Chinese nationals engaged in extensive money-laundering operations in the U.S., moving a suspected $312 billion in illicit cash over the past five years, the Treasury Department revealed Thursday.
The Financial Crimes Enforcement Network, known as FinCen, stated in a 22-page report on the threat that the Chinese networks use Chinese students and Beijing-linked real estate transactions to launder cash for drug cartels and other criminal organizations.
Human trafficking by Chinese nationals is also used by money launderers in the United States, the report said.
The money-laundering activity was uncovered by Treasury in records obtained under the 1970 Bank Secrecy Act, that requires financial institution reports on all suspicious activity.
According to the report, Chinese money laundering was boosted in part by the communist system in China that restricts the movement of dollars from the country to $50,000.
The Chinese networks “have seized on the globalization of financial and trade markets involving the [People’s Republic of China] to establish and operate businesses worldwide that allow them to launder large amounts of illicit proceeds through global commerce,” the report said.
The networks allow criminals to bypass Chinese capital flight restrictions and aid criminals in laundering illicit proceeds using multiple techniques.
Bulk cash from Mexican drug trafficking networks is being washed by the Chinese networks, which return the profits to the Mexican crime groups.
“Over the past five years, FinCen has seen an increase in complex money laundering schemes controlled by [Chinese networks] that also launder illicit proceeds from otherwise unrelated criminal networks involved in a range of illicit activities, including fraud schemes; human trafficking and smuggling; marijuana grow house operations; and tax evasion, by facilitating the exchange of cash proceeds,” the report said.
Chinese money launderers are preferred by criminal organizations because they charge lower fees, have a global presence and have access to the American financial system, the report said.
The most common Chinese method for laundering cash involved the use of Chinese nationals in the United States who were found to have made over $33 billion in suspected money-laundering bank deposits since 2020.
“Large cash deposits with unidentified sources of funds — or that are not aligned with the expected income of the known occupation — were considered suspicious and potentially indicative of illegal activity, such as money laundering,” the report said.
“Filers also reported large, suspicious cash deposits used to purchase cashier’s checks for real estate-related transactions that are often linked to money laundering schemes, including those involving CMLNs,” the acronym for Chinese money-laundering networks.
Suspicions of illegal activity were raised from the transactions because the deposited funders were immediately sent to bank accounts controlled by people in China.
Chinese networks also used real estate purchases to launder more than $53.7 billion.
Bank reports identified Chinese nationals who made large cash deposits in purchasing cashier’s checks made payable to third parties to hide the origin, often using relatives, the report said.
The illicit real estate schemes involved laundering funds through construction and remodeling companies, real estate agents or brokers and property management companies.
On the use of Chinese students for money laundering operations, the report said about $13.8 billion was reported as suspicious activity.
“Chinese students may be vulnerable to recruitment and exploitation as money mules by U.S.-based [Chinese money laundering networks], which need access to, and control of, many bank accounts to facilitate frequent cash deposits to place illicit proceeds into the U.S. financial system,” the report said.
“U.S.-based Chinese students potentially ‘lend’ their accounts to CMLNs, typically in exchange for a fee, which varies based on the amount of money the CMLNs transact through the student’s account.”
Disclosure of the use of Chinese students for illegal activity comes as President Trump announced he wants to allow 600,000 Chinese students to study at American universities, a plan that drew protests from national security experts.
Trade-based money laundering is also used by Chinese nationals and Mexican drug cartels.
For example, the report stated that Chinese buyers purchase U.S. cell phones for export to China and a percentage of the profits are sent to the Sinaloa and Jalisco New Generation Cartels.
Regarding human smuggling, suspicious activity, Chinese money laundering groups were linked to about $4.2 billion in human trafficking activity.
Another $776 million in laundered cash was traced to 83 adult and senior day care centers in New York.
