U.S. officials are sounding a new alarm about how Chinese underground bankers are helping fentanyl profits move through North America’s financial system, with Canadian choke points becoming more and more important.
The Financial Crimes Enforcement Network said in a release on August 28 that it looked at 137,153 Bank Secrecy Act reports filed between January 2020 and December 2024.
These reports showed about $312 billion in suspicious transactions that were linked to Chinese money-laundering networks used by Mexican cartels.
FinCEN said that the numbers come from reports of suspicious activity, not confirmed criminal proceeds. However, they said that the patterns are widespread and getting worse.
FinCEN’s advisory talks about a quick, cheap “mirror” system that exchanges cartel dollars in the U.S. for pesos in Mexico.
Chinese brokers then sell those dollars at a higher price to clients who want to get around Beijing’s capital controls.
The network relies on informal ways to move money, trade-based schemes, and a steady stream of money mules.
FinCEN says that account holders who move a lot of money without clear sources of funds and say they are students, housewives, or retired people are red flags.
Andrea Gacki, the head of FinCEN, said in the release, “Chinese money laundering networks are everywhere and all over the world, and they need to be broken up.”
The Financial Transactions and Reports Analysis Centre of Canada sent out an operational alert on January 23 that said organised crime groups are bringing precursor chemicals and equipment into Canada from China and other Asian countries, running illegal labs there, and using underground banking and trade-based laundering to move their profits.
From 2020 to 2023, FINTRAC looked at about 5,000 suspicious transaction reports related to fentanyl and other synthetic opioids.
They found that most of the activity happened in and around Vancouver and Toronto, and that exports went by sea, air, and land.
The picture across borders got even worse in September when FinCEN and FINTRAC held their second annual anti money laundering symposium in Washington.
The readout said that everyone was focused on breaking up Chinese money-laundering networks that help with fentanyl trafficking, human trafficking, and other crimes.
The Justice Department said in a 2024 indictment that was made public in Los Angeles that members of the Sinaloa Cartel worked with a California-based group linked to Chinese underground banking to move more than $50 million using trade-based money laundering, structuring, and cryptocurrency.
Authorities in the U.S., Mexico, and China worked together to make arrests in the case, which prosecutors called a model for how cartel money is put back into the legal economy.
Depository institutions sent in 85% of the reports about CMLN that are in FinCEN’s database. Real estate is a common channel, with 17,389 reports showing more than $53.7 billion in suspicious activity.
FinCEN said that networks may use shell companies or nominees to buy property and move money around, and they may also hire people who work at banks.
The advisory asks people who file suspicious activity reports to tag them with the key term in the notice to help with investigations.
