FinCEN Warns of Expanding Threat from Chinese Money Laundering Networks

The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a new Advisory and Financial Trend Analysis (FTA) highlighting the growing risks posed by Chinese money laundering networks (CMLNs). These networks, according to the agency, represent a significant threat to the US financial system and are heavily relied upon by Mexico-based drug cartels, including groups designated as Foreign Terrorist Organisations.

FinCEN’s analysis of 137,153 Bank Secrecy Act (BSA) reports filed between January 2020 and December 2024 revealed suspicious transactions totalling approximately 312 billion dollars linked to CMLN activity. The findings underscore the breadth of these networks, which launder proceeds not only from drug trafficking but also from fraud, human trafficking, human smuggling, and healthcare scams.

Mutual dependence between cartels & Chinese actors

CMLNs have developed a symbiotic relationship with Mexico-based cartels. Mexico’s restrictions on dollar deposits and China’s strict currency controls have created a market in which Chinese citizens seek access to US dollars while cartels need to launder illicit proceeds. US-based CMLNs exploit this gap, selling dollars obtained from cartels to Chinese nationals seeking to bypass currency restrictions.

Money laundering methods & sectors exploited

FinCEN highlighted the use of trade-based money laundering, money mule operations, and mirror transactions as core laundering techniques. Alarming trends include the infiltration of financial institutions through complicit insiders, the use of counterfeit Chinese passports, and shell companies to disguise activity.

The real estate sector emerged as a major laundering channel, with 17,389 BSA reports linking more than 53.7 billion dollars in suspicious transactions to property purchases. High-value US markets, in particular, appear to be a focus for CMLN investment. Reports also flagged illicit activity in elder care centres, healthcare fraud, and gaming.

Red flags for financial institutions

To support detection, FinCEN’s Advisory provides red flag indicators for banks and financial institutions. These include accounts opened by individuals declaring occupations such as “student”, “housewife”, “retired” or “labourer”, yet showing large unexplained transaction volumes.

US Treasury & FinCEN’s stance

“Chinese money laundering networks enable cartels to poison Americans with fentanyl, conduct human trafficking, and wreak havoc among communities,” said John K Hurley, Under Secretary for Terrorism and Financial Intelligence. FinCEN Director Andrea Gacki added that these networks “are global and pervasive, and they must be dismantled”.

The Advisory urges financial institutions to remain vigilant, apply enhanced due diligence, and promptly report suspicious activity through BSA filings. Treasury emphasises that tackling CMLNs is central to its wider mission to bankrupt transnational criminal organisations and their enablers.

Read the press release here.