Banking and Finance Law Daily Wrap Up, BANK SECRECY ACT—FinCEN’s advisory, trend analysis address Chinese money laundering networks’ infiltration into U.S. financial system, (Aug 28, 2025)

By Kathleen Bianco, J.D.

The most recent Financial Trend Analysis reports that over a five-year period, starting in January 2020, nearly $312 billion in suspicious transactions were related to Chinese money laundering networks.

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) took actions aimed at highlighting the significant threat to the U.S. financial system posed by Chinese money laundering networks (CMLNs). This includes the issuance of an advisory urging financial institutions to be vigilant in identifying the use of CMLNs by Mexico-based drug cartels and the release of a Financial Trend Analysis (FTA) addressing the scope and breadth of CMLN activity in the United States. Taken together, the advisory and the Financial Trend Analysis are intended to aid financial institutions in the identification of illicit CMLN activities, according to a FinCEN press release.

FinCEN Director Andrea Gacki asserted, “These networks launder proceeds for Mexico-based drug cartels and are involved in other significant, underground money movement schemes within the United States and around the world. FinCEN’s Advisory and Financial Trend Analysis support Treasury’s continuing efforts, alongside our law enforcement and international partners, to bankrupt transnational criminal organizations and their enablers.”

Advisory warning: The FinCEN advisory points out the increasing use of CMLNs by Mexico-based drug cartels to launder drug trafficking proceeds. The demand for U.S. currency among Chinese nationals resulting from currency controls in China creates a natural market for cartel cash. Likewise, currency restrictions in Mexico, which bar the deposit of large amounts of U.S. dollars into Mexican financial institutions, hinder the cartels’ ability to launder funds in Mexico. Because CMLNs operate outside of traditional financial systems, using value transfer methods, mirror transactions, and trade-based schemes that are hard to detect, they are a discreet, efficient, mutually beneficial way to move proceeds garnered through illegal activities.

CMLNs often recruit Chinese students or low-income individuals in the U.S. as money mules and use shell companies, luxury goods, and real estate to blur financial trails. Financial institutions are encouraged to look for red flags, such as large unexplained transfers, inconsistent business activity, and the use of cashier’s checks and report them. Suspicious Activity Reports (SARs) addressing these activities should include the keyword “CMLN-2025-A003.” To combat these bad actors, financial institutions must maintain strong anti-money laundering and countering the financing of terrorism (AML/CFT) programs, engage in heightened due diligence, and share information when appropriate.

Financial Trend Analysis. The August 2025 FTA evaluated 137,153 Bank Secrecy Act (BSA) reports, representing about $312 billion in suspicious activity related to suspected CMLN activity, filed between January 2020 and December 2024. Most of the reports (about 85 percent) were filed by depository institutions with money services businesses (MSBs) filing the second-highest number of BSA reports, accounting for approximately nine percent. In addition to laundering proceeds from drug trafficking, CMLNs are also involved in facilitating other illicit activity, including fraud, human trafficking, and human smuggling.

The FTA outlines a number of ways in which the CMLNs moves funds into the U.S. financial system, including, but not limited to, making large cash deposits into accounts owned by U.S.-based Chinese Nationals, working with daigou buyers, which are buyers purchasing high-value electronics and luxury goods on behalf of others and exporting the items to other countries, and facilitating U.S. real estate purchases. The report further notes that CMLNs use a variety of methods to launder money and may recruit or place employees inside financial institutions. The methods used by the CMLNs include both illegal and legal businesses that rely on complex schemes and multiple parties, who may or may not be complicit, to disguise the source(s) of funds. The analysis of the dataset identifies trends in CMLN activity, highlights the role of U.S. and foreign-based Chinese passport holders, and sheds light on how CMLNs launder money on a global scale.

“Today’s publication of FinCEN’s Advisory and Financial Trend Analysis reinforce Treasury’s and law enforcement’s ongoing work to combat Chinese money laundering networks, and will help financial institutions better identify signs of illicit activity,” said Under Secretary of Terrorism and Financial Intelligence John K. Hurley.

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