WARNING:- Some Chinese passport holders are laundering money for drug cartels in Mexico

On August 28, 2025, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a significant advisory and financial trend analysis warning about Chinese Money Laundering Networks (CMLNs) that are aiding Mexico-based drug cartels in laundering billions of illicit proceeds.

FinCEN said:-

• “The business relationship between CMLNs and Mexico-based drug cartels is driven in part by laws passed by the government of Mexico and the PRC [People’s Republic of China] that restrict financial flows,”
• “Private individuals carrying [PRC] passports … play a significant role … and may wittingly or unwittingly assist CMLNs.”

In a 15-page advisory and 21-page analysis, the Financial Crimes Enforcement Network warned that “Chinese money-laundering networks,” or CMLNs, move and hide funds for the cartels, some of which the U.S. now designates as foreign terrorist organisations.

FINCEN WARNINGS

• FinCEN’s Advisory is available online at: https://www.fincen.gov/sites/default/files/advisory/2025-08-28/FinCEN-Advisory-CMLN-508.pdf.
• FinCEN’s FTA is available online at: https://www.fincen.gov/sites/default/files/shared/4000-10-INV-144549-S3F6L-FTA-CMLN-508.pdf.

Findings from FinCEN:

1. Scope of the Problem

• FinCEN analysed 137,153 Bank Secrecy Act (BSA) reports from 2020 to 2024.
• These reports revealed $312 billion in suspicious transactions linked to CMLNs.
• CMLNs are laundering proceeds from:
• Drug trafficking (especially fentanyl)
• Human trafficking and smuggling
• Healthcare fraud
• Elder abuse
• Suspicious gaming activity
• Real estate transactions (over $53.7 billion flagged)

2. How CMLNs Operate

• CMLNs use:
• Trade-based money laundering
• Mirror transactions
• Money mules
• Shell companies
• Counterfeit Chinese passports
• They may recruit bank employees or place insiders in financial institutions.
• Real estate is a primary laundering vehicle, especially in high-value U.S. markets.

3. Role of Chinese Passport Holders

• Individuals with PRC passports are central to these operations.
• They may be witting or unwitting participants, often used as money mules.
• Red flags include:
• Chinese nationals with low-income occupations but considerable unexplained wealth
• Visas and passports with identical photos issued years apart
• Accounts opened by individuals claiming to be “students,” “housewives,” or “labourers”, yet handling large sums

4. Why This Partnership Exists

• Mexico’s currency laws restrict U.S. dollar deposits in Mexican banks.
• China’s capital controls limit citizens to transferring $50,000/year abroad.
• Cartels sell illicit dollars to CMLNs, who resell them to wealthy Chinese citizens seeking to bypass these controls.

FinCEN’s Call to Action

• Financial institutions are urged to screen transactions and accounts more rigorously.
• The advisory includes red flags and typologies to help detect suspicious activity.
• The goal is to disrupt the financial pipelines fuelling drug cartels and transnational crime.

References

• FinCEN’s Advisory is available online at: https://www.fincen.gov/sites/default/files/advisory/2025-08-28/FinCEN-Advisory-CMLN-508.pdf.
• FinCEN’s FTA is available online at: https://www.fincen.gov/sites/default/files/shared/4000-10-INV-144549-S3F6L-FTA-CMLN-508.pdf.
• FinCEN Issues Advisory and Financial Trend Analysis on Chinese Money ...https://www.fincen.gov/news/news-releases/fincen-issues-advisory-and-financial-trend-analysis-chinese-money-laundering
• FinCEN issues advisory on Chinese money laundering networks https://bankingjournal.aba.com/2025/08/fincen-issues-advisory-on-chinese-money-laundering-networks/
• FinCEN Exposes Chinese-Mexican Cartel Money Laundering In U.S. https://dallasexpress.com/crime/fincen-exposes-chinese-mexican-cartel-money-laundering-in-u-s/