Washington – The U.S. Treasury Department is focusing on financial institutions to oversee and investigate potential involvement in a money laundering network linked to China, with attention on funds used amid the ongoing fentanyl crisis affecting the nation.
On Thursday, new guidance was given to banks and brokers, highlighting the need to monitor clients who may be engaged in laundering money for drug cartels in Mexico. This includes individuals showing unusual wealth—students, for example—alongside Chinese citizens like retirees and housewives who are reluctant to disclose their income sources.
The Treasury claims many of these individuals might be unwittingly aiding the cartels by working around China’s currency restrictions, which limit how much money can be exchanged annually into foreign currency. The use of underground banks is somewhat common in China, allowing for conversion of local currency to U.S. dollars.
The Chinese Embassy in Washington hasn’t made any comments yet regarding these allegations.
That same day, the Financial Crimes Enforcement Network (FinCEN) published a report detailing how China’s money laundering operations are now extending beyond drug trafficking. Financial institutions are starting to report suspicious activities related to human trafficking and various facilities in New York catering to seniors.
FinCEN reviewed over 137,000 Bank Secrecy Act reports gathered from January 2020 to the end of 2024.
Recently, law enforcement outlined a significant partnership between the Sinaloa Cartel in Mexico and underground banking operations in China, revealing a laundering scheme involving $50 million linked to fentanyl and cocaine sales, according to federal prosecutors.
The push for banks to tighten scrutiny on Chinese citizens coincides with former President Donald Trump’s statements on allowing 600,000 Chinese students to attend U.S. universities. He emphasized this point during a meeting with South Korean President Lee Jae Myung, asserting that despite stories suggesting student bans, the opportunity for these students remains open.
