Eliza Wong
Sweeping Changes for Precious Metals Sector
The People’s Bank of China has issued landmark regulations imposing rigorous anti-money laundering requirements on businesses handling gold, silver, platinum, diamonds and jade. Effective August 1, 2025, these new measures fundamentally alter how precious materials dealers conduct transactions, particularly those involving substantial cash amounts. Coming amid China’s intensified crackdown on illicit financial flows, these new anti-money laundering regulations establish uniform standards for an industry previously governed by fragmented oversight.
If you’re a bullion dealer, jeweler, or frequent purchaser of precious commodities, understanding these regulations isn’t optional—it’s essential for legal compliance.
Key Requirements Under New AML Framework
The regulations officially titled ‘Administrative Measures for Anti-Money Laundering and Counter-Terrorist Financing for Precious Metals and Precious Stones Businesses’ introduce several critical requirements:
– Mandatory customer due diligence for cash transactions exceeding ¥100,000
– Large transaction reporting to China’s Financial Intelligence Unit
– Enhanced risk profiling based on transaction patterns
– Implementation of ‘Know Your Customer’ principles
– Record keeping obligations for five years
Critical Thresholds Triggering Compliance Actions
The ¥100,000 cash threshold represents the regulatory tripwire that activates enhanced scrutiny protocols. Both single transactions reaching this amount and aggregated daily cash dealings totaling ¥100,000 or more trigger compulsory compliance procedures.
Understanding Trigger Mechanisms
This threshold applies uniformly whether transactions are conducted in:
– Chinese Yuan or equivalent foreign currencies
– Physical gold bars or jewelry items
– Rough gemstones or finished luxury products
For high-volume dealers operating physical outlets or antique markets, meticulous daily aggregation becomes essential for regulatory adherence.
Expanded Coverage: What Falls Under Regulation?
The PBOC’s definition for regulated materials creates industry-wide implications:
Official Classification of Covered Materials
Precious metals include:
– Gold, silver, platinum
– Minted coins and bullion bars
– Semi-finished products and raw materials
– Manufactured items like jewelry
Precious stones comprise:
– Diamonds and natural jade
– Raw gem materials
– Ornamental carvings and finished jewelry
Notably excluded are synthetic gemstones and base metal products, concentrating regulatory focus on high-value natural commodities.
Practical Impacts on Businesses and Consumers
Implementation requirements under these new anti-money laundering regulations necessitate fundamental operational changes:
Operational Changes for Dealers
Businesses must:
– Establish formal AML compliance departments
– Develop continuous staff training programs
– Upgrade transaction monitoring systems
– Implement tiered customer verification protocols
– Designate accountable compliance officers
Failure risk includes substantial fines reaching millions of yuan and possible license revocation.
New Customer Experience Dynamics
Consumers will encounter:
– Detailed documentation requirements for large cash purchases
– Questionnaires about fund sources
– Transaction purpose inquiries
– Potential processing delays
Retailers may gradually implement identity verification even below thresholds.
Understanding Reporting Timelines
Crucially, dealers must report qualifying transactions within stringent deadlines:
Key Reporting Deadlines
– Five business-day submission window
– Reports filed electronically
– Detailed transaction specifics required
– Customer identification documentation
Delayed filings expose businesses to penalties, particularly with neighboring countries enhancing AML cooperation.
Implementation Roadmap
The regulation rollout unfolds on strict calendar:
Scheduled Enforcement Milestones
– August 1, 2025: Regulations take effect
– End-July: Compliance systems validation
– June-August: Official inspector training
The People’s Bank of China Governor Pan Gongsheng (潘功勝) emphasized ‘implementation uniformity’ during announcement.
Industry Resources for Compliance
While the official notice hasn’t been published online, businesses should:
– Monitor PBOC announcements
– Consult China Gold Association guidance
– Review regulatory revisions
Government sponsored workshops will commence nationwide beginning July 15.
Global Context of Enhanced Oversight
These reforms align with Financial Action Task Force recommendations targeting:
Strategic AML Priorities
– Disrupting illicit precious metals trafficking
– Eliminating gem-based terror financing
– Preventing trade invoice manipulation
This positions China alongside markets like Dubai implementing similar measures.
Conclusion: Preparing for New AML Era
These transformative regulations integrate precious commodities dealers into China’s formal financial oversight framework. Businesses should immediately:
– Perform compliance gap assessments
– Consult specialized legal advisors
– Train personnel on CDD protocols
– Establish transaction monitoring workflows
The foreseeable trajectory signals continued expansion, possibly incorporating gem certification schemes. Early adopters will gain competitive advantage as enforcement intensifies.
