Lawyer Shao Shiwei | The UK Begins to Intensify Efforts to Seize Overseas Assets of Chinese Nationals

The United Kingdom—The Preferred Destination for Global Illicit Funds

The United Kingdom, and London in particular, has long been regarded externally as the “preferred destination for global illicit funds.”

In May 2024, senior officials from the UK Foreign, Commonwealth & Development Office publicly stated that an estimated 40% of global money laundering activities flow through the City of London and the British Crown Dependencies (The Guardian, May 2024). According to estimates by the UK National Crime Agency (NCA), the proceeds of crime passing through or entering the United Kingdom exceed £100 billion annually.

The real estate sector serves as the most concentrated and prominent sink for such funds in the United Kingdom. Compared with bank account balances and financial products, real property offers greater stability and is more suitable for long-term holding, nominee arrangements, and resale, making it a primary destination for the parking of various types of suspicious funds.

According to data from Transparency International UK, between 2016 and 2022, at least £6.7 billion worth of UK real property was purchased using funds of suspicious origin.

A key channel for illicit funds entering the London property market is offshore jurisdictions such as the British Virgin Islands. Research by Transparency International shows that a total of 494 UK properties, with an aggregate value of approximately £5.9 billion, are linked to suspicious funds flowing in via UK Overseas Territories, with over 90% of these funds originating from the British Virgin Islands.

Reports by organizations such as Transparency International have repeatedly pointed out that substantial amounts of illicit funds from countries including Russia, China, and Nigeria have flooded into the high-end London property market.

Precisely because the United Kingdom has long been a major destination for the inflow of illicit funds, its law enforcement authorities have become increasingly proactive in recent years in handling cases involving large sums of assets of unknown origin.

Why are UK law enforcement authorities so proactive in handling large sums of assets of unknown origin?

Is this shift in enforcement merely an upgrade in governance driven by anti-money laundering pressures? Clearly not.

Fiscal considerations are the most pragmatic driver. According to public data from the Crown Prosecution Service (CPS), the United Kingdom has recovered £478 million in illicit assets over the past five years. By contrast, the 61,000 bitcoins seized in the Qian Zhimin case are currently valued at approximately £5.5 billion (around RMB 50 billion).

For law enforcement agencies, such cases represent not only “governance achievements” in the context of anti-money laundering, but also tangible asset recovery in hard currency.

From an institutional perspective, the United Kingdom has long had the necessary tools in place.

Under the UK Proceeds of Crime Act 2002 (POCA), Part 5 establishes a civil recovery regime that allows law enforcement authorities to recover proceeds of crime through civil proceedings without requiring a criminal conviction. The Criminal Finances Act 2017 further introduced Unexplained Wealth Orders (UWOs). Where law enforcement authorities have reasonable grounds to suspect that property is disproportionate to a person’s lawful income, they may require the person to explain the source of the property. If the respondent fails to respond within the prescribed period without reasonable excuse, the property may be presumed to be recoverable property (i.e., presumed to be proceeds of crime). If the respondent is unable to adduce evidence to the contrary, the property will subsequently be subject to civil recovery proceedings.

This means that combating money laundering is not only cost-neutral but can also generate revenue. In the context of fiscal austerity, this is undoubtedly a “two birds with one stone” proposition.

How do funds from Chinese residents flow out of the country?

Ultimately, the prerequisite for the UK to target these assets is that the funds have already been transferred out of mainland China.

But how exactly do funds from Chinese residents leave the country? This is also a high-frequency scenario encountered by Lawyer Shao in handling related cases.

In recent years, Lawyer Shao has represented numerous clients facing criminal liability for illegal foreign exchange trading. The individuals involved in these cases have included intermediaries, currency exchange companies, USDT merchants, and underground banks.

These cases reveal that common methods of exchanging foreign currency generally include the following:

First, “ant moving” (structured transactions).

This is the most common method used by ordinary individuals. It typically involves borrowing or collecting foreign exchange purchase quotas from friends and relatives to fragment the individual annual foreign exchange purchase quota that would otherwise be restricted, and then transferring the funds out of the country in batches.

Second, mirror transactions through underground banks.

This is currently one of the most common pathways. The person exchanging currency transfers RMB into a domestic account designated by the underground bank, and the underground bank arranges for personnel overseas to transfer an equivalent amount of foreign currency into a designated overseas account.

The third category is the virtual currency channel.

Domestic funds are first used to purchase stablecoins such as USDT through over-the-counter (OTC) transactions, then transferred on-chain, and finally converted into fiat currencies such as the US dollar or British pound overseas. This is also a relatively common type of case in the illegal foreign exchange trading matters handled by Attorney Shao.

Particularly in scenarios where domestic funds are used for overseas property purchases or overseas asset allocation, such arrangements often involve coordination with local overseas currency exchange companies or underground banks, which assist in completing the conversion into fiat currency.

The fourth category involves leveraging corporate channels.

For example, through sham trade or inner-guarantee-for-outer-loan structures, typically utilizing shell companies, fabricated transaction backgrounds, and coordinated operations between domestic and overseas entities, funds that cannot be directly transferred out of the country are remitted under the guise of corporate transactions or financing.

These different illicit foreign exchange pathways all face the same potential risks:

Funds transferred out through such methods are subsequently "laundered" via overseas property purchases, shareholdings, or account openings, thereby rendering the already unclear source of funds even more difficult to explain.

Who may be drawn into the chain of legal risks associated with asset confiscation in such cases?

Throughout the entire chain of fund transfer, settlement, and holding, there is typically a complete set of role divisions behind the scenes.

Category 1: Asset Holders

The individuals transferring the assets are naturally the most direct targets. Qian Zhimin serves as a typical example.

However, from Attorney Shao’s perspective, under civil recovery mechanisms such as Unexplained Wealth Orders (UWOs), a rather ironic point is:

Under this mechanism, assets are subject to confiscation if their source of funds cannot be explained; however, if the person under investigation cooperates by surrendering real property to UK law enforcement authorities, they will not be subject to penalties (even if their conduct would be considered a criminal offense in China). In other words, law enforcement authorities are more concerned with the assets than with securing a criminal conviction.

Taking the Song Shijie case as an example, the Anhui Bureau of the China Securities Regulatory Commission (CSRC) imposed an administrative penalty on him, comprising confiscation of illegal gains and an equivalent fine, totaling approximately RMB 22.28 million. Meanwhile, the Shanghai police initiated a criminal investigation into his suspected illegal operation of securities business and money laundering. Subsequently, based on clues and evidence provided by the Chinese authorities, UK authorities launched an investigation into his assets in the United Kingdom. Ultimately, Song Shijie agreed to surrender seven properties in London and funds held in his UK bank accounts, with a total value of approximately GBP 16.7 million (equivalent to approximately RMB 160 million).

Through this settlement, Song Shijie avoided potential criminal charges in the United Kingdom.

This case involved joint law enforcement actions coordinated with Chinese police; however, as of January 2026, he had still not paid the RMB 22.28 million in confiscated amounts and fines imposed by the Anhui Bureau of the CSRC.

As pointed out in a report by Caixin:"Song Shijie, a market manipulator whom the Anhui Bureau of the CSRC struggled to contact and who owed RMB 22 million in confiscated amounts and fines to the state treasury, surprisingly surrendered nearly RMB 200 million in assets to the United Kingdom and the United States as part of a confiscation settlement."

Category Two: Intermediaries and Facilitators

In addition to the asset holders themselves, intermediaries such as currency exchange companies, underground banks, over-the-counter (OTC) traders, and overseas real estate agents face significant risks.

Whether for overseas property purchases, fund transfers abroad, or the establishment of overseas accounts, assistance from these groups is often indispensable.

From their own perspective, they often believe they are merely "helping with currency exchange," "arranging accounts," or "facilitating the receipt of funds overseas," appearing to provide only introductions or intermediary services.

However, from the perspective of criminal legal risks in mainland China, these groups are most likely to incur liability for the crime of illegal business operations involving the illegal buying and selling of foreign exchange. Furthermore, if the funds they assist in transferring constitute proceeds of crime, they may subsequently face additional risks related to money laundering and the concealment or disguise of criminal proceeds.

This is because, from a law enforcement perspective, intermediaries who facilitate introductions constitute a critical link in enabling the entire illegal foreign exchange trading chain to operate.

Category Three: Peripheral Participants

Compared with the first two categories, peripheral participants are often the most likely to underestimate their risks.

For example, relatives or friends who assist by splitting and exchanging foreign currency, providing bank accounts, collecting or making payments on behalf of others, holding shares as nominees, or holding real property as nominees, often perceive these acts merely as favors, lending a card, or serving as a nominal holder.

However, such conduct constitutes an important component of the entire chain of asset transfer, placement, and concealment.

Individuals in this group may not initially become involved in criminal proceedings, but they may still face legal risks at various levels relating to foreign exchange control, money laundering, and illegal business operations.

Risk Warnings for Individuals Transferring Funds Overseas

These cases demonstrate that overseas jurisdictions are not the safe havens for assets that many imagine. In the past, a considerable number of people believed that once funds were successfully transferred out of the country and assets were successfully placed into overseas accounts, real property, or other holding structures, the risks had disappeared.

The misconception among these individuals is that their assets are at risk only if they are criminally convicted.

However, the sophistication of the United Kingdom’s Unexplained Wealth Orders (UWOs) and civil recovery mechanisms lies in the fact that they allow law enforcement authorities to first form a “reasonable suspicion” regarding the source of wealth and then confiscate such assets through civil proceedings, without necessarily requiring a prior criminal conviction.

Although this enforcement mechanism appears outwardly to be an anti-money laundering enforcement tool, its function, as reflected in the outcomes of specific cases, is more precisely to seize and retain high-value assets with unclear sources before a criminal conviction is obtained.

In the past, Chinese nationals sought ways to move money out of the country; now, the United Kingdom seeks ways to keep that money within its own coffers.