Chinese Money Laundering Networks Fuel $312B in U.S. Crime Schemes

FinCEN has issued an advisory and a financial trend analysis highlighting the scale of Chinese money laundering networks (CMLNs) within the U.S. financial system. According to the report, between January 2020 and December 2024, U.S. financial institutions filed 137,153 Bank Secrecy Act (BSA) reports related to CMLN activity, involving approximately $312 billion in suspicious transactions. These figures underscore the magnitude of illicit financial flows facilitated by CMLNs, which are heavily engaged in laundering drug trafficking proceeds from Mexico-based cartels. CMLNs also support a range of other crimes, including fraud, human trafficking, and human smuggling. The advisory highlights how these networks exploit legal and regulatory loopholes, particularly due to currency restrictions in Mexico and the People’s Republic of China (PRC), which drive the cartels to seek alternative laundering routes through U.S.-based intermediaries [1].

The advisory notes that CMLNs operate by purchasing U.S. dollars from drug cartels, which are then resold to Chinese individuals or entities attempting to bypass domestic currency control laws. This creates a symbiotic relationship where both parties benefit from the exchange, enabling cartels to launder drug profits while Chinese actors circumvent financial restrictions. The advisory warns that CMLNs are not limited to drug-related activities and are increasingly involved in other forms of financial crime. For example, financial institutions reported $766 million in suspicious transactions linked to 83 adult and senior day care centers in New York, suggesting potential ties to elder abuse and fraud. Similarly, 108 BSA reports were filed involving healthcare fraud and suspicious gaming activity, highlighting the broad scope of CMLN operations [2].

Real estate has also emerged as a key avenue for CMLN activity. According to the analysis, 17,389 BSA reports, involving over $53.7 billion in suspicious transactions, were connected to the real estate sector. CMLNs are using money mules and shell companies to purchase property, which may be leveraged as investments or assets for wealthy Chinese clients. This method allows illicit funds to be integrated into the legitimate economy through high-value property transactions. The advisory explains that CMLNs often use complex, multi-layered financial strategies and third-party intermediaries to obscure the origins of the funds. By targeting high-demand real estate markets and leveraging Chinese interest in U.S. property, CMLNs further obfuscate their activities and complicate regulatory oversight [1].

In addition to real estate, CMLNs employ various techniques to launder funds, including trade-based money laundering, money mule schemes, and mirror transactions. The advisory warns that these networks may also infiltrate financial institutions by recruiting insiders or placing operatives within banks to facilitate their operations. Furthermore, CMLNs are known to use counterfeit Chinese passports to open accounts under false identities, particularly for individuals reporting occupations such as "student" or "housewife"—professions typically not associated with large financial transactions. These red flags are meant to alert financial institutions to potential illicit activity and improve detection mechanisms [1].

The Treasury Department has emphasized that dismantling these networks is a priority for national security and financial integrity. Under Secretary for Terrorism and Financial Intelligence, John K. Hurley, stated that CMLNs enable cartels to destabilize communities through drug trafficking and human trafficking, and that the U.S. will not tolerate such activities. FinCEN Director Andrea Gacki added that these networks operate globally and must be targeted through coordinated domestic and international efforts. The advisory and financial trend analysis are intended to support financial institutions in identifying and reporting suspicious activity, ultimately helping to dismantle the infrastructure that allows these criminal operations to flourish [1].

Source:

[1] FinCEN Issues Advisory and Financial Trend Analysis on Chinese Money Laundering (https://www.fincen.gov/news/news-releases/fincen-issues-advisory-and-financial-trend-analysis-chinese-money-laundering)

[2] FinCEN Issues Advisory and Financial Trend Analysis on ... (https://home.treasury.gov/news/press-releases/sb0231)