US Banks Moved $312B in Chinese Drug Money, But Crypto Gets the Blame

US financial institutions processed $312 billion in suspicious transactions linked to Chinese money laundering networks between January 2020 and December 2024, according to a new FinCEN analysis of 137,153 Bank Secrecy Act ￰1￱ surprisingly unexpected big figures emerge as crypto exchanges face intensified regulatory scrutiny for money laundering, despite traditional banking systems handling vastly larger volumes of illicit ￰2￱ has issued an Advisory and Financial Trend Analysis raising the alarm on Chinese money laundering networks, which pose a significant threat to the ￰3￱ system. ￰0￱ — Financial Crimes Enforcement Network (FinCEN) (@FinCENnews) August 28, 2025 Chinese money laundering networks have established sophisticated partnerships with Mexico-based drug cartels, exploiting currency restrictions in both ￰4￱ currency laws prevent large dollar deposits in local banks, while China’s currency controls limit overseas transfers by its ￰5￱ regulatory gap allows cartels to sell illicit dollars to Chinese nationals seeking to circumvent Beijing’s capital ￰6￱ networks extend beyond drug trafficking into human trafficking, healthcare fraud, and real estate purchases worth $53.7 billion in suspicious ￰7￱ identified 1,675 reports involving human trafficking and 43 reports covering $766 million in suspicious adult day care center activity in New York ￰8￱ Handle Bulk of Criminal Money While Crypto Faces Heat Banks accounted for $246 billion of the total suspicious transactions, while money service businesses handled $42 billion and securities firms processed $23 ￰9￱ average annual flow through US banking systems reached $62 billion from Chinese money laundering operations ￰10￱ cases reveal systematic banking vulnerabilities to criminal ￰11￱ Bank laundered $350 billion for Mexican drug cartels between 2007 and 2010, receiving only a $160 million penalty despite the massive ￰12￱ Bank processed $228 billion in suspicious transactions from Russia between 2007 and 2015, ignoring internal warnings throughout the period.

Similarly, 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 ￰13￱ Bank agreed to pay over $3 billion after prosecutors found the institution had been used to launder more than $470 million through Chinese networks in New York and New ￰14￱ fact, dating back to 2021, the 1MDB scandal involved over $1 billion stolen through global banking networks, with funds used to purchase luxury real estate, yachts, and artwork across major ￰15￱ of Credit and Commerce International laundered billions for drug cartels and corrupt governments before its 1991 closure forced stricter international banking ￰16￱ organizations recruit bank employees as complicit insiders and use counterfeit Chinese passports to facilitate account ￰17￱ mules often report occupations as “student,” “housewife,” or “retired” during onboarding to explain large transaction volumes that are inconsistent with their stated ￰18￱ Target Crypto Despite Minimal Illicit Activity Share Cryptocurrency transactions represent ‘ less than 1% ’ of total money laundering activity globally, according to TRM ￰19￱ fact, Chainalysis data shows illicit crypto volumes totaled approximately $189 billion over five years, compared to over $2 trillion laundered annually through traditional financial systems worldwide.