U.S. Treasury Warns of $312 Billion in Chinese Laundering For Mexican cartels

FinCEN says Chinese networks moving billions for Mexican cartels also push illicit cash through U.S. real estate, elder care centers, and human trafficking schemes.

WASHINGTON — The U.S. Department of the Treasury issued a stark warning Thursday that Chinese money laundering networks have become a primary engine driving Mexico-based drug cartels’ expansion into the United States, flagging $312 billion in cartel-linked suspicious transactions and a further $53.7 billion in illicit real estate activity over the past four years. Officials underscored the systemic risks posed by what they described as a sprawling global underground economy.

While cartel laundering was the central focus, Treasury’s Financial Crimes Enforcement Network (FinCEN) also highlighted troubling evidence of Chinese-linked financial activity tied to elder care centers, human trafficking, and fraud. Investigators flagged $766 million in suspicious activity at 83 adult and senior day care centers in New York, along with 1,675 reports of suspected human trafficking or smuggling, and 108 reports tied to elder abuse and health care schemes.

New York has been the focus of investigations showing how Chinese community groups and service centers became entangled in Beijing’s foreign interference campaigns, according to indictments and reporting in The New York Times—raising concerns that the financial networks flagged by FinCEN blur the line between criminal enterprises and hostile state activities.

As reported previously by The Bureau in coverage of a sweeping FinTRAC warning on Chinese underground banking in Toronto, FinCEN is now raising similar alarms. The Treasury said so-called “money mules” often rely on falsified jobs and identities to gain access to the banking system, disguise unexplained wealth, and buy residential properties. In cases where these mules opened accounts, they frequently listed occupations such as “student,” “housewife,” “retired,” or “laborer” — roles that would not normally involve large volumes of financial activity — yet the accounts showed high-value deposits and transactions consistent with laundering.

These same evasive patterns first appeared in audits during the 2010s of massive drug-money laundering through British Columbia’s government casinos, a dominant node of Chinese triad and state activity in North America. According to FinTRAC, Chinese criminal networks shifted the scheme across Canada’s banking and legal systems during the pandemic, when casino closures forced an evolution of laundering tactics.

In the United States, Treasury officials said, these networks have become critical partners to Latin American drug cartels — including groups designated as foreign terrorist organizations.

“Money laundering networks linked to individual passport holders from the People’s Republic of China enable cartels to poison Americans with fentanyl, conduct human trafficking, and wreak havoc among communities across our great nation,” said John K. Hurley, Treasury’s Under Secretary for Terrorism and Financial Intelligence. “The United States will not stand by and allow nefarious actors to launder illicit proceeds through our financial system.”

FinCEN Director Andrea Gacki called the networks “global and pervasive,” warning that they must be “dismantled” through coordinated international action.

The Financial Trend Analysis behind the advisory drew on 137,153 Bank Secrecy Act reports filed between January 2020 and December 2024, documenting $312 billion in suspicious transactions tied to Chinese laundering networks.

Officials described a vast shadow infrastructure stretching from cartel couriers in the United States and Mexico to Chinese nationals seeking to evade Beijing’s strict capital controls. The result is a mutually beneficial pipeline: cartels desperate to shed bulk U.S. dollars sell cash to Chinese intermediaries, who in turn profit by reselling those dollars to wealthy clients inside China eager to move money abroad.

Chinese Command Cartel Money Movement

A granular view of the scheme emerged in the stunning case of Beijing-born Zhi Dong Zhang — code-named “Chino” — who, as The Bureau reported this week, recently escaped house arrest in Mexico City just days before his scheduled extradition to the United States. Indictments allege Zhang commanded both the Chinese and Mexican wings of cartel operations, training Hispanic money mules to infiltrate U.S. banks. He reportedly bridged fentanyl precursor supply lines for the rival Sinaloa and Jalisco cartels — a rare position that underscored how Chinese networks have become the anchor of cartel financial and chemical infrastructure.

The global, trade-based nature of the system — emphasized in Treasury officials’ comments — stems from Mexico’s restrictions on dollar deposits and China’s caps on outbound transfers. Together, these measures have forged what Treasury calls a “mutualistic relationship” between cartels and Chinese brokers. Cartel proceeds in U.S. dollars are sold at a discount to Chinese laundering networks, which in turn meet demand from Chinese citizens and businesses seeking dollars for tuition, real estate, or investments in the United States.

Transactions move through informal networks advertised on WeChat or brokered via personal connections. Cartels are then compensated in yuan through Chinese accounts or with goods purchased in Asia and shipped to Mexico through their diaspora distribution channels.

In some cases, financial institution employees are recruited as complicit insiders, while counterfeit Chinese passports have been used to open accounts and disguise flows. The layering of shell companies, third-party intermediaries, and complex real estate purchases allows illicit proceeds to be reintegrated into the legitimate economy.

As previously reported by The Bureau, the U.S. government has been surfacing vast datasets and cases tied to an ongoing DEA task force codenamed Sleeping Giant. The operation was launched by senior DEA agent Don Im, whose career has focused on decoding China’s central role in global money laundering and chemical supply chains for methamphetamine and fentanyl. The mission was designed to bring cases against Latin American cartels working in partnership with Chinese laundering syndicates.

One of the task force’s major cases revealed how Sai Zhang, a Chinese student in California on a study visa, played a commanding role in orchestrating Sinaloa cartel fentanyl cash flows. But the system extended far beyond one trafficker, Im said, bridging into the architecture of China’s economic system itself.

“Chinese banking networks were operating in the U.S. long before Zhang linked up with the Sinaloa cartel,” Im told The Bureau in a report that previewed FinCEN’s detailed findings. He described how Chinese buyers bid on pools of cartel drug cash collected worldwide, paying a premium to receive laundered dollars in U.S. cities and investments of their choosing. “The buyers were mostly wealthy Chinese seeking dollars for real estate or tuition in America. Payments were made in yuan through Chinese accounts. In return, Mexican cartels received goods or cash.”

In exclusive interviews, Im outlined in unprecedented detail the breathtaking complexity of China’s global drug money laundering networks — a labyrinth of shadow transactions that Sleeping Giant helped map and penetrate. These findings, he said, help explain why Washington is now imposing new trade sanctions targeting China and countries bound tightly to its export-driven economy.

At the heart of the problem, according to Im, is Beijing’s decentralized economic apparatus. The Chinese Communist Party’s regional governors knowingly align with drug barons, he argued — channeling fentanyl cash, reintegrating it into China’s industrial output, and exporting drug-funded goods worldwide. Meanwhile, Chinese immigrants and travelers access the other side of this narco-banking system, using it to bankroll overseas investments and strengthen the reach of the Chinese diaspora.

The new Treasury advisory urges financial institutions to sharpen detection of red flags, from unusual cash deposits and wire transfers tied to Chinese nationals to trade transactions routed through shell companies and real estate purchases inconsistent with reported income. Officials cast the move as part of a whole-of-government campaign to choke off cartel financing while pressing for tighter coordination with foreign governments and law enforcement partners.

“Chinese money laundering networks are global and pervasive, and they must be dismantled,” Gacki said.

One senior U.S. expert, in a previous interview, warned that diligent business leaders in the United States — and worldwide — would be wise to study such sweeping warnings, or risk penalties for complicity in terror-designated cartel financing if they fail to implement proper controls and oversight of suspicious transactions.