China targets virtual currency laundering with tougher AML enforcement and cross-border cooperation
China has outlined plans to intensify anti-money laundering (AML) enforcement, with virtual currency laundering at the centre of its next five-year financial security push. In a policy review covering the 14th Five-Year Plan period, the People’s Bank of China said criminals increasingly use virtual currencies, underground banks and new technologies to conceal and move illicit funds.
Officials reported more than 2,000 money laundering convictions in 2025 under Article 191, and pledged stronger action against virtual currency laundering, cross-border fund transfers and related financial crimes. A joint campaign launched in 2022 by the central bank, the Ministry of Public Security and nine other agencies expanded a “dual investigation” approach, focusing on both underlying predicate crimes and the laundering networks.
The People’s Bank of China also pointed to legal and supervisory upgrades: the revised Anti-Money Laundering Law took effect in 2025, and a national beneficial ownership reporting system was introduced in 2024. Regulators have widened oversight beyond banks to cover sectors such as lawyers, notaries, accountants, and real estate and precious-metals/gemstone businesses.
For crypto markets, the AML emphasis follows ongoing restrictions on cryptocurrency-related activities. In February, authorities extended rules that treat offshore renminbi-pegged stablecoins and tokenized real-world assets as illegal financial activities, while stating that cryptocurrencies (including Bitcoin, Ether and Tether) cannot circulate as money in China.
China said future efforts will deepen international cooperation on intelligence sharing, investigations, asset recovery and enforcement coordination in cross-border cases.
Bearish
This is likely bearish because it signals tighter AML enforcement with virtual currency laundering as a clear priority, following earlier restrictions on crypto-related activity in China. When regulators move from “framework building” to sharper enforcement—especially around cross-border money flows and beneficial ownership verification—traders typically expect reduced compliance clarity and higher policy risk.
In the short term, the news can pressure risk sentiment for crypto linked to China’s onshore/offshore flow narratives (stablecoins, tokenized assets, exchange on/off ramp liquidity). It may also raise the probability of further operational constraints for firms serving Chinese counterparties, which can translate into lower volumes and volatility around major pairs.
In the long run, the legal upgrades (revised AML law, beneficial ownership reporting, broadened supervision) usually increase the cost of illicit activity while also pushing legitimate market participants toward stricter compliance. Historically, similar regulatory tightening waves tend to shift markets from “growth via access” toward “growth via compliance,” often dampening speculative leverage and favoring more liquid, globally integrated assets. Net effect: policy-driven caution dominates, which is bearish for broader sentiment even if fundamentals elsewhere remain unchanged.