China updated its Anti‑Money Laundering (AML) Law effective January 1, 2025, with major changes that impact cross‑border lawsuits. You face stronger compliance rules and broader exposure if your case involves China.
Broader scope, broader liability
China now classifies money laundering as covering proceeds from any criminal activity, not just specific financial crimes. That means any transfer of suspect funds—even if outside China—could trigger Chinese jurisdiction. If your business moves money tied to misconduct abroad, you may face asset freezes, investigations, or litigation under China’s new extraterritorial reach.
New players under AML rules
Under the updated AML Law, China now holds non‑financial sectors like law firms, real estate, accounting firms, and precious‑metal dealers accountable for AML compliance. If you work with Chinese entities in cross‑border contracts or litigation, expect deeper scrutiny of transaction records and ownership information. Foreign law firms helping clients in China may also face obligations or oversight.
Enhanced data and asset‑freeze powers
Chinese regulators can freeze assets and demand suspicious‑transaction information extending beyond financial institutions. This ability affects your cross‑border case strategy: you may struggle to access funds or evidence if China invokes AML powers. Confidential data might get shared across Chinese regulators and entity branches—especially in joint‑venture or foreign‑affiliate ties.
What this means for your lawsuits
You must conduct thorough AML due diligence on Chinese counterparties and their beneficial owners—even if you are outside China. Be ready for faster international cooperation under China’s AML network. Also expect tougher penalties, including personal liability for executives. Your litigation strategy must anticipate Chinese AML enforcement—like rapid asset freezes or cross‑border evidence demands.
Preparing your case
Set up strong KYC processes. Retain transaction records for at least five years. Screen proposed transfer routes against Chinese AML risks. If your opponent in litigation has Chinese ties, map their financial footprint early.
You can’t control Chinese AML rules—but you can control your compliance. Stay proactive. That helps you preserve leverage, prevent unwanted freezes or jurisdiction grabs, and strengthen your cross‑border legal position.