Yan will spend the next five months serving home detention in a luxury apartment in downtown Auckland.
To allow Yan to work, Judge Rob Ronayne granted him permission to leave the apartment for meetings during weekdays, for up to five hours each day, but only with the approval of his probation officer.
Prime Minister Bill English said Yan's sentence was entirely a matter for the court. Asked if Yan's settlement with New Zealand authorities gave the impression justice could be bought, English said he didn't think that conclusion could be drawn.
"But the courts make the decisions about the sentence ... I wouldn't want to reach over them to say what should have happened."
Yan's sentence of home detention has been slammed by the Maori Party, New Zealand First, and Act.
Maori Party co-leader Marama Fox said the case showed the "despicable" gap between sentences in New Zealand, considering benefit fraud and even poaching trout saw people jailed.
Nothing had been done to address that problem, which came down to racism, Fox said.
"It is the thin end of the big wedge where Maori are disproportionately affected ... how do you change the culture in New Zealand? There is one way to change institutionalised racism and that's to make sure Te Reo Maori is compulsory in schools."
NZ First leader Winston Peters said the sentence for one of the biggest money-laundering cases in New Zealand was nothing short of a joke.
Yan had been "hit with a wet bus ticket", Peters said, and no justice had been done.
People not committing white collar crimes were thrown in jail, Peters said, and this case told New Zealanders that more serious white-collar crime did not get properly punished.
"This is simply the worst possible signal that can be sent."
Yan's Kiwi citizenship and political connections have been at the centre of years of controversy.
He arrived in New Zealand in 2001. He made headlines for his links to the previous Labour Government's decision to give him a New Zealand passport in 2008, despite having multiple identities and an Interpol alert against his name.
After lobbying from Dover Samuels, a Labour MP at the time, former Labour Party Minister Shane Jones overruled the advice of Department of Internal Affairs officials, who said Yan did not meet the good character test for citizenship.
Jones - who is widely rumoured to be preparing to stand for New Zealand First in the upcoming election - said he granted citizenship because he believed Yan would be executed if sent back to China.
Asked if Jones had been right to grant Yan citizenship, Peters cited an investigation by the Auditor-General.
"The inquiry found the allegations were baseless because Mr Jones, as I remember it now, had evidence which was produced at court that if this man was sent home then he was going to be killed."
The Auditor-General report, released in 2013, criticised Jones for granting citizenship but said there was no evidence of wrongdoing.
Jones has been contacted for comment. It is understood he is in Fiji.
Act leader David Seymour said the Yan case didn't reflect well on Jones or his intention to return to Parliament with New Zealand First.
"And more generally as a policy issue, we need to rein in the cash for citizenship deals. The idea that you can put $10 million into New Zealand Government bonds and get residency in New Zealand - I think we are selling ourselves short."
Asked about the sentence, Seymour said he respected the judge who had all the evidence before them.
"But I think most people would be flabbergasted that you could come to New Zealand, launder [money] and all you have to do is stay home for five months. And not even all the time."
It would be very difficult to revoke someone's citizenship, Seymour said, and the key was to make sure they were granted correctly in the first place.
Anti-money laundering legislation
The Yan sentencing comes as the Government progresses anti-money laundering legislation, drawing a large number of submissions from concerned groups.
The amendment bill passed its first reading in March will support of all parties.
It extends anti-money laundering and countering terrorism legislation to lawyers, conveyancers, accountants, real estate agents and sports and racing betting.
They will need to take steps to know who their customers are on whose behalf they act when undertaking certain activities, and large cash transactions will need to be reported as will suspicious activity. A risk assessment and compliance programme will also need to be run.
The Law Society today appeared before a Parliamentary committee and called for the date at which lawyers be subjected to the new requirements to be delayed from July 2018 to January 2019, saying regulations and guidance were not yet available.
Spokeswoman Mary Ollivier said there was a case for other groups to be the first to be subjected to the regulations "because of the unique ethical and legal requirements for lawyers".
There was also an issue with lawyers being required to report an activity no later than three days after "forming suspicions", Ollivier said.
"Preparation of a suspicious activity report will probably be time-consuming. Lawyers will also have to consider whether they include any privileged information in the report. This might mean the lawyer needs to take independent legal advice."
The Jewellers & Watchmakers of New Zealand group, representing manufacturers, retailers, wholesalers and diamond and gemstone merchants, questioned whether the legislation should apply to all dealers of high-value goods.
Its membership is mostly small jewellery retailers that would make few high value sales and the changes would greatly increase the cost of compliance, the group's submission states. It recommends the changes apply only to dealers who aren't members of industry groups and subject to related codes of conduct.
