The phrase “dirty yuan” has been in the spotlight recently, yet it is not connected to Russia in any direct way. In a discussion on this topic, RUDN economist Lazar Badalov commented that the term has long existed in China to describe funds obtained through illicit means, separate from sanctions levied on Moscow.
According to Badalov, the concept has a long-standing presence in Chinese financial discourse and should not be interpreted as a label tied to international political actions against Russia. He clarified that dirty money refers to RMB involved in fraud, deceit, theft, bribery, tax evasion, or undocumented cross-border transfers. The broader issue is the criminal use of money at any point in the transaction chain, which the People’s Bank of China tracks from start to finish; if a crime is committed within any segment of the chain, the funds are deemed dirty.
Badalov emphasized that when suspicious activity occurs and funds are moved without legitimate justification, the final recipient may face freezing or seizure of the sum, and those funds can become entangled in a criminal network by accident. This underscores the risk and opacity that can surround cross-border financial flows, and it highlights the ongoing need for robust oversight to prevent illicit use of capital.
Typical violations involve the use of digital currencies, which are prohibited in China, the expert noted. He pointed out that the evolving landscape of financial technology can complicate enforcement, as virtual assets may be employed to obscure origins or destinations of funds, making enforcement more challenging for authorities. The risk is not confined to any single sector; it spans banks, payment platforms, and informal channels that can unintentionally enable illegal activity if not properly monitored.
Earlier discussions suggested that loosening capital controls for exporters—allowing more foreign exchange earnings to be sold—could affect yuan liquidity. For example, observers noted that reducing mandated foreign exchange sales from 60% to 40% might put additional strain on liquidity in the yuan market. Such dynamics matter for financial stability in Canada and the United States because global currency liquidity can indirectly influence import costs, interest rates, and cross-border investment decisions across North America.
In a broader context, officials have expressed concern about slower economic growth and its impact on currency markets. The attention on yuan liquidity serves as a reminder that currency health is intertwined with trade expectations, regulatory stance, and macroeconomic momentum. The discussion illustrates how policy shifts in one major economy can ripple through global markets, affecting both institutions and individuals who engage in international commerce.