FinCEN Advisory: Use of Chinese Money Laundering Networks by Transnational Criminal Organizations Based in Mexico to Launder Illicit Proceeds

FINANCIAL CRIMES ENFORCEMENT NETWORK (FinCEN) of the U.S. Department of the Treasury (Treasury) issues this Advisory to urge financial institutions1 to be vigilant in identifying and reporting suspicious transactions potentially related to the use of Chinese Money Laundering Networks (CMLNs)2 by the Jalisco New Generation Cartel (CJNG), the Sinaloa Cartel, the Gulf Cartel, and other transnational criminal organizations (TCOs) based in Mexico — commonly known collectively as the “Cartels” — to launder illicit proceeds. CMLNs are considered professional money launderers (PMLs)3 and play a vital role in laundering the illicit proceeds of the cartels in the United States. This is, in part, due to the speed and efficiency of CMLN money laundering operations, as well as their willingness to assume financial losses and risks for the cartels and other clients.4 Additionally, CMLNs operate globally and can coordinate with other international PMLs, such as shadow banking networks and Colombian peso brokers.5 According to the Treasury’s 2024 National Money Laundering Risk Assessment, CMLNs are one of the most significant threat actors in money laundering facing the U.S. financial system.6

This Advisory supports FinCEN’s work to raise awareness and counter the revenue sources of criminal organizations7 and is consistent with two of the eight national priorities for combating money laundering and terrorist financing (ML/TF) (i.e., drug trafficking organization (DTO) activity and TCO activity).8

Furthermore, on January 20, 2025, the President issued Executive Order (E.O.) 14157 designating certain international cartels and other TCOs as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs).9 Cartels control virtually all illegal trafficking across the U.S. southwestern border, and their activities threaten the security of the American people, the security of the United States, and the stability of the international order in the Western Hemisphere. The Treasury is committed to countering cartel and related actor activity.

This Advisory: (i) provides an overview of CMLNs and their connection to cartels, (ii) analyzes financial typologies associated with the laundering of illicit proceeds by CMLNs, (iii) highlights red flags, and (iv) reminds financial institutions of their reporting requirements under the Bank Secrecy Act (BSA). The information contained in this Advisory is derived from FinCEN’s analysis of open-source reports, BSA reports, and law enforcement information.

Summary of Chinese Money Laundering Networks

CMLNs operate in a compartmentalized manner, leveraging trust-based relationships rather than working through a hierarchical structure to launder money. CMLNs typically launder illicit proceeds for various TCOs and may engage in additional criminal activity as part of their money laundering operations, such as providing false identity documents to individuals opening bank accounts in their name.10

CMLNs are typically composed of both current and former holders of U.S. and foreign Chinese passports (i.e., Chinese citizens). CMLNs often recruit members from Chinese or other diaspora populations to participate in their money laundering operations and act as money mules,11 money brokers, and cash messengers.12 In the United States, CMLNs appear to have increasingly recruited Chinese students studying at U.S. universities, and some of these students may have continued participating in CMLN operations after graduation.13 CMLNs may target individuals with student visas in particular, as they are often restricted from obtaining certain types of legal employment in the United States.14 In some cases, individuals recruited by CMLNs may not understand that their actions are illegal, but rather were drawn to participate in the programs under the incentive of having a source of income and helping other Chinese citizens or nationals access U.S. dollars (USD). One of the primary goals of CMLNs is to obtain large amounts of USD and other currencies to satisfy the demand for these currencies by Chinese citizens seeking to evade the monetary controls of the People’s Republic of China (PRC).15 This demand for USD has led CMLNs to associate with illicit actors, such as cartels, who have access to large sums of USD that they need to launder.16 CMLNs assume much of the risk of transporting and laundering large volumes of cash within the United States, while providing near-instantaneous value transfers to their clients through informal value transfer systems (IVTS)17 or trade-based money laundering (TBML) schemes.18

In the United States, CMLNs operate functionally as unregistered money services businesses (MSBs)19 and act as intermediaries in the global Chinese underground banking system (CUBS),20 which provides Chinese citizens with the ability to move funds out of China despite PRC currency control laws.

Although CMLNs derive some benefits from their money laundering activities (e.g., payments to cartels), CMLNs are often able to offer lower fees than other PMLs because the majority of CMLN revenue comes from the sale of illicit cash to Chinese citizens at a premium.21

In addition to laundering drug proceeds on behalf of cartels, CMLNs are associated with laundering proceeds from other types of illicit activities on behalf of clients, such as the marijuana business, human trafficking, and fraud.22 CMLNs may also be involved in other criminal activities besides money laundering, such as healthcare fraud and illegal gambling.23 Relating to a variety of illicit actors gives CMLNs access to money flows from diverse sources and locations. CMLNs also coordinate and connect with CMLNs or PMLs in other countries through IVTS and TBML to launder illicit proceeds, eliminating the need to physically transport cash or execute cross-border bank transfers.24

The complex networks and operations of CMLNs, as described in more detail below, threaten the U.S. financial system and facilitate the laundering of illicit proceeds into the United States and internationally.

Drivers of Chinese and Cartel Money Laundering

The increased prominence of CMLNs, including their business relationships with cartels and other TCOs, has been driven, in part, by laws passed by the Government of Mexico (GoM) and the PRC that restrict financial flows. Instituted in 2010 and revised in 2014, the GoM’s monetary restrictions prevent large amounts of USD from being deposited in Mexican financial institutions.25 These restrictions have hindered the ability of cartels to launder illicit U.S. dollar proceeds through the formal Mexican financial system, leading them to seek PMLs operating in the United States. PRC currency control laws26 restrict the amount of Chinese renminbi (RMB) that Chinese citizens can convert into other currencies each year and prevent direct transfers of RMB abroad without prior approval. Similarly, these laws have increased the demand for access to U.S. dollars among Chinese citizens in a manner that evades PRC oversight of funds.

This policy has led Chinese citizens to increasingly rely on CMLN services to provide access to USD through informal transactions. Ultimately, the demand for large amounts of USD by Chinese citizens and the need for cartels to launder their illicit proceeds in USD have resulted in a mutually beneficial relationship in which cartels sell their illicitly obtained USD to CMLNs, which in turn sell the USD to Chinese citizens seeking to evade PRC currency control laws.27

Financial Typologies Associated with the Laundering of Cartel Illicit Proceeds by CMLNs

Use of Mirror Transactions by CMLNs

To launder funds, CMLNs transfer value globally and sometimes simultaneously, using a form of IVTS. For example, once a U.S.-based CMLN receives USD from a cartel for laundering, it coordinates with its Mexican CMLN counterparts who execute a reciprocal or “mirror”28 transaction in which an equivalent amount of pesos is transferred to the cartels’ accounts in Mexico, minus a nominal commission. Through this informal value transfer, CMLNs “buy” the value of the cartels’ illicit USD proceeds in pesos. This mirror transaction occurs almost instantaneously and avoids many of the risks associated with bulk cross-border cash smuggling or depositing large sums of USD in financial institutions based in Mexico, thereby evading USD deposit restrictions.

CMLNs may also use convertible virtual currency (CVC) as an alternative medium to execute mirror transactions with cartels.29 Like other mirror transactions, the use of CVC avoids the risks associated with physically transporting cash or bulk depositing large amounts of USD.

U.S.-based CMLNs then sell the dollars bought from the cartels, advertising them on social media or leveraging personal networks, to Chinese citizens or businesses seeking to evade PRC currency control laws.30 Once identified, the buyer is connected by the U.S.-based CMLN with an operator based in China, who instructs them to transfer an equivalent amount of RMB, plus a significant commission, from their bank account in China to an account controlled by the China-based operator.31 This internal RMB transfer within China avoids PRC foreign exchange control laws and effectively “buys” control of the USD from the CMLN. Once the transfer is made in China, the U.S.-based CMLN makes the purchased USD available to Chinese buyers in the United States, typically laundering the money through the U.S. financial system.

Use of Money Mules

As part of the laundering process, CMLNs may use money mules to deposit illicit USD into accounts they direct to open at U.S. depository institutions or into accounts held by Chinese citizens or businesses based in the U.S.32 In situations where money mules open accounts, these money mules may declare their occupation during the account onboarding process as “student,” “homemaker,” “retiree,” “laborer,” or other occupations that typically do not involve large volumes of transactions. CMLNs may also provide money mules with false Chinese passports to facilitate account opening and engage in other illicit financial conduct.33 CMLNs may also recruit employees of financial institutions to act as internal accomplices or infiltrate and place CMLN members within a financial institution to assist in CMLN operations.34

1. See 31 U.S.C. § 5312(a)(2); 31 CFR § 1010.100(t).
2. CMLNs may also be referred to as Chinese Money Laundering Organizations (CMLOs). Treasury and some law enforcement agencies have begun characterizing them as “networks” due to their horizontal structure and decentralized nature. See, for example, U.S. Drug Enforcement Administration (DEA) “2025 National Drug Threat Assessment” (“NDTA 2025”) (May 2025), at page 6.
3. Professional money laundering encompasses individuals, organizations, and networks involved in laundering third-party money in exchange for a fee or commission. See Treasury, “2024 National Money Laundering Risk Assessment” (“NMLRA 2024”) (February 2024), at page 26.
4. Id. at p. 29.
5. Id. For more information on Colombian peso brokers, see U.S. Department of Justice (DOJ), “Colombian Intermediary Sentenced to Nearly a Decade in Prison for Role in International Money Laundering Conspiracy” (June 20, 2025).
6. See 2024 NMLRA, note 3 supra, at pp. 29-30.
7. See FinCEN, FIN-2025-A002, “FinCEN Alert on Smuggling Schemes on the U.S. Southwest Border Associated with Mexico-Based Cartels” (May 1, 2025); FinCEN, FIN-2025-A001, “FinCEN Alert on Smuggling and Bulk Cash Repatriation by Transnational Criminal Organizations Based in Mexico” (March 31, 2025); FinCEN, FIN-2024-A002, “Supplementary Advisory on the Acquisition of Precursor Chemicals and Manufacturing Equipment Used for the Synthesis of Illicit Fentanyl and Other Synthetic Opioids” (June 20, 2024); FinCEN, OFAC, and FBI, FIN-2024-NTC2, “Joint FinCEN, OFAC, and FBI Advisory on Timeshare Fraud Associated with Transnational Criminal Organizations Based in Mexico” (July 16, 2024).
8. See FinCEN, “National Priorities for Combating Money Laundering and Terrorist Financing” (June 30, 2021).
9. See White House, “Designation of Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists” (January 20, 2025); U.S. Department of State, “Designation of International Cartels” (February 20, 2025).
10. Id.; see also U.S. Immigration and Customs Enforcement, Cornerstone Report Number #48, “Chinese Money Laundering Organizations (CMLO) - Use of Forged Chinese Passports” (“Forged Chinese Passports”) (January 2, 2024).
11. Money mules are individuals who are used, consciously or unconsciously, to transfer value, either by laundering stolen money or by physically transporting goods or other products. See FATF, “Professional Money Laundering” (July 2018), at p. 22. According to law enforcement agencies, criminal organizations often target students as potential money mules.
12. See Department of Justice, “The Final Three Members Indicted in the Prolific Chinese Money Laundering Scheme Plead Guilty to Laundering Tens of Millions in Drug Proceeds” (July 7, 2025).
13. See FinCEN, Financial Trends Analysis, “Chinese Money Laundering Networks: Threat Pattern and Trend Information 2020 – 2024” (“FinCEN CMLN FTA”) (August 28, 2025), pp. 19-20.
14. See U.S. Citizenship and Immigration Services, “Students and Employment” (last updated April 8, 2025).
15. China instituted strict capital controls in 2016, following an increase in capital flight. China’s foreign exchange rules limit the maximum amount of renminbi (RMB) that Chinese citizens can convert into other currencies to approximately $50,000 each year and restrict Chinese citizens from directly transferring RMB abroad without prior approval from China’s State Administration of Foreign Exchange. Consequently, many Chinese citizens attempt to circumvent these monetary control laws for various reasons. See U.S. Department of State, “2024 Investment Climate Statements: China” (“China Investment Climate Statement”) (July 2024).
16. See Treasury, “Treasury Sanctions Mexico and China-Based Money Launderers Linked to Sinaloa Cartel” (July 1, 2024).
17. An IVTS is “any system, mechanism, or network of persons that receives money for the purpose of obtaining funds or equivalent value payable to a third party in another geographic location, whether in the same form or not.” The informal nature of the system means that the movement of value occurs outside the formal financial system. An IVTS is not inherently illicit and may be used for legitimate (e.g., sending remittances) or illegitimate (e.g., money laundering) purposes. See FinCEN, Number 33, “Informal Value Transfer Systems” (March 2003), at p. 1; see also 2025 NDTA, note 2 supra, at p. 64; DEA, “2024 National Drug Threat Assessment” (“NDTA 2024”) (May 9, 2024), p. 47.
18. TBML is the process of disguising criminal proceeds and transferring value through the use of commercial transactions in an attempt to legitimize their illicit origin. See Financial Action Task Force (FATF), “Trade-Based Money Laundering” (June 23, 2006), at p. i; see 2024 NDTA, note 17 supra, at pp. 46-47.
19. As an MSB, any person not exempt who participates in the transmission of money must register with FinCEN within 180 days of commencing money transmission. See 31 CFR § 1022.380.
20. CUBS is a type of IVTS. See FinCEN CMLN FTA, note 13 supra, at p. 8; see also NDTA 2024, note 17 supra, at p. 47.
21. See 2024 NMLRA, note 3 supra, at pp. 29-30.
22. See FinCEN CMLN FTA, note 13 supra, at p. 4; see also Department of Justice, “Seventeen Individuals Indicted in Sophisticated National Money Laundering Scheme Originating with Violent Crimes in Baltimore” (October 10, 2024); Substituted Indictment, Dkt. No. 112, United States v. Tao, 1:24-cr-289 (D. Md. October 9, 2024); DOJ, “Seven Chinese Citizens Indicted for Alleged Roles in Multibillion-Dollar Money Laundering, Foreign Narcotics Trafficking, and Drug Trafficking” (June 8, 2025); Indictment, Dkt. No. 1, United States v. Chen, 1:25-cr-10284 (D. Mass. July 2, 2025). Proceedings in these matters are ongoing.
23. See CMLN FTA, note 13 supra, at pages 15-16.
24. See Brian E. Nelson, Under Secretary of the U.S. Department of the Treasury for Terrorism and Financial Intelligence, “Written Testimony for the Senate Caucus on International Narcotics Control Hearing titled ‘Chinese Money Laundering Organizations: Cleaning Cartel Money’” (April 30, 2024), at page 1.
25. On June 15, 2010, to counter cartel operations, Mexico’s Secretariat of Finance and Public Credit (SHCP) announced new AML regulations restricting the amounts of physical cash (bills and coins) denominated in USD that Mexican banks can receive. Generally, individuals in Mexico are limited to depositing $4,000 per month, and businesses in border or tourist zones are limited to $14,000 per month; however, certain Mexico-based businesses may receive exemptions to these deposit limits. See Secretariat of Finance and Public Credit and National Banking and Securities Commission, “Overview of the Mexican Financial System and its AML/CFT Regulation and Supervision” at pages 52-56.
26. See China Investment Climate Statement, note 15 supra.
27. See William F. Kimbell, Chief of Operations, DEA, “Written Testimony for the Senate Caucus on International Narcotics Control Hearing titled ‘Chinese Money Laundering Organizations: Cleaning Cartel Money’” (April 30, 2024), at p. 4.
28. The term “mirror transactions” or “mirror transfer” is used by U.S. law enforcement agencies to describe a money laundering typology involving the exchange of foreign currencies. The process typically occurs within Chinese underground banking and black market peso exchange schemes, and often involves a money broker or accountant who executes two equal but separate transactions involving at least two parties who are often unaware of each other. In this system, the broker or accountant makes payments to each party using the other party’s currency, “mirroring” or balancing the transactions. See 2024 NMLRA, note 3 supra, at pp. 29-30.
29. See NDTA 2024, note 17 supra, at page 47.
30. See 2024 NMLRA, note 3 supra, at pp. 29-30.
31. The China-based CMLN operator will typically sell the RMB obtained from this transaction to Mexican or Chinese importers in Mexico with business in China through a mirror transfer via the Mexico-based CMLN operator to obtain more pesos. This cycle replenishes the peso supply of the Mexico-based CMLN operator for future transactions. See 2024 NMLRA, note 3 supra, at p. 30.
32. See FinCEN CMLN FTA, note 13 supra, pp. 19-20; see also Wall Street Journal, “Drug Cartel Cash Stashes and Bank Teller Windows in the U.S.” (“Cash Stashes”) (May 14, 2025).
33. See Forged Chinese Passports, note 10 supra; see also FinCEN, FIN-2024-NTC1, “FinCEN Advisory on the Use of Forged U.S. Passport Cards to Perpetrate Identity Theft and Fraud at Financial Institutions” (April 15, 2024).
34. See FinCEN CMLN FTA, note 13 supra, at pp. 20-21.

This publication has been translated into Spanish solely for your convenience. Although FinCEN has taken reasonable measures to provide the most accurate translation possible, the English version is the only official version of the following FinCEN Advisory: Use of Chinese Money Laundering Networks by Transnational Criminal Organizations Based in Mexico to Launder Illicit Proceeds. If you have any questions regarding the meaning or accuracy of the information contained in the translated Advisory, please refer to the English version of the document.

FIN-2025-A003 August 28, 2025

FinCEN Advisory: Use of Chinese Money Laundering Networks by Transnational Criminal Organizations Based in Mexico to Launder Illicit Proceeds

Request for Suspicious Activity Report (SAR) Filing:

FinCEN requests that financial institutions reference this Advisory in the SAR Field 2 (Depository Institution Note to FinCEN) and the narrative, including the key term “CMLN-2025-A003,” and select, as applicable, SAR Field 38(n) (Suspicious Use of Informal Value Transfer System); SAR Field 38(s) (Unlicensed or Unregistered MSB); SAR Field 36(l) (Trade-Based Money Laundering/Black Market Peso Exchange), and any other applicable boxes.