Chinese Money Launderers Used US Banks for Drug Cartels
Chinese money laundering networks funneled an estimated $312 billion through US banks between 2020 and 2024, according to a new report from the US Financial Crimes Enforcement Network (FinCEN).
The advisory, released Thursday, analyzed over 137,000 Bank Secrecy Act reports and revealed that an average of $62 billion per year flowed through American financial institutions from Chinese money launderers.
These groups have built a close partnership with Mexico’s drug cartels. The cartels need to launder US dollar drug proceeds, while Chinese networks seek dollars to bypass strict currency controls in China.
“Chinese money-laundering 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,” said FinCEN Director Andrea Gacki.
Beyond Drug Cartels: Real Estate and Fraud
The FinCEN report highlighted that Chinese groups aren’t only moving drug money. They are also involved in:
- Human trafficking and smuggling
- Healthcare fraud and elder abuse
- Real estate money laundering, with $53.7 billion in suspicious transactions
This reveals how deeply these networks have embedded themselves into the traditional financial system.
Crypto Takes the Heat Despite Smaller Role
Despite the staggering role of US banks in global money laundering, lawmakers often point fingers at cryptocurrency. Senator Elizabeth Warren, a vocal critic of digital assets, has repeatedly claimed that crypto enables money laundering and pushed for stricter regulations.
But the numbers tell a different story. According to the United Nations Office on Drugs and Crime, global money laundering exceeds $2 trillion annually. In comparison, illicit crypto transactions totaled $189 billion across the last five years, Chainalysis data shows.
“Illicit activity is but a small fraction of the crypto ecosystem. We estimate that it is less than 1% of overall crypto volume,” said Angela Ang, head of policy at TRM Labs.
Shadow Banking vs. Crypto Regulation
Experts argue that the real threat lies in shadow financial systems operating within traditional banks. FinCEN’s findings highlight how underground networks exploit banking loopholes to move money globally.
“FinCEN’s findings align with a broader pattern—these underground banking networks function as a shadow financial system for organized crime worldwide, operating at the seams of banking systems,” Ang said.
Key Takeaway
While US banks quietly process hundreds of billions in dirty money, cryptocurrency continues to take the blame in Washington. The data makes one thing clear: money laundering is far more entrenched in the traditional banking system than in the crypto ecosystem.
