Job titles matter less than authority and work records
The 2026 notice expressly holds domestic entities and individuals liable where they know or should know that an overseas entity is unlawfully providing relevant services within the PRC and still assist it. Customer service, R&D, sales and finance personnel may all be involved in key steps, and the job title on the labor contract is not the only thing to look at. It is necessary to verify whether an employee handles account-opening approvals, exchange quotations, trading instructions, private-key signing, RMB receipts and payments, or the channeling of mainland clients, and what the employee actually knows about the business risks.
Ordinary support work is not equivalent to trading operations
Suppose an employee only maintains general office systems and has no access to clients, orders or assets; the factual basis there differs from that of a team organizing OTC quotations or handling deposits and withdrawals within the mainland. But this is only a distinction in risk analysis; the law contains no rule that "general technical positions are always safe." For products said to serve only overseas clients, the scope of clients and the actual manner of operation must also be verified; where the relevant business itself is unlawful, or an employee continuously handles obviously abnormal requests, an overseas license cannot eliminate the risk on the employee's behalf.
Contracts cannot replace the real employment arrangement
Signing contracts directly with an overseas company, being employed through a domestic affiliate, and engaging independent contractors involve different assessments of entity qualification and labor relations. Where an employee is subject to long-term attendance, performance and day-to-day direction within the mainland, the employment assessment cannot be skipped merely because the contract calls the person a "consultant." Responsibility for remuneration payment, individual income tax filing, social insurance and client data access must be determined separately; whether wage payment is compliant does not mean the business in which the employee participates is lawful.
Enterprises should embed the boundaries in systems and processes
It is advisable to prepare a position-authority matrix that specifies the data that may be accessed, the instructions that may be executed and the escalation paths. Where problems such as solicitation within the mainland, fictitious trade or collecting payments on behalf of others are discovered, the relevant operations should be suspended and referred for compliance handling, with work orders and review records retained, rather than requiring employees to fill gaps using personal accounts or personal wallets. Contracts, training and access controls should be consistent with actual conduct; a paper policy stating "no service to China" is not enough.
Recommended actions
- Check system access, client contact, fund operations and sales targets position by position.
- Review client onboarding for the overseas platform and conduct sample checks for manual approvals within the mainland.
- Confirm the lawful employing entity, remuneration filing and data access paths, and establish an abnormal-escalation mechanism.
Information note: This article provides general information only and does not replace legal advice based on specific facts.
References
- Notice on Further Preventing and Addressing Risks Associated with Virtual Currency and Related Matters (Yin Fa [2026] No. 42) — People's Bank of China and seven other departments
- Interim Provisions on Wage Payment (Lao Bu Fa [1994] No. 489) — Former Ministry of Labour / Shanghai Municipal Human Resources and Social Security Bureau
- Individual Income Tax Law of the People's Republic of China — Standing Committee of the National People's Congress / State Taxation Administration
