New anti-money laundering (AML) rules introduced last year from the Chinese mainland’s central bank are driving greater scrutiny of know-your-customer (KYC) procedures – and opening up opportunities for accountants in compliance and advisory work.
Last August the People’s Bank of China (PBOC) introduced enhanced due diligence checks for transactions exceeding RMB100,000 (US$14,445) to prevent money laundering and terrorist financing.
This was followed by the State Taxation Administration’s changes to Chinese gold market tax policies, effective from 1 November 2025. Under the new rules, members who withdraw gold from the Shanghai Gold Exchange (SGE) are subject to different rules depending on whether they are doing so for investment or non-investment purposes.
‘These developments increase liability risks for dealers and their advisers’
Dealers in precious metals and stones (DPMS) are now required to report these transactions to financial crime watchdog, the China Anti-Money Laundering Monitoring and Analysis Centre. They must also retain transaction records and customer identity information for at least 10 years.
The changes follow the SGE’s expansion into Hong Kong SAR of China in June 2025, as investor interest in gold as an alternative asset continues to grow.
Gold demand reached record highs in January 2026, with 126 tonnes of gold withdrawn from the Shanghai Gold Exchange, reported the World Gold Council. Chinese gold exchange traded funds also fared well, adding US$6.2 billion into their portfolios.
Yet, there has been a rocky start to the year, with a major gold trading platform in Shenzhen collapsing in late January, leaving retail investors with losses reportedly totalling more than 10 billion yuan. With the volatility in precious metal markets amidst an unprecedented rally in global gold prices, companies have moved to change buyback policies in gold, aligning themselves with the SGE by halting precious metals trade on non-trading days for the exchange. Some have also adjusted daily purchase limits downward to 100kg, according to local press.
Stricter scrutiny
According to Anthony Lai, compliance associate at Acclime, the new AML rules are partly designed to bring the Chinese mainland in line with Financial Action Task Force standards ahead of an upcoming mutual evaluation review. The rules also align with Hong Kong SAR’s 2023 dealer AML update.
‘What the regulators believe is that if you’re doing transactions from a bank or for another financial institution, then the risk of money laundering and terrorist financing decreases significantly,’ Lai says. ‘That’s why there’s such a significant burden on companies that are dealing in cash transactions.’
For accountants, the shift is creating new opportunities. Traders in precious metals and stones will need guidance to adapt quickly, stay compliant and protect their reputation, says Jonathan Wan, financial services risk and technology consulting leader at Forvis Mazars in Hong Kong SAR. ‘These developments increase liability risks for dealers and their advisers, requiring robust internal controls, proactive risk management and tailored advisory services,’ he says.
‘We’re seeing deeper scrutiny of clients’ source of funds’
Major players handling large volumes of gold and diamond trades should expect closer scrutiny, says Wan. High-net-worth individuals intending to trade gold should expect more frequent enhanced due diligence checks, ‘including lifestyle consistency reviews and crossborder transaction tracing’.
Advisers are helping traders respond by reducing exposure to high-risk clients and jurisdictions. ‘Companies are introducing stricter onboarding criteria and transaction caps and exploring collateralised lending as an alternative to direct high-value trades, which allows better risk control and documentation,’ Wan adds.
Compliance is key
KYC procedures are essential in the precious metals trade and play a key role in’ risk management, though they may vary from one market participant to another, says Chunliang Chu, general manager of GoldSmith Metals Trading in Shanghai.
‘Compliance is the biggest risk and challenge of investing in expensive metals,’ he says. ‘Through KYC, we can decide whether to complete a transaction with a counterparty, what kind of transaction limit to set and how to control the credit risk.’
Risk and compliance have become top priorities across the industry. ‘We’re seeing increasing regulatory and licensing requirements, more questions from banks, deeper scrutiny of clients’ source of funds and stricter AML regulations that we must comply with,’ says Joshua Rotbart, managing partner at J Rotbart & Co in Hong Kong SAR.
‘The risk is very high. You must know your trading partner’s background very well’
The precious metals trade comes with operational risks on both sides – from market participants and from internal management, Chu says. .
‘An individual can operate a transaction worth hundreds of millions of dollars. The risk is very high,’ Chu says. ‘You must know your trading partner’s background very well.’
Traders need strong, consistent control systems to manage employees and counterparty risks. ‘If we want long-term, stable development, we need to establish very strict internal controls,’ says Chu.
While necessary, these KYC procedures may ‘significantly increase operational costs’ for smaller businesses, according to Banky Lau, chairman and CEO of the Hong Kong Jewellery Alliance and the director of Seng Fook Jewellery and Goldsmith Co in Hong Kong SAR.
‘They often lack the necessary resources to handle these additional compliance requirements,’ Lau says. ‘When we’re required to ask customers about their source of funds, many become reluctant to proceed with the purchase due to the inconvenience, especially those who prefer cash transactions.’
For smaller traders, the new rules have created uncertainty – and demand for cost-effective compliance solutions.
‘Shaped bars that used to get full exemptions are suddenly treated like jewellery’
‘The real friction right now is the uncertainty around what counts as investment gold versus consumption gold under the new VAT rules,’ says Jamie Turnough, founder and CEO at Bullion Beasts. ‘Even some shaped bars that used to get full exemptions are suddenly treated like jewellery. That confusion is putting real pressure on smaller mainland retailers.’
Stepping up
Advisory firms are adapting their service offerings in response. These now include readiness assessments and gap analysis for DPMS, as well as technology-driven solutions for transaction monitoring and KYC automation.
‘Firms are also adopting crossborder compliance advisory integrating PBOC and Hong Kong SAR regulatory requirements, as well as independent assurance and assessment engagements to validate control effectiveness for regulators and stakeholders,’ Wan says.
They are also helping traders assess how AML changes will affect their business, guiding them through the compliance process.
‘It’s important to communicate with dealers that before you even accept this transaction you need to go through these steps,’ says Lai. ‘If we have these requirements, how does it affect the business? That’s something that the exchanges and dealers might be concerned about.’
