By Jeffrey A. Newman Esq.
The U.S. Treasury’s Financial Crimes Enforcement Network (FINCEN) says in a report that Chinese money laundering networks (CMLNs) moved over $312 Billion in suspicious transactions through U.S. financial institutions, including banks, between 2020 and 2024. The networks act as a critical bridge between Mexican drug cartels seeking to launder cash and Chinese nationals. Mexican drug cartels generate large amounts of illicit U.S. cash from drug sales, particularly fentanyl. However, Mexico has currency restrictions that limit large-scale cash deposits in its banks, forcing cartels to look for other ways to move their money.
The transaction is completed using an underground banking system. A Chinese national deposits yuan into an account controlled by the CMLN in China, and in return, receives the previously obtained U.S. dollars from the network’s U.S. cash reserves. This avoids detection by evading international wire transfers. The Financial Crimes Enforcement Network (FinCEN) report, based on analysis of 137,153 Bank Secrecy Act reports, uncovered how widespread CMLN operations are.
Enforcement actions against banksIn addition to the recent warnings, U.S. regulators have taken action against major banks for failing to prevent money laundering involving Chinese entities.
- Agricultural Bank of China (2016): The New York Department of Financial Services (NYDFS) fined the bank $215 million for intentionally violating anti-money laundering laws and hiding transactions.
- Industrial and Commercial Bank of China (2024): ICBC was fined $32.4 million by the Federal Reserve and NYDFS for anti-money laundering failures at its New York branch.
- TD Bank (2024): TD Bank and its parent company pleaded guilty and agreed to pay over $1.8 billion to settle charges involving money laundering, including funds routed through Chinese networks.
- Wachovia Bank laundered $350 billion for Mexican drug cartels between 2007 and 2010, receiving only a $160 million penalty despite the massive scale
- Danske Bank processed $228 billion in suspicious transactions from Russia between 2007 and 2015, ignoring internal warnings throughout the period.
- HSBC paid $1.9 billion in 2012 for allowing drug cartels to transfer hundreds of millions through accounts, with criminals using specially designed cash deposit boxes that fit perfectly into bank slots.
Targeting of individuals and entities: The Treasury Department’s Office of Foreign Assets Control (OFAC) has issued sanctions against Mexico- and China-based money launderers involved with drug cartels.
One laundering ring appears to have processed $6 billion through 7 million credit card charges. Another $13.8 billion may have been moved through the personal accounts of Chinese students. In New York alone, 83 adult and senior daycare centers were linked to $766 million in suspicious flows.There is no official ‘brand name’ for the combined laundering operation encompassing all the figures you’ve cited. Individual indictments reference various entities such as NYC Early Learning Company and several non-profits allegedly used for the diversion of federal funds, but the $6 billion, $13.8 billion, and $766 million operations are generally referenced in aggregate as part of Chinese organized laundering schemes or daycare fraud rings. The scheme’s documented operations are concentrated in New York City, primarily Brooklyn, where both social adult day care centers and several personal accounts managed by Chinese nationals have been under federal review. The suspicious flows traced to 83 adult/senior daycare centers specifically reference neighborhoods across the five boroughs, with many connected to Brooklyn and Queens. In August 2025 A New York woman pleaded guilty today to conspiring to defraud Medicaid and pay health care kickbacks at her two Brooklyn social adult day cares. Zakia Khan has admitted her involvement in a sweeping scheme that defrauded the U.S. government of $68 million in welfare funds meant for one of our country’s most vulnerable populations,” stated Special Agent in Charge Ricky J. Patel of Immigration and Customs Enforcement Homeland Security Investigations (HSI) New York. “Today’s guilty plea underscores not only the lengths criminal opportunists often take, but also the state-of-the-art skills and procedures utilized by HSI New York to stop them in their tracks”.
DO THE U.S. BANKS KNOW?
In many cases, U.S. banks are aware of the risks and specific suspicious activities related to Chinese money laundering networks (CMLNs). However, whether any specific bank is complicit or simply failing to detect these complex schemes depends on the individual circumstances and the effectiveness of its anti-money-laundering (AML) programs.
Suspicious Activity Reports (SARs): Under the Bank Secrecy Act (BSA), banks are required to file SARs for any transaction that may involve illicit activity. Banks have filed over 137,000 SARs detailing suspicious transactions from Chinese money laundering networks.
Jeffrey Newman is a whistleblower lawyer, whose law firm represents whistleblowers revealing violations of export controls, tariff evasions, money laundering, healthcare fraud and other kinds of WB cases. The firm represents individuals both in the United States and other countries. Mr. Newman and his firm also represent physicians and other healthcare providers who become whistleblowers in healthcare fraud cases. Whistleblower laws in the U.S. allow individuals anywhere with information about export control violations or tariff fraud to reveal the information under The False Claims act or through the Securities and Exchange Commission’s Whistleblower Program. The Firm’s website is at www.JeffNewmanLaw.com . Attorney Newman can be reached at Jeff@Jeffnewmanlaw.com or at 978-880-4758
