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AsianFin— August 1 marks the start of new anti-money laundering regulations in China targeting the precious metals and gemstone sectors, as authorities seek to close regulatory loopholes and align with global standards.
Under the Administrative Measures for Anti-Money Laundering and Counter-Terrorist Financing of Precious Metals and Gemstone Institutions, institutions must report any single or cumulative cash transaction of $13,800 or more to the China Anti-Money Laundering Monitoring and Analysis Center within five business days.
The new rules apply to transactions in jewelry, gold bars and coins, diamonds, and colored gemstones, and cover both brick-and-mortar stores and online platforms.
Experts say the policy will have limited disruption to mainstream institutions, but could pressure smaller dealers and informal market players.
“This is less about tightening and more about standardizing,” said Wu Zewei, a special researcher at Suzhou Commercial Bank. “Larger players like banks and exchange-linked gold retailers already report such transactions—this simply brings smaller merchants into compliance.”
Wu added that in the short term, tighter reporting thresholds may discourage some cash transactions and increase operational friction, particularly in market segments that rely heavily on large cash flows. But over time, greater transparency is expected to improve investor confidence and industry governance.
“The psychological impact may be greater than the actual financial burden,” Wu noted.
To avoid triggering reporting obligations, consumers are expected to increasingly favor digital payments such as bank cards, mobile apps, and digital yuan over physical cash.
Retailers are also adjusting. “We’re already seeing gold shops encouraging customers to 'pay by card' for big-ticket purchases,” one industry executive told CNBC. “It’s faster and cleaner for everyone.”
Scenarios such as gold gifting, high-value wedding purchases, and pawnshop redemptions—traditionally cash-heavy and often anonymous—will now require real-name ID verification, surveillance recording, and regulatory reporting.
This could suppress some gray-market demand, analysts said, and make it harder for parallel traders and underground exchanges to operate without scrutiny.
Despite the tighter controls, analysts believe the measures won’t affect gold prices significantly.
“This is purely a compliance measure for cash reporting,” said one market analyst. “China’s retail gold demand is just one part of a globally priced commodity, and structural shifts in payment methods are unlikely to move the needle.”
Gold has posted strong year-to-date gains despite recent weakness. A stronger U.S. dollar and rising equity markets have pulled capital away from gold in the short run, but safe-haven demand remains intact amid global geopolitical shifts.
Wu remains bullish on gold’s long-term trajectory: “We’re in a new era of macro uncertainty. Whether it’s monetary policy, geopolitical realignment, or market volatility, gold’s role as a non-sovereign hedge will only become more prominent.”
The new regulations may accelerate industry consolidation. Compliant merchants are likely to gain easier access to bank financing, insurance partnerships, and official buyback channels. That could raise barriers to entry and increase brand premiums for major players.
Meanwhile, smaller and non-compliant shops may struggle with the increased reporting burden, or be forced to overhaul their business models altogether.
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