As economic crimes, particularly those involving large numbers of victims, the internet, and new technologies such as virtual assets, continue to occur at high rates, massive, complex, and concealed financial data have become central to investigation and prosecution, posing challenges to traditional evidence-collection models. Against this backdrop, fund analysis techniques long employed within public security organs were formally institutionalized as a statutory category of expert evaluation—“fund analysis as evidence”—following the issuance in 2025 of a series of documents centered on the Provisions on the Procedures for Fund Analysis and Expert Evaluation by Public Security Organs (Trial). The outputs of such analyses have been expressly designated by the Ministry of Public Security as expert opinions.
This article aims to explore effective defense strategies for lawyers when confronting “fund analysis as evidence” from a defense perspective. We will provide an in-depth analysis of this system and, with a particular focus on new types of cases such as illegal business operations involving virtual assets, propose key points for cross-examination and lines of defense.
I. Author: Attorney Shao Shiwei
1
Overview of the System: What Is “Fund Analysis as Evidence”?
(1) Conceptual Definition and Institutional Establishment
“Fund analysis as evidence” refers to the legal practice of systematically organizing and conducting in-depth analysis of case-related financial data using professional methods, and converting the analytical results into statutory evidence in accordance with law. Its core lies in performing correlational analysis of information such as accounts, amounts, timestamps, and counterparties involved in fund transactions, so as to determine fund flows and account relationships, thereby ascertaining the facts of unlawful or criminal conduct.
(2) Historical Evolution and Current Development
While “fund analysis” has long existed as an investigative support tool, its transformation into evidence and institutionalization have accelerated in recent years:
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In July 2023, the Economic Crime Investigation Bureau of the Ministry of Public Security officially launched the research project on “conversion of fund analysis into evidence (fund analysis as evidence)” and deployed nationwide pilot programs;
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In February 2024, it issued the Guidelines (Trial) on the Conversion of Outcomes from Financial Data Analysis by the Economic Crime Investigation Departments of Public Security Organs, specifying the five major stages of fund analysis work: acquisition, cleaning, verification, analysis, and reporting;
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The Provisions on the Procedures for Fund Analysis and Expert Evaluation by Public Security Organs (Trial), issued by the Ministry of Public Security on April 7, 2025, represent a landmark normative achievement in standardizing this practice;
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Currently, 88 fund analysis and appraisal centers (laboratories) have been established nationwide, cultivating more than 6,700 junior fund analysts and over 1,200 intermediate fund analysts[i].
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On December 23, 2025, according to data released by the Beijing Economic Crime Investigation Department, fund analysis reports were admitted as evidence in the judgments of more than 200 cases across 27 provinces, demonstrating their initial breadth of practical application[ii].
(III) Primary Scope of Application and Case Characteristics
This system primarily targets complex economic crime cases exhibiting the following characteristics; its application is necessary rather than universal:
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Substantial amounts involved and complex fund trails: Often involving hundreds of accounts and massive volumes of transaction records, which are difficult to clarify through traditional review methods.
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Strong public involvement and urgent demands for asset recovery and loss mitigation: Particularly in cases such as illegal fundraising, clear and authoritative analysis of fund flows is key to addressing public concerns and advancing asset disposition.
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High technical complexity and concealed, rapid fund transfers: Criminals commonly leverage new technologies such as virtual assets, aggregated payment services, and cross-border platforms to achieve rapid and anonymous fund transfers, imposing high technical requirements on analytical methods.
For cases where fund flows are simple and the trail is clear, allowing facts to be intuitively reflected through original vouchers, there is no need to initiate this complex specialized appraisal procedure. The application of the system focuses on resolving specialized issues that traditional evidence-collection models cannot address.
As defense counsel, while we acknowledge the positive significance of the "fund analysis as evidence" system in addressing new types of economic crimes and processing massive datasets, we must remain highly vigilant regarding the risks to procedural legitimacy and the difficulties in substantive review arising in criminal proceedings.
2
What Are the Advantages and Disadvantages of “Financial Analysis as Evidence”?—An In-Depth Analysis of Its Value and Procedural Risks
As defense counsel, it is necessary for us to examine this system from a dialectical perspective: we must objectively recognize the practical necessity of its emergence in order to identify effective points for cross-examination, and, more importantly, raise reasonable challenges to the potential issues it may give rise to, which lies at the core of defense work.
(I) Reasons for the Emergence of the System
The establishment of this system aims to address several practical difficulties in the investigation of economic crimes:
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Responding to the Evolution of Criminal Patterns: Economic crimes involving large numbers of victims, network-based operations, and the use of new technologies such as virtual currencies are prevalent. The sheer volume of fund flows, coupled with their rapid and concealed transfer, far exceeds the capacity of traditional manual verification.
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Resolving Legal Dilemmas in the Conversion of Evidence: Prior to the introduction of the system, relevant analysis reports lacked statutory evidentiary status and thus had weak probative value. Meanwhile, engaging social audit institutions presented issues such as high costs, long cycles, and low alignment with the needs of criminal investigations.
(II) Issues with the System
However, the system has also given rise to concerns regarding judicial fairness, which constitutes a key focus for defense counsel.
The “Integrated Investigation and Appraisal” Model and Risks to Procedural Neutrality
Both the appraisal institutions and personnel are embedded within public security organs, resulting in a high degree of organizational and personnel integration between appraisal activities and investigative activities. This structure of “self-investigation and self-appraisal” directly conflicts with the neutrality required of judicial appraisals and may, in practice, affect the objectivity and impartiality of appraisal opinions.
In practice, expert opinions frequently exceed their statutory mandate to address only "specialized issues" by directly making legal determinations regarding the nature of funds (such as labeling them as "gambling proceeds"), patterns of conduct, or subjective intent. This effectively exercises the power of conviction that should reside solely with the adjudicating authorities, resulting in a situation where "expert appraisal substitutes for judicial trial."
The "Technical Black Box" Characteristic and the Dilemma of Effective Cross-Examination
The analytical process relies heavily on proprietary algorithms, models, and data cleansing rules that are not disclosed. The defense is unable to access algorithmic details and complete underlying data, making it difficult to conduct a substantive review of the scientific validity and reliability of the analytical methods.
This technical barrier often renders cross-examination of expert conclusions merely formalistic, weakening the adversarial nature of the trial and hindering the discovery of factual truth.
Ongoing Controversies Regarding Evidentiary Attributes and Jurisprudential Foundations
Although official documents explicitly classify such reports as "expert opinions"[iii], there remains significant jurisprudential controversy in both theoretical circles and practice regarding the direct categorization of big data analysis reports within the traditional scope of "expert opinions." Some argue that this constitutes the creation of a new category of evidence through internal authorization, and its theoretical basis requires further clarification.
For example, in the case investigated by Beijing public security organs involving Feng Moumou's illegal business operations using virtual assets[iv], although the "Jin Xi Wei Zheng" report was used as key evidence and accepted by the court, what the report essentially presented was merely a statistical summary and display of fund transaction data related to the accounts involved during a specific period.
Such data itself cannot be directly equated with the "amount of illegal business operations" as defined by law. As evidence, the function of an expert opinion on fund analysis is to objectively present data, rather than to replace judicial personnel in making legal determinations regarding the nature of the conduct. For transaction amounts whose sources or destinations cannot be ascertained, or which cannot be uniquely linked to criminal conduct, the principle of "in dubio pro reo" (doubt benefits the defendant) must be strictly followed, and such amounts should not serve as the basis for conviction or sentencing.
Therefore, we will now take the crime of illegal business operations involving the trading of virtual assets as an example to systematically elaborate on the relevant points for cross-examination and defense strategies.
3
How to Cross-Examine "Jin Xi Wei Zheng" Reports?—Illustrated Through Cases of Illegal Business Operations Involving Virtual Assets
As some prosecutors have pointed out[v], the evidentiary status of fund data analysis reports merely means they are included within the scope of criminal evidence review; it by no means implies they automatically become the basis for a verdict. This provides an important argumentative foundation for defense counsel: strict scrutiny must be applied to the admissibility and probative value of such evidence. For instance, in cases involving illegal business operations with virtual assets, defense efforts should focus on cross-examining the "Fund Analysis Expert Opinion" or "Fund Analysis Inspection Report," ultimately leading to sentencing defense.
(I) Core Dimensions of Cross-Examination: A Comprehensive Review from Procedure to Substance
Cross-examination of the "Financial Analysis as Evidence" document should begin with its formal requirements, directly targeting the logical disconnect between its conclusions and the facts of the case.
First Dimension: Review of Qualifications of the Conducting Entity and Procedural Legality
First, verify whether the appraisal institution is included in the roster of appraisal institutions approved and registered by the public security organs, and whether the appraiser has obtained the qualification certificate for "Fund Analysis Appraiser." Whether the appraiser in such cases possessesspecialized knowledge in specific fields such as blockchain data analysis and virtual currency tracingshould be a key focus of cross-examination.
Second, review whether the entrustment procedures are complete, and whether there are circumstances where the appraiser should have recused themselves but failed to do so (for example, the appraiser also serves as an investigator in the same case).
Second Dimension: Review of the Completeness and Authenticity of the Data Foundation
It is essential to challenge whether the data completely covers the entire process, both "on-chain" (public blockchain ledgers) and "off-chain" (exchanges, bank accounts). This is a prerequisite for the appraisal opinion to reflect the true fund flow.
The core point of defense lies in: how the report proves that there isan exclusive and unique associationbetween the specific on-chain addresses analyzed and the defendant's real-world identity. Key review should focus on whether the use ofmixing services, cross-chain transactions, or over-the-counter (OTC) tradingor the transfer of assets intocold walletsand other such circumstances, resulting in a break in the chain of fund flows and depriving subsequent tracing of its basis.
Third Dimension: Scientific Rigor and Logical Coherence of the Review and Analysis Methodology
With respect to the alleged “RMB–virtual currency–foreign currency” redemption model, whether the analytical model clearly reveals thenecessary connection and integrity among the three stageswhether it can exclude other reasonable possibilities, such as the defendant first engaging in personal virtual currency investments and later selling them to obtain foreign currency due to personal needsother reasonable possibilities？
It should be required to explain the specific methods used, such as on-chain analysis tools and clustering algorithms, and to review their generally accepted reliability and limitations within the industry.
Fourth Dimension: Relevance of Conclusions and Risk of Legal Overreach
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Severing the Equation between “Fund Flows” and “Illegal Business Operations”：
It must be clearly stated that the task of an expert opinion is to analyze fund flows, not to determine the legal nature of conduct. Any statement in the report that directly equates “the existence of virtual currency transfers” with “engaging in illegal foreign exchange business” constitutes “substituting expert appraisal for judicial adjudication,” exceeds the scope of the expert’s authority, and its conclusions should not have legal effect.
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Mount a defense centered on the concept of "business activities"：
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With respect to the "purpose of profit," raise doubts as to whether the pattern of fund flows demonstrates continuous and stableoperational characteristics(such as fixed spreads or regular transaction fees), or whether it is more consistent with sporadic, fragmented personal exchanges or investment activities;
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With respect to the "payment and settlement function," examine whether the fund analysis sufficiently proves that the defendant organized afund pool, providing repeated and continuous exchange and settlement services to an unspecified majority of persons, rather than engaging in peer-to-peer asset trading.
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Challenge the methodology for determining cryptocurrency prices：
Currently, there is no national standard for determining the value of virtual currencies involved in cases when converted into RMB. Therefore, in each specific case, reasonable challenges should be raised regarding the reasonableness and fairness of the selected valuation timing (at the time of the incident or transaction) and price source (specific exchange), emphasizing that when doubts exist, the principle of "in dubio pro reo" should be followed, adopting the determination method most favorable to the defendant.
(II) Apply for Expert Assistants to Appear in Court
Given the highly technical and specialized nature of such cases, apply to the court, pursuant to the Criminal Procedure Law, to notifypersons with specialized knowledge (expert assistants) Appearing in court is a necessary means to break down the prosecution's technical barriers and achieve effective cross-examination.
It should be clearly articulated to the court that the expert opinion involves highly specialized fields such as blockchain data tracing, virtual currency mixing, and cross-chain technologies, which exceed the common knowledge of legal professionals. Therefore, it is necessary for an expert assistant to challenge the reliability of the expert opinion by questioning the underlying technical principles and the limitations of the analytical methods employed.
The core functions of an expert assistant include the following:
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Explaining to the court how virtual currency anonymization technologies actually operate and why they may cause breaks in the fund tracing chain.
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From a professional industry perspective, reviewing and evaluating the scientific validity, general acceptance, and inherent error rates of the analytical tools and models used by the forensic appraisal institution.
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Clearly identifying specific technical defects in the data foundation or analytical methods of the appraisal report, thereby demonstrating the uncertainty of its conclusions.
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Assisting the defense counsel in clarifying to the court that the conclusions regarding fund flows, derived from existing analytical methods and data foundations, admit multiple technically reasonable interpretations and cannot establish an exclusive and unique link to the alleged illegal business operations and the specific amounts involved.
(III) Comprehensive Defense Strategy: From Cross-Examination of Evidence to Factual Determination
The ultimate purpose of cross-examination is to "de-authoritize" the expert opinion and place its conclusions in a state of "doubt." On this basis, the defense should incorporate the following arguments:
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Emphasizing that fund analysis appraisals can only provide probabilistic associations at the data level and cannot substitute for a comprehensive legal judgment of the actor's subjective intent and objective behavioral patterns.
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Combining other evidence on record (such as chat records, witness testimonies, and the defendant's confessions) to demonstrate that the fund flows have multiple reasonable explanations, such as the "commingling of legitimate transactions," "internal transfers," and "inability to correlate" as previously described, thereby failing to meet the criminal standard of proof beyond a reasonable doubt.
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Ultimately, persuading the court to exclude transaction amounts that cannot be uniquely and exclusively linked to the illegal business operations, thereby achieving effective defense in factual determination and sentencing.
4
Conclusion
“Jinxi Weizheng” (Financial Analysis as Evidence) is an institutional response emerging in the digital age to address the challenges posed by new types of economic crimes. It aims to resolve the difficulties in converting massive and complex financial data into admissible evidence, thereby demonstrating its practical necessity.
However, as defense counsel, we must clearly recognize that the model of directly conferring the statutory evidentiary status of “expert opinion” upon technical analysis reports essentially generated internally by investigative authorities through institutional design is itself subject to significant controversy. If judicial practice fails to maintain a prudent and critical scrutiny of such reports, and instead directly accords them excessive probative value or authority, it may undermine the substantive review of specialized issues during trial proceedings and increase the risk of erroneous factual determinations.
Therefore, in specific cases, particularly those involving virtual assets or other major economic crimes with high technical barriers, defense counsel must uphold professionalism and diligence by thoroughly analyzing every stage of the report’s generation process. This includes examining the qualifications of the expert entity and recusal procedures, the integrity and legality of the underlying data, the scientific rigor and transparency of the analytical methods, and the logical coherence between the final conclusions and the facts to be proved. Through systematic cross-examination, counsel should reveal the limitations of such reports as evidence, ensuring that the determination of factual issues remains firmly within the court’s comprehensive judgment rather than being dictated by any unilateral technical report.
Only by adhering to this comprehensive and in-depth review stance can defense counsel effectively fulfill their duties, ultimately safeguarding the legitimate rights and interests of clients and upholding the baseline of judicial fairness within the balance between combating crime and protecting human rights.
[i] [Window into Economic Crime Investigation] Chronicle of “Jinxi Weizheng” (Financial Analysis as Evidence) https://mp.weixin.qq.com/s?__biz=Mzg3OTEzNjk4Ng==&mid=2247564268&idx=2&sn=cbc9fd7996153ef4adc6a356317263f8&chksm=cebcd1d10f4a8e87a2c687f7836d0d589493ad8b8d38d17fb4f750f9139891e337e717374179&scene=27
[ii] https://mp.weixin.qq.com/s/yAIiJ3tg1YLHRl_tam5R7Q
[iii] Authoritative Interpretation by the Ministry of Public Security on the Provisions Governing the Procedures for Financial Analysis and Appraisal by Public Security Organs _ Statutory Active Disclosure Content _ Jinjiang Municipal People's Government https://www.jinjiang.gov.cn/xxgk/zfxxgkzl/bmzfxxgk/gaj/zfxxgkml/202506/t20250628_3184044.htm
[iv] https://mp.weixin.qq.com/s/5nWdjIV8oUO-Zpt3eP_l0g
[v] https://mp.weixin.qq.com/s/krWbMcF8G23cIWEVeQwMNw
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