China targets virtual currency laundering in expanded anti money laundering push

China has outlined plans to strengthen anti-money laundering enforcement, expand scrutiny of virtual currency-related crime, and deepen international cooperation as authorities prepare the country’s financial security framework for the next five-year policy cycle.

The People’s Bank of China said in a policy document reviewing anti-money laundering work during the 14th Five-Year Plan period that authorities will maintain pressure on money laundering offenses, with particular attention on virtual currency laundering, cross-border fund transfers, telecom fraud, online gambling, drug crimes, illegal fundraising, and underground banking networks.

The central bank said China has entered a new stage of anti-money laundering development after completing a series of legal, regulatory, enforcement, and international cooperation initiatives over the past five years. Officials said future efforts will focus on implementing the revised Anti-Money Laundering Law, strengthening risk-based supervision, improving beneficial ownership reporting, and enhancing cross-border enforcement cooperation.

Virtual currency laundering remains an enforcement priority

The People’s Bank of China said authorities have intensified action against money laundering crimes in recent years through a joint campaign launched in 2022 by the central bank, the Ministry of Public Security, and nine other government agencies.

Under that initiative, investigators expanded the use of a “dual investigation” approach that examines both underlying criminal activity and related laundering networks. The central bank said agencies have coordinated efforts to address evidence collection, case handling, and legal application issues while increasing enforcement against professional money laundering groups, virtual currency laundering operations, and cross-border laundering schemes.

The report stated that courts across China issued more than 2,000 judgments under Article 191 of the Criminal Law, the country’s money laundering offense provision, during 2025.

Authorities also warned that criminal organizations have adopted new methods to conceal illicit funds. The central bank said emerging technologies and new business models have provided additional channels that can be abused for money transfers, making detection and transaction tracing more difficult.

Chinese officials identified cross-border laundering networks as a growing challenge. The report said organized crime groups increasingly exploit differences in legal and regulatory systems across jurisdictions and use underground banks, nominee accounts, offsetting transactions, and virtual currencies to disguise fund movements.

China expands legal and regulatory framework

The central bank said China completed a major revision of its Anti-Money Laundering Law, which took effect in 2025. The updated legislation formally adopted a risk-based approach and introduced requirements for monitoring money laundering threats linked to new technologies and emerging sectors.

Authorities also established a national beneficial ownership reporting system in 2024 through measures jointly issued by the People’s Bank of China and the State Administration for Market Regulation. Officials described the system as an important tool for preventing shell companies from being used to conceal illicit activity.

The report said regulators later introduced new rules requiring financial institutions to identify and verify beneficial owners of customers while improving information quality through a differentiated reporting mechanism.

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

The document comes as Chinese authorities continue to tighten oversight of cryptocurrency-related activities.

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

The notice classified crypto trading, token issuance, market-making services, and crypto-linked financial products as illegal financial activities. Authorities also stated that civil legal acts involving cryptocurrency investments would be invalid, with investors responsible for any resulting losses.

The central bank said future anti-money laundering efforts will include stronger international cooperation on intelligence sharing, investigations, asset recovery, and enforcement coordination, particularly in cases involving cross-border criminal activity and illicit fund transfers.

In May, Liu Guixiang, a member of the judicial committee of China’s Supreme People’s Court, said courts would conduct further research into adjudication standards for disputes involving virtual currencies and cross-border financial activities.

Despite recent concerns, Wang Xin, director-general of the Research Bureau at the People’s Bank of China, said that policymakers were paying close attention to stablecoins and central bank digital currencies. Speaking at the Lujiazui Forum on June 17, Wang said stablecoins could assume a larger role in international payments in the future and called for continued attention to regulatory coordination and international cooperation surrounding their use.