(Based on the People’s Republic of China Anti‑Money Laundering Law effective January 1, 2025 (2024 amendment), related PBOC regulations and FATF’s Fifth Evaluation Requirements)
Any foreign-linked entity conducting business with Chinese financial institutions—including the 27 branches and licensed subsidiaries directly supervised by the People’s Bank of China—is considered an “obligated associate” and must comply with China’s AML requirements.
Regulators include: the AML Bureau of the People’s Bank of China, the National Financial Regulatory Administration, and the State Administration of Foreign Exchange. From 2025, major foreign banks, securities firms, insurers, and payment providers are under “head-office direct supervision.”
Beneficial Ownership Transparency – entities with ≥25% ownership or ultimate control must be traced through layers to the final natural person controller.
Dynamic Ongoing Monitoring – if beneficiary changes, equity restructuring, senior management changes, or negative media occur, re‑CDD must be completed within 30 days.
Third‑Party CDD Oversight – if duty is outsourced to law firms, accounting firms, or data vendors, written evaluation of their AML capacity must be documented and retained for 5 years; otherwise your firm assumes joint legal liability (new Law Art. 32).
Identity and transaction records must be kept for at least 10 years from the end of the business relationship or transaction completion.
Before sharing AML data across borders, standard contractual clauses for cross-border personal information transfer must be registered, and sensitive fields must be masked or encrypted.
Using AML data for non‑compliance purposes may lead to fines up to RMB 5 million (Law Art. 54).
Large transactions: single or same-day cumulative cash receipts/payments of RMB 50,000 or equivalent USD 10,000 must be reported via CAMLMAC (China AML Monitoring and Analysis Center).
Suspicious transactions: scenario‑based monitoring models (e.g. virtual currency, cross-border game cards, NFTs, tipping channels) should flag patterns like structuring, high-frequency small amounts, or counterparties from high‑risk jurisdictions. Trigger the manual review and report within 5 business days.
Prior to launching API‑aggregated payment, digital currency custody, AI advisory services, or Web3 wallets in China, submit an AML risk assessment report to partnered financial institutions including:
Product flowcharts and fund flow diagrams;
Rules for detecting abnormal transactions;
Customer risk scoring and segmentation strategy.
Conduct internal or external audit every six months, and submit audit report to the PBOC within 30 days.
Adopt a “whitelist + minimal data” sharing mechanism: only share AML-essential fields (e.g., risk level, suspicious flags); commercial or sensitive information is prohibited.
Record sharing purpose, scope, and duration in writing; retain records for 5 years.
If your firm in China includes real-estate, precious metals dealers, law firms, accounting firms, or notary agencies—classified as “specified non‑financial institutions”—you’ll be required to comply with CDD, record‑keeping, and suspicious transaction reporting like financial institutions.
In 2025, the PBOC issued its first RMB 25 million fine to a foreign payment provider for failing to identify OTC virtual currency counterparties.
Typical violations: servicing unidentified clients, anonymous wallet channels, and failure to enhance due diligence for clients from high‑risk jurisdictions.
T+0: Immediately re‑perform due diligence for existing high-risk clients.
T+30 days: Revise internal AML policy and reissue AML policy statement.
T+60 days: Deploy upgraded monitoring models and complete staff training and exams.
T+90 days: Commission third‑party audit to issue the first AML compliance audit report and submit to PBOC.
Have you established a Chinese AML policy document and submitted it to your partner financial institution?
Is your high‑risk client list (PEPs, virtual currency, offshore shell companies) updated quarterly?
Are all cross-border payments embedded with real‑time screening (OFAC, EU, UN, Chinese Ministry of Public Security terrorist lists)?
Do you have a 24×7 emergency contact for regulatory inspections in China?
Need templates for policy documents in Chinese, audit firm whitelist, or regulator liaison scripts? Contact Abby Lawyer for assistance.
Schedule A Free Consultation
