China's anti-money laundering regime has entered a stricter phase. Revised AML rules – introduced by the State Council (China's highest executive authority) and implemented through the People's Bank of China – took effect in January 2025. International companies operating through a Wholly Foreign-Owned Enterprise (WFOE) or any locally incorporated entity now face tighter obligations across customer identification, beneficial owner disclosure, and transaction monitoring. The cost of non-compliance is no longer administrative inconvenience. It now includes frozen bank accounts, suspended credit facilities, and referral to criminal prosecutors.
China's updated anti-money laundering legislation, effective January 2025. Extends full AML and know-your-customer (KYC) obligations to a broader category of non-financial businesses and expands the definition of shouzyi suoyouzhe (beneficial owner) to capture multi-layered holding structures. Companies must complete a compliance review and remediate any gaps by 30 June 2025. Failure to meet this deadline exposes the entity to regulatory penalties and disruption to banking relationships, including correspondent banking arrangements.
This alert summarises what changed, which businesses are affected, and the immediate steps required.
What changed – the regulatory development and effective date
China's anti-money laundering legislation was substantially amended following a State Council directive issued in mid-2024. The revised rules entered into force on 1 January 2025. Three developments are material for international businesses.
Expanded scope of obligated entities. The prior regime applied primarily to financial institutions. The 2025 rules extend AML and KYC obligations to designated non-financial businesses and professions. This category now includes accounting firms, law firms, real estate agencies, trust companies, and company service providers. Any WFOE providing services in these categories is directly subject to the new rules.
Strengthened beneficial owner disclosure. The updated legislation requires all companies registered in China – including WFOEs and joint ventures – to identify and verify their ultimate beneficial owner. The threshold for disclosure has been lowered. Ownership or control of ten percent or more of voting rights now triggers mandatory disclosure to the State Administration for Market Regulation (SAMR). Indirect ownership through offshore structures must be traced to the natural person at the apex of the chain. Regulators have made clear they will not accept nominee arrangements as a substitute for genuine beneficial owner identification.
Tighter transaction monitoring thresholds. Mandatory reporting thresholds for large cash transactions and suspicious transaction reports have been revised downward for corporate accounts. Banks are now required to file reports at lower transaction values than before. This directly affects how a company manages its bank account opening process, maintains its account documentation, and responds to bank inquiries. Correspondent banking relationships – used by many multinationals to move funds into and out of China – are subject to enhanced due diligence on both sides of the transaction.
For a detailed review of banking and finance obligations in China, see our banking and finance legal services in China.
To explore how these changes intersect with capital-raising activities and securities compliance, see our coverage of capital markets law in China.
Who is affected – threshold criteria and business categories
Not every foreign-invested business faces an identical compliance burden. The following categories face the most significant exposure.
- WFOEs in financial services or designated non-financial sectors – full AML programme required, including written policies, a designated compliance officer, and staff training.
- Companies with beneficial owners holding ten percent or more – mandatory identification and registration with SAMR; updates required within thirty days of any ownership change.
- Entities with correspondent banking arrangements – enhanced due diligence by the Chinese bank is now standard; documentation gaps can trigger account suspension.
- Joint ventures with state-owned partners – the foreign partner remains responsible for its own AML programme even where the Chinese partner is a regulated entity.
- Holding companies and intermediate vehicles – offshore holding structures used to invest into China must now be documented to the level of the ultimate natural person, regardless of the number of intermediate layers.
Companies that have recently obtained or are applying for a credit facility in China should note that lenders now conduct AML and beneficial owner checks as a condition of drawdown. Incomplete documentation delays disbursement.
For those assessing whether a comparable regulatory shift affects their Middle East operations, a parallel review of AML updates in the UAE is available.
To discuss whether your entity in China falls within the affected categories, contact us at info@ferrazwhitmore.com.
What to do now – immediate actions and timeline
The compliance deadline for remediation is 30 June 2025. Regulators have signalled that they will prioritise inspections of foreign-invested entities in the designated non-financial sectors. The following actions should be completed without delay.
1. Map your beneficial ownership structure. Identify every natural person who holds ten percent or more of voting rights or economic interest in your China entity, directly or indirectly. Document the chain of ownership from the China entity to each ultimate individual. This mapping must be current as of the date of submission to SAMR.
2. Audit your KYC files. Review the customer due diligence files your China entity holds for its own customers or counterparties. Where files are incomplete or based on expired documents, remediate immediately. Banks and regulators will request these files during inspections.
3. Review your bank account opening documentation. Contact your primary bank in China and confirm what additional documentation they require under the 2025 rules. Many banks have issued updated questionnaires. Failure to respond within the bank's deadline can trigger a discretionary account review.
4. Appoint a dedicated AML compliance officer. Entities in the designated non-financial sector must formally designate a responsible person for AML compliance. This individual must be identifiable to regulators and trained in the current rules. Document the appointment in board minutes.
5. Assess dispute resolution exposure. If a regulatory action is taken against your entity. whether by SAMR, the People's Bank of China. Alternatively. Another authority. you may need to engage the China International Economic and Trade Arbitration Commission (CIETAC) or the relevant administrative review body. Separately, the China International Commercial Court handles cross-border commercial disputes where AML non-compliance has caused contractual damage. Understanding your dispute resolution options before an issue arises is advisable.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our Asia-Pacific practice supports international companies – including WFOEs, joint ventures, and holding structures – navigating banking and finance regulation, AML compliance, and market entry requirements in China. Our team combines Portuguese civil law expertise with English common law tradition, giving clients dual-tradition counsel across both regulatory and dispute resolution matters. Engaging a lawyer in China with cross-border experience is particularly valuable when beneficial owner disclosures intersect with offshore holding structures that span multiple legal systems. As an international law firm working across Asia and Europe, Ferraz & Whitmore coordinates compliance strategies that address local rules without disrupting the broader group structure. To discuss your AML compliance obligations in China, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.