New Anti-Money Laundering Regulations Are Here: How Do Terror Financing Blacklists like East Turkestan Affect the Crypto Industry?

In January 2026, the People’s Bank of China, together with the Ministry of Foreign Affairs, Ministry of Public Security, and six other departments, officially announced the “Measures for the Administration of Special Preventive Measures Against Money Laundering.” This new regulation, approved at the Central Bank’s Executive Meeting on November 17, 2025, will come into effect on February 16, 2026. As an important supporting system for the new Anti-Money Laundering Law, it centers on list management and is supported by full-process control, further improving China’s anti-money laundering, counter-terrorist financing, and proliferation financing prevention and control system. It poses unprecedented compliance challenges for financial institutions and designated non-financial entities. Especially for practitioners involved in virtual assets and cross-border transactions, understanding this regulation is not only a compliance requirement but also a crucial part of risk management.

Three Major Signals from the Central Bank’s New Regulation: Clarification of the Blacklist System

The core innovation of this new regulation is the establishment of an “Blacklist System” for anti-money laundering. This blacklist is not managed by a single department but is a multi-source system involving the National Anti-Terrorism Leading Group, the Ministry of Foreign Affairs, the People’s Bank of China, and other relevant agencies, jointly participating in its formation.

This multi-departmental design reflects China’s emphasis on preventing terrorist financing. The National Anti-Terrorism Leading Group is mainly responsible for formulating lists of domestic terrorist organizations and personnel. To date, publicly available lists mainly include terrorist groups such as East Turkestan and related individuals. The Ministry of Public Security has issued sanctions lists targeting terrorist and separatist forces three times—in March 2003, April 2008, and May 2012—covering four organizations and 25 individuals. Although such lists are sensitive and access is limited, market participants can follow official announcements from the Office of the National Anti-Terrorism Leading Group for real-time updates.

Three Sources of the East Turkestan and Other Terrorist Financing Prevention and Control Lists

The Ministry of Foreign Affairs mainly implements international sanctions in accordance with UN Security Council resolutions. The “Notice on the Revision of Personal Information Listed by the UN Security Council’s Sanctions Committee on ISIS and Al-Qaeda,” issued on October 7, 2025, is a typical example. Additionally, enforcement of resolutions related to North Korea (Resolutions 1695, 1718, 2397) and Iran (Resolution 2402, etc.) is also within this framework, meaning that the prevention and control of transnational terrorist organizations like East Turkestan has been integrated into the international cooperation system.

The People’s Bank of China plays a more flexible role, capable of independently or jointly identifying organizations and individuals with significant money laundering risks, where inaction could cause serious consequences. These lists are divided into two dimensions: the international blacklist, mainly sourced from the Financial Action Task Force (FATF), which can be accessed via its website under “publications” > “High-risk and other monitored jurisdictions”; and domestic blacklists, publicly released under the “Anti-Money Laundering” section of the PBOC website, specifically in the “Risk Alerts and Financial Sanctions” column. This means most regular financial institutions, payment companies, and crypto asset trading platforms need to establish comprehensive list-matching mechanisms.

Is Being Blacklisted Truly “Hopeless”? Detailed Pathways for Relief

Many practitioners are concerned: once listed on the blacklist, is there no way out? Article 9 of the new regulation provides categorized relief channels.

For disputes over the domestic terrorism list maintained by the National Anti-Terrorism Leading Group, individuals can apply for review through its office in accordance with the relevant provisions of the Anti-Terrorism Law of the People’s Republic of China. However, in practice, success rates for such reviews are very low due to national security considerations.

For disputes over UN Security Council sanctions lists, individuals can request delisting from the Ministry of Foreign Affairs, but this process is also challenging because it requires a UN Security Council resolution to remove the listing, which cannot be decided by a single domestic department.

Relatively, for lists identified solely by the PBOC or jointly with other departments, there are more feasible relief pathways. The affected parties can apply for administrative reconsideration with the identifying department, and if dissatisfied with the decision, can file an administrative lawsuit in accordance with the law. With legal assistance, by collecting sufficient objective evidence to prove the legality of transactions and clarity of fund flows, there is a certain probability of “self-innocence.” Legal experts point out that many foreign institutions are listed due to large-risk transactions, penalties on related parties, or suspicious fund flows. While completely lifting restrictions through administrative remedies is difficult, it is not impossible.

Virtual Currencies Are Not a “Firewall”: Key Points for Three Types of Entities’ Risk Prevention

Article 29 of the new regulation explicitly states that funds include assets evidenced in electronic or digital form. This definition directly covers virtual currencies, digital assets, and other encrypted assets. Some market participants once held the hope that the anonymity of virtual currencies could help evade regulation, but the new regulation thoroughly dispels this illusion.

For individuals, the greatest risk comes from identity and account misuse. If someone uses your ID to open accounts or transfers funds using your bank card, once the transaction links enter the blacklist scope, all your legitimate assets could be frozen. Although Article 4 emphasizes protecting good-faith third parties, proving “good faith” can require significant time and effort, with high economic costs. Therefore, the first and most important rule is: do not lend out your ID or bank cards, even to friends or family.

For enterprises, especially those involved in cross-border trade and large transactions, it is essential to establish a comprehensive partner screening system. Before each transaction, verify whether the partner appears on the PBOC, FATF, or UN Security Council lists. If risks are identified, immediately cease all transactions and transfers, and report to relevant authorities. Otherwise, the enterprise itself could be deemed a “related entity” and face restrictions.

For financial institutions and crypto trading platforms, the new regulation requires establishing dynamic anti-money laundering review mechanisms. This is not only a legal obligation but also directly impacts operational licensing. Platforms need to implement list matching at key points such as user onboarding, transactions, and large withdrawals, and establish emergency response mechanisms to freeze accounts and assets promptly upon detecting anomalies.

Practical Guide: Three Things to Prepare Now

First, if you are a legal or risk control manager at an enterprise, immediately build a list database. Import all lists issued by the National Anti-Terrorism Leading Group, Ministry of Foreign Affairs, PBOC, and FATF into your system, and set up regular update procedures. Check for new lists at least weekly, and perform full comparisons monthly.

Second, organize your transaction records from the past three years, especially details of cross-border transactions, large transfers, and dealings with high-risk counterparties. These documents will be key evidence to prove the legitimacy of your transactions if questioned in the future. Don’t wait until accounts are frozen to start remedial actions.

Third, if your organization or account has already entered risk monitoring due to certain reasons, consult a professional lawyer immediately. Based on the specific category of the blacklist involved, choose the appropriate relief pathway. If listed solely by the PBOC, administrative reconsideration offers the greatest chance. Also, cooperate with law enforcement investigations by submitting all transaction details and fund traceability documents as required. Do not attempt to hide or transfer assets, as this will only worsen legal violations.

The Era of Penetrative Supervision Has Arrived: A New Paradigm for Compliance Development

Overall, the new regulation marks an important turning point in anti-money laundering supervision. Moving from vague rules to specific lists, from post-event disposal to preemptive prevention—this reflects China’s practice in the evolution of international AML standards.

For the crypto industry, this is not bad news. Clearer rules mean practitioners can build risk controls based on defined standards rather than reacting passively to uncertainty. Many internationally renowned crypto exchanges have gained cooperation from mainstream financial institutions precisely because they have established strict AML systems in advance. After the regulation takes effect, the domestic market will further differentiate: platforms with comprehensive AML systems will gain more compliance resources, while those with vulnerabilities will face increasingly strict scrutiny.

For the entire market, this regulation signifies that virtual assets are no longer beyond legal oversight. Whether individuals, enterprises, or trading platforms, all need to reassess their compliance systems within the framework of penetrative supervision. The future trend will be transparent transactions, on-chain traceability, and real-name registration. While this may create tension with the original ethos of cryptocurrencies, it is an inevitable direction for global AML and counter-terrorist financing efforts.

In this new era, the smartest approach is to proactively embrace regulation rather than oppose it. By establishing sound internal controls and fostering positive cooperation with law enforcement, market participants can achieve compliant business development while contributing to the prevention of terrorist financing like East Turkestan and maintaining financial security. This is the only way to organically unify risk prevention and business growth.