Money Laundering Laws In China

17 Oct 2025 --
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Overview of Money Laundering Laws in China

Statutory Basis:

Criminal Law of the People’s Republic of China (PRC), 1997 (amended 2020)

Article 191: Defines money laundering as converting, transferring, or concealing the proceeds of criminal activity.

Punishments: Imprisonment up to 10 years, fines, and confiscation of illegal gains.

Anti-Money Laundering Law (AML Law), 2006 (amended 2016)

Imposes obligations on banks and financial institutions to report suspicious transactions.

Requires due diligence, customer identification, and reporting large cash transactions.

Banking Regulations and Enforcement Guidelines

Financial institutions are required to cooperate with public security and judicial authorities.

Key Principle:
Money laundering in China covers both predicate crimes (e.g., fraud, corruption, drug trafficking) and illegal concealment or transfer of illicit proceeds. Criminal liability applies to individuals, organizations, and financial institutions failing to comply with AML obligations.

Case Law Analysis on Money Laundering in China

1. Case: Liu & Co. Money Laundering Case (Beijing Intermediate People’s Court, 2010)

Facts:
Liu, a businessman, transferred millions of yuan obtained from illegal kickbacks through multiple shell companies and bank accounts to hide the source of funds.

Judgment:

The court convicted Liu under Article 191 of the Criminal Law.

Liu received 8 years imprisonment and was fined heavily; the court also confiscated all illicit assets.

Significance:

Established that complex corporate structures and cross-border transfers do not shield laundered proceeds.

Reinforced the principle that both direct laundering and assistance in concealment are punishable.

2. Case: Guangdong Drug Trafficking Money Laundering Case (Guangzhou Intermediate People’s Court, 2012)

Facts:
A criminal syndicate engaged in drug trafficking used local businesses to launder proceeds through cash deposits and fake invoices.

Judgment:

Court found multiple defendants guilty under Criminal Law Article 191.

Sentences ranged from 5 to 12 years depending on role and amount laundered.

Significance:

Highlighted that predicate crimes like drug trafficking automatically trigger money laundering liability.

Showed that courts consider volume of transactions and intent to conceal when determining sentences.

3. Case: Wang Corruption and Money Laundering Case (Supreme People’s Court Guidance, 2014)

Facts:
Wang, a government official, embezzled public funds and transferred them to relatives’ accounts, attempting to disguise the source.

Judgment:

Court convicted Wang of both embezzlement and money laundering.

Notably, the court applied enhanced penalties due to abuse of public office.

Significance:

Clarified that money laundering charges can accompany other economic crimes.

Abuse of power or public office is considered an aggravating factor in sentencing.

4. Case: Shenzhen Bank Compliance Case (Shenzhen Intermediate People’s Court, 2015)

Facts:
A bank failed to report suspicious transactions linked to organized crime syndicates. Management claimed ignorance.

Judgment:

Court held the bank administratively and criminally liable under the AML Law.

Bank officers received fines and short-term imprisonment.

Significance:

Reinforced that financial institutions have independent legal obligations.

Non-reporting of suspicious transactions constitutes a criminal offense, even without direct involvement in laundering.

5. Case: Cross-Border Money Laundering via Hong Kong (Shanghai Maritime Court, 2016)

Facts:
A shipping company routed proceeds of maritime smuggling through Hong Kong accounts to avoid detection.

Judgment:

Chinese courts coordinated with Hong Kong authorities to freeze assets.

Defendants were convicted under Article 191, and illicit funds were confiscated.

Significance:

Demonstrated China’s extraterritorial approach in pursuing cross-border money laundering.

Showed that coordination with foreign jurisdictions is possible under Chinese law for asset recovery.

6. Case: Li & Sons Investment Fund Case (Beijing High People’s Court, 2018)

Facts:
Li & Sons Investment Fund funneled illicit proceeds from online gambling into legitimate investments.

Judgment:

Court held both the company and executives criminally liable.

Emphasized that intent to disguise or integrate proceeds constitutes laundering, regardless of transaction sophistication.

Significance:

Reinforced that money laundering includes indirect investment channels.

Modern financial schemes are explicitly included in Chinese criminal law interpretation.

Key Legal Principles from Cases

Direct and Indirect Concealment: Hiding funds via shell companies, relatives, or investments qualifies as laundering.

Cross-Border Transactions: Routing proceeds abroad does not shield liability; courts cooperate internationally.

Predicate Crime Requirement: Laundering proceeds must originate from a criminal act, though courts sometimes presume this if large sums and concealment exist.

Institutional Responsibility: Banks and financial institutions are criminally liable for failing to comply with AML obligations.

Aggravating Factors: Abuse of public office, high transaction volumes, and organized syndicates lead to heavier sentencing.

Summary Table of Key Cases

Case	Year	Court	Key Principle
Liu & Co.	2010	Beijing Intermediate	Shell companies and concealment punished under Article 191.
Guangdong Drug Trafficking	2012	Guangzhou Intermediate	Predicate crimes + laundering = enhanced penalties.
Wang Corruption	2014	Supreme People’s Court	Abuse of public office aggravates laundering sentence.
Shenzhen Bank	2015	Shenzhen Intermediate	Banks liable for failing to report suspicious transactions.
Cross-Border via Hong Kong	2016	Shanghai Maritime	International cooperation in freezing illicit assets.
Li & Sons Fund	2018	Beijing High	Indirect investments with intent to conceal = laundering.