Chinese AML Mirror Laundering Network Exposed in Major US Drug Proceeds Case

US authorities have charged a key figure in a Chinese-linked money laundering network accused of laundering tens of millions of dollars in drug trafficking proceeds through sophisticated mirror transaction schemes. The case underscores the central role of professional laundering networks in sustaining the global fentanyl, cocaine and methamphetamine trade.

Yan Lin, 41, of California, appeared in federal court in Cincinnati on 8 January 2026 following the unsealing of an indictment alleging conspiracy to commit money laundering and concealment money laundering. Prosecutors allege that between March 2022 and October 2024, Lin worked on behalf of Mexico-based drug trafficking organisations to repatriate illicit proceeds generated across multiple US cities.

According to the indictment, the scheme relied on a classic mirror transaction model frequently associated with Chinese underground banking networks. Bulk cash derived from US drug sales was collected and delivered to intermediaries, who then used the funds to purchase consumer electronics. These goods were shipped to co-conspirators in Hong Kong, China, and other locations. Once receipt of the cash was confirmed, equivalent value, minus commission, was paid out to traffickers in Mexico outside the formal banking system.

Investigators estimate that a single ledger covering part of 2024 recorded approximately 27.4 million dollars in bulk cash movements across the United States, indicating the industrial scale of the operation. US officials described the network as a critical financial enabler that allowed Mexican cartels to continue supplying lethal drugs into the US market.

The Department of Justice emphasised that dismantling Chinese money laundering networks is a strategic priority in targeting transnational criminal organisations. Law enforcement agencies involved highlighted that cutting off illicit financial flows is as vital as intercepting drugs themselves, as it deprives cartels of the ability to reinvest, expand and sustain operations.

If convicted, Lin faces up to 20 years in prison. The investigation involved a broad multi-agency effort, including Homeland Security Investigations, IRS Criminal Investigation, the Drug Enforcement Administration, the Federal Bureau of Investigation and regional law enforcement partners.

From a financial crime compliance and AML perspective, the case reinforces persistent vulnerabilities around trade-based money laundering, underground banking and mirror transactions. It also highlights the continued exploitation of consumer goods supply chains and cross-border trade flows to obscure criminal value transfer, presenting ongoing challenges for banks, logistics providers and regulators seeking to detect and disrupt these networks.

Read the press release here.