. Authorities said this surge reflects intensified enforcement driven by a cross-agency campaign launched in 2022 by the PBoC, the Ministry of Public Security, and nine other government bodies.

A key element of the campaign has been a dual-investigation model that simultaneously probes predicate offenses and the related laundering networks. This coordinated approach aims to close evidence gaps, streamline case handling, and disrupt professional money laundering groups, virtual asset laundering operations, and cross-border laundering schemes.

How criminals are adapting: underground banks and crypto methods

The PBoC report warns that organized crime is exploiting legal and regulatory differences across jurisdictions. Criminals increasingly use underground banks, nominee accounts, offsetting transactions, and virtual currencies to disguise fund movements. New business models and advanced technologies complicate transaction tracing, making detection and attribution more difficult for investigators.

Cross-border laundering networks pose a particular challenge. Groups move funds across borders using a mix of on- and off-chain techniques and opaque intermediaries, which can dilute traditional AML controls. Regulators say enhanced intelligence sharing and coordinated cross-border investigations will be central to disrupting these schemes.

Expanded regulatory scope beyond banks

China has broadened AML oversight to include non-bank professionals and industries that can be abused to conceal illicit finance. The PBoC has worked with the Ministry of Justice, Ministry of Finance, Ministry of Housing and Urban-Rural Development, and other agencies to extend supervision to lawyers, notaries, accountants, real estate firms, precious metals dealers, gemstone traders, and company registration agents.

This expansion is designed to close loopholes exploited by shell companies and nominee arrangements that obscure beneficial ownership and enable money laundering.

Legal and technical reforms: beneficial ownership and the AML law

Significant legal changes underpin China’s next-phase AML push. The revised Anti-Money Laundering Law, which took effect in 2025, formally adopts a risk-based approach and adds requirements for monitoring money laundering risks linked to emerging technologies and new sectors.

In 2024, the PBoC and the State Administration for Market Regulation established a national beneficial ownership reporting system. Regulators say this database will be a critical tool to prevent shell companies from being used to conceal illicit activity. Additional rules now require financial institutions to identify and verify beneficial owners and to improve data quality through differentiated reporting mechanisms.

Regulations targeting crypto and tokenized assets

Chinese authorities have continued to tighten oversight of cryptocurrency-related activities. In February, the PBoC, the China Securities Regulatory Commission, and other regulators issued guidance extending restrictions to offshore renminbi-pegged stablecoins and tokenized real-world assets. The framework reiterates that cryptocurrencies such as Bitcoin, Ether, and Tether do not have the legal status of sovereign currency in China and cannot be used as money domestically.

The notice classified crypto trading, token issuance, market-making services, and crypto-linked financial products as illegal financial activities within China. It also warned that civil legal acts tied to cryptocurrency investments would be invalid and that investors would bear losses.

International cooperation and future enforcement

The PBoC said future AML efforts will emphasize stronger international cooperation on intelligence sharing, joint investigations, asset recovery, and coordinated enforcement, especially for cross-border criminal activities and illicit fund transfers. Authorities view multilateral coordination as essential for tracing complex money flows that exploit jurisdictional gaps.

In May, Liu Guixiang, a member of the judicial committee of China’s Supreme People’s Court, announced courts will further research adjudication standards for disputes involving virtual currencies and cross-border financial activities. This indicates judicial attention to the legal complexities of crypto-related cases.

Policymaker perspectives on stablecoins and CBDCs

Despite strict domestic limits on cryptocurrencies, senior officials have signaled a pragmatic interest in the evolving payments landscape. At the Lujiazui Forum on June 17, Wang Xin, director-general of the Research Bureau at the PBoC, said policymakers are watching stablecoins and central bank digital currencies (CBDCs) closely. She noted that stablecoins could play a larger role in international payments over time and called for continued regulatory coordination and international cooperation to manage associated risks.

What this means for crypto businesses and AML compliance

For digital asset firms, fintech providers, and compliance teams operating internationally, China’s approach underscores the need for robust AML frameworks that cover virtual currency laundering, cross-border transaction monitoring, and beneficial ownership transparency. Enhanced data-sharing arrangements and stricter verification requirements will likely influence global AML best practices and expectations for cryptocurrency compliance.

As regulators worldwide step up scrutiny of crypto-related money flows, firms should prepare for intensified cross-border enforcement, more comprehensive beneficial ownership checks, and growing demand for transparent, traceable transaction records to deter abuse by criminal networks.

Key takeaways

• China is prioritizing virtual currency laundering within a broader AML enforcement expansion.
• Over 2,000 money laundering convictions were recorded under Article 191 in 2025.
• The revised 2025 AML law and the 2024 beneficial ownership reporting system are central to the new framework.
• Authorities have broadened supervision to non-financial sectors and tightened rules on stablecoins and tokenized assets.
• International cooperation on intelligence sharing, investigations, and asset recovery will be a core focus going forward.

These measures signal a tougher global posture on crypto-related financial crime and underscore the importance of rigorous AML compliance across the blockchain and cryptocurrency ecosystem.