The US Treasury Department is intensifying its investigation into how drug cartels manage their finances. Recently, officials have collaborated with various criminal groups, particularly focusing on China’s money laundering network, notorious for transferring significant sums of money.
A recent notification from the Treasury’s Financial Crime Enforcement Network (FinCEN) alerted financial institutions about the techniques used by these criminal organizations to launder money. From 2020 to 2024, FinCEN analyzed 137,153 bank secrecy law reports and uncovered $312 billion in dubious transactions linked to this Chinese network.
Of particular concern to FinCEN is the clear connection between the Mexican drug cartels and these Chinese money laundering operations. This report came shortly after FinCEN and the US Treasury sanctioned a broker implicated by two Mexican banks and a brokerage for allegedly washing funds for various drug cartels, funneling their profits to China in exchange for fentanyl precursor chemicals.
The ties between the drug cartels and Chinese groups are somewhat exacerbated by the currency regulations in both Mexico and China. These laws limit the volume of US dollars that can be transferred or held within Mexico, as well as constrain China’s control over its international currency. Officials suggest that Chinese laundering groups purchase US dollars from drug cartels and then resell them to individuals or companies in China looking to bypass those cash management restrictions.
To operate, these money laundering networks depend on Chinese nationals residing in the US to carry out regular cash deposits. In response to this, authorities have urged banks to monitor for Chinese students, retirees, housewives, or workers making unusually large cash deposits without clear proof of income.
