Chinese money laundering networks (CMLNs) in the U.S. that are used by Mexico-based drug cartels — dubbed a “mutualistic relationship” — are the target of an advisory to banks, the Treasury’s top financial crimes enforcement arm said Thursday.
The Financial Crimes Enforcement Network (FinCEN) said the CMLNs “pose a significant threat to the U.S. financial system.” The agency said the advisory it issued urged banks and other financial institutions “to be vigilant in detecting the use of CMLNs by Mexico-based drug cartels, including several designated as Foreign Terrorist Organizations.”
The agency also issued a “trend analysis” that highlights the “scope and breadth” of the networks’ activity in the U.S.
FinCEN said it analyzed 137,153 Bank Secrecy Act (BSA) reports filed by financial institutions between January 2020 to December 2024 associated with suspected CMLN-related activity. The agency said that totaled $312 billion in suspicious transactions.
The agency asserted that Mexican currency restrictions, and People’s Republic of China (PRC) currency control laws, limit how much in dollars may be deposited in Mexico, and how much Chinese currency may be transferred overseas each year. The result, the agency said, is that the Mexican drug cartels turn to U.S.-based CMLNs.
“Ultimately, Chinese citizens’ demand for large quantities of U.S. dollars and the cartels’ need to launder their illicit U.S. dollar proceeds has resulted in a mutualistic relationship wherein the cartels sell off their illicitly obtained U.S. dollars to CMLNs who, in turn, sell the U.S. dollars to Chinese citizens seeking to evade China’s currency control laws,” FinCEN said.
FinCEN said it had developed “red flags” to help financial institutions “detect, prevent, and report suspicious activity connected to CMLNs laundering illicit proceeds.”
“In situations where the money mules are opening accounts, these money mules may report their occupation during the account onboarding process as ‘student,’ ‘housewife,’ ‘retired,’ ‘laborer,’ or other occupations that typically do not engage in large volumes of transactions, which may bring about suspicions as to why these accounts have large volumes of unexplained wealth,” FinCEN said.
The agency said private individuals carrying passports from the PRC play a significant role in CMLNs and may — wittingly or unwittingly — assist the networks in laundering money “on a global scale.”
FinCEN Issues Advisory and Financial Trend Analysis on Chinese Money Laundering Networks
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