FIN-2025-A003: Advisory on Chinese money laundering networks used by Mexico-based TCOs (CVC mirror transactions)
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FIN-2025-A003 August 28, 2025
FinCEN Advisory on the Use of Chinese Money Laundering
Networks by Mexico-Based Transnational Criminal
Organizations to Launder Illicit Proceeds
The U.S. Department of the Treasury’s (Treasury)
Suspicious Activity Report (SAR)
Financial Crimes Enforcement Network (FinCEN) is
Filing Request:
FinCEN requests that financial
issuing this Advisory to urge financial institutions1
institutions reference this Advisory in SAR to be vigilant in identifying and reporting suspicious
field 2 (Filing Institution Note to FinCEN) transactions potentially related to the use of Chinese
and the narrative by including the key money laundering networks (CMLNs)2 by the Jalisco
term “CMLN-2025-A003” and select, as New Generation Cartel (CJNG), the Sinaloa Cartel,
applicable, SAR field 38(n) (Suspicious the Gulf Cartel, and other Mexico-based transnational
Use of Informal Value Transfer criminal organizations (TCOs)—frequently known
System); SAR field 38(s) (Unlicensed collectively as the “Cartels”—to launder illicit proceeds.
or Unregistered MSB); SAR field 36(l) CMLNs are considered professional money launderers
(Trade Based Money Laundering/Black (PMLs)3 and play a vital role in laundering the Cartels’
Market Peso Exchange), and any other drug proceeds in the United States. This is, in part,
applicable check box. due to the speed and effectiveness of CMLNs’ money
laundering operations, as well as their willingness to absorb financial losses and assume risks for
the Cartels and other clients.4 Further, CMLNs operate around the world and may coordinate
with other international PMLs, such as shadow banking networks and Colombian peso brokers.5
According to Treasury’s 2024 National Money Laundering Risk Assessment, CMLNs are one of the
most significant money laundering threat actors facing the U.S. financial system.6
1. See 31 U.S.C. § 5312(a)(2); 31 CFR § 1010.100(t).
2. CMLNs may also be referred to as Chinese money laundering organizations (CMLOs). Treasury and some
law enforcement agencies have moved to characterizing them as “networks” due to their horizontal structure
and decentralized nature. See, e.g., U.S. Drug Enforcement Administration (DEA) “2025 National Drug Threat
Assessment” (“2025 NDTA”) (May 2025), at p. 6.
3. Professional money laundering encompasses individuals, organizations, and networks involved in third-party money
laundering for a fee or commission. See Treasury, “2024 National Money Laundering Risk Assessment” (“2024
NMLRA”) (Feb. 2024), at p. 26.
4. Id. at p. 29.
5. Id. For more information on Colombian peso brokers, see U.S. Department of Justice (DOJ), “Colombian Money
Broker Sentenced to Nearly a Decade in Prison for Role in International Money Laundering Conspiracy”
(June 20, 2025).
6. See 2024 NMLRA, supra note 3, at pp. 29-30.
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F I N C E N A D V I S O R Y
This Advisory supports FinCEN’s work to bring awareness to, and counter, TCO-related revenue
streams7 and is consistent with two of the eight national anti-money laundering and countering
the financing of terrorism (AML/CFT) priorities (i.e., drug trafficking organization (DTO) activity
and TCO activity).8 Further, on January 20, 2025, the President issued Executive Order (E.O.) 14157
designating certain international cartels and other TCOs as Foreign Terrorist Organizations (FTOs)
and Specially Designated Global Terrorists (SDGTs).9 The Cartels functionally control nearly all
illegal traffic across the southwest border of the United States, and their activities threaten the safety
of the American people, the security of the United States, and the stability of the international order
in the Western Hemisphere. Treasury is committed to countering the activity of the Cartels and
related actors.
This Advisory: (i) provides an overview of CMLNs and their connection to the Cartels, (ii) discusses
financial typologies associated with CMLNs laundering the Cartels’ illicit proceeds, (iii) highlights
red flag indicators, and (iv) reminds financial institutions of their reporting requirements under
the Bank Secrecy Act (BSA). The information contained in this Advisory is derived from FinCEN’s
analysis of open-source reporting, BSA reporting, and information from law enforcement partners.
Overview of Chinese Money Laundering Networks
CMLNs operate in a compartmentalized fashion, leveraging relationships built on trust rather than
working through a hierarchical structure to launder money. CMLNs often launder illicit proceeds
for a number of TCOs and may engage in some form of additional criminal activity as part of
their money laundering operations, such as the provision of fake identification documents to
individuals opening bank accounts on their behalf.10 CMLNs typically comprise both current and
former U.S.- and foreign-based Chinese passport holders (i.e., Chinese nationals). CMLNs often
recruit members of Chinese or other diaspora populations to participate in their money laundering
operations to act as money mules,11 money brokers, and cash couriers.12 In the United States,
CMLNs appear to have increasingly recruited Chinese students studying at U.S. universities, and
7. See FinCEN, FIN-2025-A002, “FinCEN Alert on Oil Smuggling Schemes on the U.S. Southwest Border Associated
with Mexico-Based Cartels” (May 1, 2025); FinCEN, FIN-2025-A001, “FinCEN Alert on Bulk Cash Smuggling and
Repatriation by Mexico-Based Transnational Criminal Organizations” (Mar. 31, 2025); FinCEN, FIN-2024-A002,
“Supplemental Advisory on the Procurement of Precursor Chemicals and Manufacturing Equipment Used for the
Synthesis of Illicit Fentanyl and Other Synthetic Opioids” (June 20, 2024); FinCEN, OFAC, and FBI, FIN-2024-NTC2,
“FinCEN, OFAC, and FBI Joint Notice on Timeshare Fraud Associated with Mexico-Based Transnational Criminal
Organizations” (July 16, 2024).
8. See FinCEN, “Anti-Money Laundering and Countering the Financing of Terrorism National Priorities” (June 30, 2021).
9. See White House, “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially
Designated Global Terrorists” (Jan. 20, 2025); U.S. Department of State, “Designation of International Cartels”
(Feb. 20, 2025).
10. Id.; see also U.S. Immigration and Customs Enforcement, Cornerstone Report Issue #48, “Chinese Money Laundering
Organizations (CMLOs) - Use of Counterfeit Chinese Passports” (“Counterfeit Chinese Passports”) (Jan. 2, 2024).
11. Money mules are people who are used, wittingly or unwittingly, to transfer value, either by laundering stolen money
or physically transporting goods or other merchandise. See FATF, “Professional Money Laundering” (July 2018), at
p. 22. According to law enforcement, criminal organizations often target students as potential money mules.
See generally Federal Bureau of Investigation (FBI), “Money Mules” (as of Aug. 27, 2025).
12. See DOJ, “Final Three Members Charged in Prolific Chinese Money Laundering Scheme Plead Guilty to Laundering
Tens of Millions in Drug Proceeds” (July 7, 2025).
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some of these students may have continued to participate in CMLN operations after graduating.13
CMLNs may target individuals on student visas in particular, since such individuals are often
restricted from obtaining certain types of lawful employment in the United States.14 In some cases,
individuals recruited by CMLNs may not understand that their actions are illegal, but rather
were lured into participating in the schemes under the incentive of having a source of income and
assisting other Chinese citizens or nationals in accessing U.S. dollars (USD).
A primary goal of CMLNs is to obtain large quantities of USD and other currencies to meet the
demand for these currencies by Chinese citizens seeking to evade the People’s Republic of China’s
(PRC’s) currency controls.15 This demand for USD has led CMLNs to partner with illicit actors,
such as the Cartels, who have access to large sums of USD that they need to launder.16 CMLNs
assume much of the risk of transporting and laundering large volumes of cash inside the United
States, while providing near-instant transfers of value back to their clients by engaging in informal
value transfer systems (IVTS)17 or trade-based money laundering (TBML) schemes.18 In the United
States, CMLNs functionally operate as unregistered money services businesses (MSBs)19 and serve
as money brokers in the global Chinese underground banking system (CUBS),20 which provides
Chinese citizens the ability to move funds out of China despite the PRC’s currency control laws.
Although CMLNs generate some profit from their money laundering activities (e.g., payment from
the Cartels), CMLNs are typically able to offer lower rates than other PMLs because most CMLN
revenue comes from selling the illicit cash to Chinese citizens at a high rate.21
In addition to laundering drug proceeds on behalf of the Cartels, CMLNs are associated with the
laundering of proceeds from other types of illicit activity on behalf of clients, such as marijuana
13. See FinCEN, Financial Trend Analysis, “Chinese Money Laundering Networks: 2020 – 2024 Threat Pattern & Trend
Information” (“FinCEN CMLN FTA”) (Aug. 28, 2025), at pp. 19-20.
14. See U.S. Citizenship and Immigration Services, “Students and Employment” (last updated April 8, 2025).
15. China instituted strict capital control measures in 2016, when it recorded a surge in capital flight. China’s foreign
exchange rules cap the maximum amount of renminbi (RMB) that Chinese citizens are allowed to convert into other
currencies at approximately $50,000 each year and restricts Chinese citizens from directly transferring RMB abroad
without prior approval from the Chinese State Administration of Foreign Exchange. Consequently, many Chinese
citizens attempt to circumvent these currency control laws for a variety of reasons. See U.S. Department of State,
“2024 Investment Climate Statements: China” (“China Investment Climate Statement”) (July 2024).
16. See Treasury, “Treasury Sanctions Mexico- and China-Based Money Launderers Linked to the Sinaloa Cartel”
(July 1, 2024).
17. An IVTS is “any system, mechanism, or network of people that receives money for the purpose of making the funds
or an equivalent value payable to a third party in another geographic location, whether or not in the same form.”
The informal nature of the system means that the movement of value occurs outside of the formal financial system.
An IVTS is not inherently illicit, and can be used for legitimate (e.g., sending remittances) or illegitimate (e.g., money
laundering) purposes. See FinCEN, Issue 33, “Informal Value Transfer Systems” (March 2003), at p. 1; see also 2025
NDTA, supra note 2, at p. 64; DEA, “2024 National Drug Threat Assessment” (“2024 NDTA”) (May 9, 2024), at p. 47.
18. TBML is the process of disguising the proceeds of crime and moving value through the use of trade transactions in
an attempt to legitimize their illicit origin. See Financial Action Task Force (FATF), “Trade-Based Money Laundering”
(June 23, 2006), at p. i; see also 2024 NDTA, supra note 17, at pp. 46-47.
19. As an MSB, any non-exempt person engaged in money transmission must register with FinCEN within 180 days of
starting to engage in money transmission. See 31 CFR § 1022.380.
20. The CUBS is a type of IVTS. See FinCEN CMLN FTA, supra note 13, at p. 8; see also 2024 NDTA, supra note 17, at p. 47.
21. See 2024 NMLRA, supra note 3, at pp. 29-30.
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trafficking, human trafficking, and fraud.22 CMLNs may also be involved in certain other criminal
activities in addition to money laundering, such as healthcare fraud and illicit gaming.23 Engaging
with a variety of illicit actors grants CMLNs access to cash flows from numerous sources and
locations. CMLNs also coordinate and network with CMLNs or PMLs in other countries through
IVTS and TBML to launder illicit proceeds, which obviates the need to physically transport cash or
execute cross-border wire transfers.24
The complex networks and operations of CMLNs, as described in further detail below, threaten
the U.S. financial system and facilitate the laundering of illicit proceeds into the United States and
internationally.
Drivers of Chinese and Cartel Money Laundering
The rise in the prominence of CMLNs, including their business relationships with the Cartels
and other TCOs, has been driven, in part, by laws passed by the Government of Mexico (GOM)
and the PRC, that restrict financial flows. Instituted in 2010 and revised in 2014, the GOM’s
currency restrictions prevent large amounts of USD from being deposited into Mexican financial
institutions.25 These restrictions have hindered the Cartels’ ability to launder illicit USD proceeds
through the formal Mexican financial system, leading them to seek out PMLs that operate in the
United States. The PRC’s currency control laws26 restrict the amount of Chinese renminbi (RMB)
that Chinese citizens are allowed to convert into other currencies each year and prevent direct
transfers of RMB abroad without prior approval. Likewise, these laws have increased Chinese
citizens’ demand for access to USD in a way that circumvents the PRC’s control over the funds.
This policy has driven Chinese citizens to increasingly rely on the services of CMLNs to provide
access to USD through informal transactions. Ultimately, Chinese citizens’ demand for large
quantities of USD and the Cartels’ need to launder their illicit USD proceeds has resulted in a
mutualistic relationship wherein the Cartels sell off their illicitly obtained USD to CMLNs who, in
turn, sell the USD to Chinese citizens seeking to evade the PRC’s currency control laws.27
22. See FinCEN CMLN FTA, supra note 13, at p. 4; see also DOJ, “Seventeen Individuals Indicted Alleging a Sophisticated
Nationwide Money Laundering Scheme Originating with Violent Crime in Baltimore City” (Oct. 10, 2024);
Superseding Indictment, Dkt. No. 112, United States v. Tao, 1:24-cr-289 (D. Md. Oct. 9, 2024); DOJ, “Seven Chinese
Nationals Charged for Alleged Roles in Multi-Million-Dollar Money Laundering, Alien Smuggling and Drug
Trafficking Enterprise” (June 8, 2025); Indictment, Dkt. No. 1, United States v. Chen, 1:25-cr-10284 (D. Mass. July 2,
2025). Proceedings in these matters remain ongoing.
23. See CMLN FTA, supra note 13, at pp. 15-16.
24. See U.S. Department of the Treasury Under Secretary for Terrorism and Financial Intelligence Brian E. Nelson,
“Written Testimony for Senate Caucus on International Narcotics Control Hearing Entitled ‘Chinese Money
Laundering Organizations: Cleaning Cartel Cash’” (Apr. 30, 2024), at p. 1.
25. On June 15, 2010, to counter cartel operations, the Mexican finance ministry, Secretaría de Hacienda y Crédito Público
de México (SHCP), announced new AML regulations that restrict the amounts of physical cash (banknotes and coins)
denominated in USD that Mexican banks may receive. Generally, individuals in Mexico are limited to depositing
$4,000 per month and businesses in border or tourist areas are limited to $14,000 per month; however, certain Mexico-
based businesses may be granted exemptions to these depository limits. See Secretaría de Hacienda y Crédito
Público and Comisión Nacional Bancaria y de Valores, “Overview of the Mexican Financial System and its AML/CFT
regulation and supervision” at pp. 52-56.
26. See China Investment Climate Statement, supra note 15.
27. See DEA Chief of Operations William F. Kimbell, “Written Testimony for Senate Caucus on International Narcotics
Control Hearing Entitled ‘Chinese Money Laundering Organizations: Cleaning Cartel Cash’” (Apr. 30, 2024), at p. 4.
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Financial Typologies Associated with CMLNs Laundering
Illicit Cartel Proceeds
CMLNs’ Use of Mirror Transactions
To launder funds, CMLNs transfer value globally and sometimes simultaneously using a form
of IVTS. For example, once a U.S.-based CMLN receives USD from a Cartel for laundering,
it coordinates with Mexico-based CMLN counterparts who conduct a reciprocal or “mirror
transaction,”28 in which an equivalent amount of pesos is transferred to the Cartels’ Mexico-based
accounts, minus a nominal fee. Through this informal value transfer, CMLNs “purchase” the value
of the Cartels’ illicit USD proceeds in pesos. This mirror transaction occurs nearly instantly and
avoids many of the risks involved with cross-border bulk cash smuggling or with depositing large
sums of USD in Mexico-based financial institutions and thereby circumvents Mexico’s USD deposit
restrictions. CMLNs may also use convertible virtual currency (CVC) as an alternative means to
conduct mirror transactions with the Cartels.29 Similar to other mirror transactions, use of CVC
avoids the risks associated with physical transportation of cash or depositing bulk USD.
The U.S.-based CMLNs then sell the USD purchased from the Cartels, by advertising it on social
media or leveraging personal networks, to Chinese citizens or businesses seeking to evade the
PRC’s currency control laws.30 Once identified, the buyer is connected by the U.S.-based CMLN
to a China-based operator, who instructs the buyer to transfer an equivalent amount of RMB,
plus a significant fee, from their bank account in China to an account controlled by the China-
based operator.31 This RMB transfer internal to China avoids the PRC’s currency control laws
and effectively “purchases” the control of the USD from the CMLN. Once the transfer is made
in China, the U.S.-based CMLN makes the purchased USD available to the Chinese buyers in the
United States, typically by laundering the cash through the U.S. financial system.
Use of Money Mules
As part of the laundering process, CMLNs may use money mules to deposit the illicit USD into
accounts they are directed to open at U.S. depository institutions, or at accounts held by U.S.-based
Chinese nationals or businesses.32 In situations where the money mules are opening accounts,
28. The term “mirror transactions” or “mirror transfer” is used by U.S. law enforcement to describe a money laundering
typology involving foreign currency exchange. The process typically happens within Chinese underground banking
and black market peso exchange schemes and usually involves a money broker or an accountant who conducts two
equal, but separate, transactions involving at least two parties who often are unaware of each other. In this scheme,
the broker or accountant makes payments to each party using the other parties’ currency, “mirroring” or balancing
the transactions. See 2024 NMLRA, supra note 3, at pp. 29-30.
29. See 2024 NDTA, supra note 17, at p. 47.
30. See 2024 NMLRA, supra note 3, at pp. 29-30.
31. The China-based CMLN operator will typically sell the RMB obtained from this transaction to Mexican or Chinese
importers in Mexico with business in China through a mirror transfer via the Mexico-based CMLN operator to obtain
more pesos. This cycle replenishes the Mexico-based CMLN operator’s supply of pesos for future transactions.
See 2024 NMLRA, supra note 3, at p. 30.
32. See FinCEN CMLN FTA, supra note 13, at pp. 19-20; see also Wall Street Journal, “Bags of Cash From Drug Cartels
Flood Teller Windows at U.S. Banks” (“Bags of Cash”) (May 14, 2025).
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these money mules may report their occupation during the account onboarding process as
“student,” “housewife,” “retired,” “laborer,” or other occupations that typically do not engage in
large volumes of transactions. CMLNs may also provide money mules with counterfeit Chinese
passports to facilitate account opening and engage in other illicit financial behavior.33 CMLNs may
also recruit financial institution employees to act as complicit insiders or infiltrate and place CMLN
members within a financial institution to assist in CMLN operations.34
CMLN money mules may also engage in “smurfing” operations35 across multiple depository
institution branches to deposit illicit funds into money mule accounts, or into accounts held by
U.S.-based Chinese nationals and businesses. CMLN money mules have also been observed
depositing large sums of cash during a visit, irrespective of Currency Transaction Reporting
requirements.36 The money mules may also purchase cashier’s checks from depository institutions
with U.S.-based Chinese nationals and businesses listed as the payee directly. Alternatively,
CMLNs may purchase cashier’s checks listing the payee as a shell company the CMLNs beneficially
own or listing the payee as a U.S.-based company or individual in the real estate industry.
CMLNs may use money mules or shell companies to purchase real estate, which may serve as an
investment for the CMLN or a wealthy China-based client of the CMLN.37 They may also deposit
the illicit funds into existing money mule accounts (i.e., personal or shell company accounts) and
then use wire, automated clearing house (ACH), or peer-to-peer (P2P) transfers to send the money
to separate accounts held by U.S.-based Chinese nationals and businesses.38 These actions are
intended to launder the illicit funds and make them available to the Chinese citizens, businesses, or
nationals who purchased them from the CMLN. According to BSA reporting, financial institutions
that have questioned customers, who are the ultimate beneficiaries or recipients of these funds,
have been told that the customer was unable to move their money out of China due to currency
control laws, and the customer paid for a service to circumvent these restrictions. While that is
partially true, the reality is that the CMLNs keep the beneficiaries’ funds in China, and pay them
with laundered, illicit funds in the United States.
Trade-Based Money Laundering
CMLNs may also use complex TBML schemes to launder the Cartels’ illicit funds. According to
law enforcement, CMLNs may use money mules and other recruits to purchase U.S. electronics
and other luxury goods (e.g., cell phones, automobiles, clothing, designer handbags, etc.) at various
33. See Counterfeit Chinese Passports, supra note 10; see also FinCEN, FIN-2024-NTC1, “FinCEN Notice on the Use of
Counterfeit U.S. Passport Cards to Perpetrate Identity Theft and Fraud Schemes at Financial Institutions” (Apr. 15, 2024).
34. See U.S. Department of Homeland Security, Homeland Security Investigations Assistant Director Ricardo Mayoral,
“Written Testimony for Senate Caucus on International Narcotics Control Hearing Entitled ‘Chinese Money
Laundering Organizations: Cleaning Cartel Cash’” (“HSI Testimony”) (Apr. 30, 2024), at p. 5; see also DOJ, “Queens
Man Admits Orchestrating $653 Million Money Laundering Conspiracy, Operating Unlicensed Money Transmitting
Business, and Bribing Bank Employees” (Feb. 22, 2022).
35. “Smurfs” are teams of persons who, acting in conjunction with or on behalf of other persons, structure financial
transactions for the purpose of evading the requirement to file a Currency Transaction Report.
36. See Bags of Cash, supra note 32.
37. See FinCEN CMLN FTA, supra note 13, at pp. 18-19; see also 2024 NMLRA, supra note 3, at p. 30.
38. See DOJ, “Three Members of a Prolific Chinese Money Laundering Organization Plead Guilty to Laundering Tens of
Millions of Dollars in Drug Proceeds” (May 1, 2025).
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stores, some of whom are complicit, across the United States.39 These purchases may be made
using the drug proceeds or with credit cards that are subsequently paid off by the CMLN or by the
complicit business owner.40 Such businesses may have income that is not commensurate with that
of other businesses of a similar size.
Once the goods are purchased, CMLNs often use shell or front companies, or complicit businesses,
to resell or export these goods in a variety of ways. According to law enforcement, CMLNs may
sell goods in the United States through various online marketplaces, at front companies, or at
businesses complicit in their schemes. Alternatively, CMLNs may export the goods they purchase
to counterparties in Mexico, China, Hong Kong, and the United Arab Emirates, who resell these
goods in their respective countries. In some cases, U.S.-based CMLNs may export these goods to
Cartel-owned companies in Mexico as an alternative to a mirror transfer. These exports serve as a
form of value exchange between CMLN operators that avoids cross-border money movements and
serves as a revenue source for the CMLNs.
CMLNs may also use or work with “daigou” buyers (meaning “buying on behalf of,” i.e., straw
buyers)41 to obtain U.S. goods for Chinese citizens or businesses. Daigou buyers may be witting
or unwitting individuals and may be current, or former, Chinese nationals residing in the United
States. CMLNs typically provide the daigou buyer with cash or send a P2P transfer to their account
and instruct them to purchase certain goods. The daigou buyers are also instructed to ship the
goods to a location in China or to a daigou operator, an individual that directs multiple buyers,
located in the United States. Daigou operators typically further export the U.S. goods to China or
other countries.
Case Study
Federal Indictment Alleges Alliance Between Sinaloa Cartel and Money Launderers
Linked to Chinese Underground Banking
On June 18, 2024, the U.S. Department of Justice announced a 10-count superseding
indictment charging Los Angeles-based associates of Mexico’s Sinaloa Cartel with conspiring
with money-laundering groups linked to Chinese underground banking to launder drug
trafficking proceeds. During the conspiracy, more than $50 million in drug proceeds flowed
between the Sinaloa Cartel associates and Chinese underground money exchanges. The
multi-year investigation into this conspiracy—dubbed “Operation Fortune Runner”—
resulted in a superseding indictment, which alleges that a Sinaloa Cartel-linked money
laundering network collected and, with help from a San Gabriel Valley, California-based
money transmitting group with links to Chinese underground banking, processed large
39. See FinCEN CMLN FTA, supra note 13, at p. 10.
40. See FinCEN CMLN FTA, supra note 13, at pp. 10-11. Generally, a trade or business that receives more than $10,000
in cash in a single transaction or in related transactions must file Form 8300. See 26 U.S.C. § 6050I; see also Internal
Revenue Service, “Form 8300 and reporting cash payments of over $10,000” (Sept. 17, 2024).
41. The term “daigou” roughly translates to “buying on behalf of” and involves a practice where current or former
Chinese nationals that reside in a different country purchasing goods on behalf of third parties located in China.
See UK National Crime Agency, “Chinese Underground Banking and Daigou” (Oct. 2019); see also HSI Testimony
supra note 34, at p. 5; FinCEN CMLN FTA, supra note 13, at pp. 12-13.
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amounts of drug proceeds in U.S. currency in the Los Angeles area. They then allegedly
concealed their drug trafficking proceeds and made the proceeds generated in the United
States accessible to cartel members in Mexico and elsewhere. Lead defendant Edgar Joel
Martinez-Reyes and others allegedly used a variety of methods to hide the money’s source,
including trade-based money laundering, “structuring” assets to avoid federal financial
reporting requirements, and the purchase of cryptocurrency.
According to the superseding indictment, from October 2019 to October 2023, members and
operatives of the Sinaloa Cartel imported large quantities of narcotics, including fentanyl,
cocaine, and methamphetamine, into the United States, generating huge sums of drug cash
proceeds in USD. In January 2021, Martinez-Reyes allegedly traveled to Mexico to meet
with Sinaloa Cartel members to strike a deal with money remitters with links to Chinese
underground banking to launder drug trafficking proceeds in the United States. After the
deal was struck, the Sinaloa Cartel—through their connections and associates—distributed
cocaine, methamphetamine, and other narcotics, generating U.S. dollars as drug proceeds.
Martinez-Reyes and other conspirators allegedly then delivered the currency—frequently
in amounts of hundreds of thousands of USD in cash—to other members of the Chinese
underground money exchange and remitting organizations to be laundered for a fee. The
remitting organizations possessed large amounts of USD and could help wealthy Chinese
nationals evade the PRC’s currency controls. The money remitters allegedly disposed of the
drug proceeds by either delivering United States currency directly to their money exchange
customers or by purchasing real or personal property, including luxury goods and cars to
be shipped to China. Additionally, the remitters also moved illicit drug proceeds through
cryptocurrency transactions. They also allegedly used a variety of traditional methods to
place the funds into the traditional banking system such as purchasing cashier’s checks, or
“structuring,” that is, depositing small amounts at a time into bank accounts opened for this
purpose to avoid banks from reporting large cash deposits to the U.S. government.42
Red Flags Related to CMLNs Laundering Cartel Proceeds
FinCEN has identified red flags to help financial institutions detect, prevent, and report
suspicious activity connected to CMLNs laundering illicit proceeds. As no single red flag
is determinative of illicit or suspicious activity, financial institutions should consider the
surrounding facts and circumstances, such as a customer’s historical financial activity, whether
the transactions are in line with prevailing business practices, and whether the customer exhibits
multiple red flags, before determining if a behavior or transaction is suspicious or otherwise
indicative of a connection to a CMLN.
42. DOJ, “Federal Indictment Alleges Alliance Between Sinaloa Cartel and Money Launderers Linked to Chinese
Underground Banking” (June 18, 2024); First Superseding Indictment, Dkt. No. 217, United States v. Martinez-Reyes,
2:23-cr-258 (C.D. Cal. Apr. 4, 2024). Proceedings in the case remain ongoing.
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Red Flags Potentially Indicative of CMLN-Affiliated Money Mules
A customer, especially a customer who presented a Chinese passport as identification during
the onboarding process, regularly receives funds that are not commensurate with the reported
occupation or income, and the source of the funds cannot be attributed to payroll or other
legitimate sources of income (i.e., unexplained wealth).43
During the onboarding process, a customer presents a Chinese passport and a visa that
contain the same photograph despite being allegedly issued years apart.44
A customer, especially a Chinese national, creates an account at a financial institution and
reports their occupation as a student during the onboarding process. This customer then
regularly deposits cash into their account or receives wire transfers notated as “tuition” or
“living expenses” that are not commensurate with the reported information. After receiving
the funds, the customer may subsequently initiate wire transfers or P2P transactions to
unknown individuals who are unrelated to the purpose of the wire transfers or may make
credit or debit card payments.
A customer, especially a Chinese national, reports their occupation during customer
onboarding as a student, retiree, housewife, or other low-income occupation but has
unexplained wealth.
A customer, especially a Chinese national with unexplained wealth, initiates a wire transfer
related to a real estate purchase or purchases cashier’s checks made payable to a real estate
company. The customer may be accompanied by a real estate agent at the time of purchasing
the cashier’s checks.
A customer, especially a Chinese national, regularly deposits large volumes of cash or
cashier’s checks, or receives multiple wire, ACH, or P2P transfers for no business or apparent
lawful purpose. The customer then subsequently uses the funds to purchase a cashier’s check
or disperses the funds to other individuals using P2P and wire transfers, often to other high-
risk jurisdictions.
A customer’s account, especially a Chinese national, receives numerous transfers or deposits,
and has a significant number of withdrawals or transfers, none of which appear to be related
to routine payroll, living expenses, or customer’s stated expected activity.
A customer, especially a Chinese national, has large amounts of cash funding cashier’s checks,
which are then deposited at another financial institution.
A customer, especially a Chinese national, is reluctant or refuses to provide information
regarding the source of funds deposited or transferred into their account or acts evasive when
questioned about the purpose of a transaction or may explain it as repayment of a loan.
43. See Counterfeit Chinese Passports, supra note 10.
44. Id.
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A customer that is a U.S.-based escrow company receives funds from an unaffiliated, foreign-
based shell company or entity in a disparate line of business that are used to purchase real
estate in the United States.
Red Flags Potentially Indicative of CMLN-Affiliated TBML Schemes
A business45 owned by a Chinese national regularly receives deposits from online
marketplaces, but rarely, or never, engages in transactions that indicate the purchase of goods
to maintain inventory.
A business owned by a Chinese national regularly receives wire transfers indicating the export
of goods to foreign countries including Mexico, China, Hong Kong, and the United Arab
Emirates, but rarely, or never, engages in transactions that indicate the purchase of goods to
maintain inventory.
A small U.S.-based business in the electronics or real estate industry receives wires from
Mexico, China, Hong Kong, and the United Arab Emirates and has no known nexus to these
countries.
A customer, especially a Chinese national, regularly receives P2P or wire transfers from
unknown individuals and subsequently uses those funds to make a substantial credit
card payment. If questioned about the source of the funds, the customer may state that
the transfers are from U.S.-based family members of Chinese citizens who are sending the
customer funds to purchase goods.
A customer, especially a Chinese national, regularly uses a credit card to purchase large
volumes of electronics or other luxury goods.
A business that sells electronics or other luxury goods has income that is not commensurate
with the size and scale of the business.
A business that sells electronics or other luxury goods makes payments for multiple credit
cards associated with various individuals, who are seemingly unrelated to the business.
Hong Kong registered trading companies with shell-like characteristics send funds to Chinese
nationals residing in the United States, real estate escrow or title insurance companies, and
other international destinations with no apparent business or economic purpose.
Reminder of Relevant BSA Obligations and Tools
for U.S. Financial Institutions
45. According to BSA reporting, businesses are commonly reported to be in shipping, transportation, freight, logistics,
industrial supplies, food, and technology sectors.
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F I N C E N A D V I S O R Y
Reminder of Relevant BSA Obligations and Tools
for U.S. Financial Institutions
Suspicious Activity Reporting
A financial institution is required to file a suspicious activity report (SAR) if it knows, suspects,
or has reason to suspect a transaction conducted or attempted by, at, or through the financial
institution involves funds derived from illegal activity; is intended or conducted to disguise funds
derived from illegal activity; is designed to evade regulations promulgated under the BSA; lacks
a business or apparent lawful purpose; or involves the use of the financial institution to facilitate
criminal activity.46 All statutorily defined financial institutions may voluntarily report suspicious
transactions under the existing suspicious activity reporting safe harbor.47
When a financial institution files a SAR, it is required to maintain a copy of the SAR and the original
or business record equivalent of any supporting documentation for a period of five years from
the date of filing the SAR.48 Financial institutions must provide any requested documentation
supporting the filing of a SAR upon request by FinCEN or an appropriate law enforcement or
supervisory agency.49 When requested to provide supporting documentation, financial institutions
should take special care to verify that a requestor of information is, in fact, a representative of
FinCEN or an appropriate law enforcement or supervisory agency. A financial institution should
incorporate procedures for such verification into its BSA compliance or AML program. These
procedures may include, for example, independent employment verification with the requestor’s
field office or face-to-face review of the requestor’s credentials.
SAR Filing Instructions
SARs, and compliance with other BSA requirements, are crucial to identifying and stopping
CMLNs. FinCEN requests that financial institutions indicate a connection between the suspicious
activity being reported and the activities highlighted in this Advisory by including the key term
“CMLN-2025-A003” in SAR field 2 (Filing Institution Note to FinCEN), as well as in the narrative.
Financial institutions may highlight additional Advisory, Alert, or Notice keywords in the narrative,
if applicable.
Financial institutions should select SAR field 38(n) (Suspicious Use of Informal Value Transfer
System); SAR field 38(s) (Unlicensed or Unregistered MSB); SAR field 36(l) (Trade Based Money
Laundering/Black Market Peso Exchange), and any other applicable check box. Financial
46. 31 U.S.C. § 5318(g)(1); see also 31 CFR §§ 1020.320, 1021.320, 1022.320, 1023.320, 1024.320, 1025.320, 1026.320, 1029.320,
1030.320.
47. See 31 U.S.C. § 5318(g)(3). Financial institutions may report suspicious transactions regardless of amount involved
and still take advantage of the safe harbor.
48. See 31 CFR §§ 1020.320(d), 1021.320(d), 1022.320(c), 1023.320(d), 1024.320(c), 1025.320(d), 1026.320(d), 1029.320(d),
1030.320(d).
49. Id.; see also FinCEN, FIN-2007-G003, “Suspicious Activity Report Supporting Documentation” (June 13, 2007).
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institutions also should select all other relevant suspicious activity fields, such as those in SAR fields
36 (Money Laundering) and 38 (Other Suspicious Activities), if applicable.
Financial institutions should include all available information relating to the account and
locations involved in the reported activity, identifying information related to other entities and
persons involved in the activity and the status of their accounts with the institution. Financial
institutions also should provide all available information regarding other domestic and foreign
financial institutions involved in the activity; where appropriate, financial institutions should
consider filing a SAR jointly on shared suspicious activity.50
Financial institutions are required to file complete and accurate reports that incorporate all
relevant information available. In situations involving violations requiring immediate attention,
such as ongoing money laundering schemes, a financial institution should also immediately
notify, by telephone, an appropriate law enforcement authority, in addition to filing a timely
SAR.51 Immediate notification to law enforcement is especially important in situations involving
suspected terrorist activity, as terrorists and terrorist organizations often rely on the international
financial system to acquire funding to sustain and finance their operations and engage in acts
of terrorism. Additionally, FinCEN emphasizes that any financial institution and any director,
officer, employee, or agent of such institution who makes, or requires another to make any
voluntary disclosure of any possible violation of law or regulation to a government agency under
the BSA or its implementing regulations is protected from liability for any such disclosure.52
Financial institutions wanting to report suspicious transactions that may potentially relate to
terrorist activity should call the Financial Institutions Toll-Free Hotline at (866) 556-3974
(7 days a week, 24 hours a day).53
Other Relevant BSA Reporting Requirements
Financial institutions and other entities or persons may also have other relevant BSA reporting
requirements to provide information in connection with the subject of this Advisory. These
include obligations related to the Currency Transaction Report (CTR),54 Report of Cash
Payments Over $10,000 Received in a Trade or Business (Form 8300),55 Report of Foreign
50. See 31 CFR §§ 1020.320(e)(1)(ii)(A)(2))(i), 1021.320(e)(1)(ii)(A)(2)), 1022.320(d)(1)(ii)(A)(2), 1023.320(e)(1)(ii)(A)(2)(i),
1024.320(d)(1)(ii)(A)(2), 1025.320(e)(1)(ii)(A)(2), 1026.320(e)(1)(ii)(A)(2)(i), 1029.320(d)(1)(ii)(A)(2), 1030.320(d)(1)(ii)(A)(2).
51. See, e.g., 31 CFR §§ 1020.320(b)(3), 1022.320(b)(3), 1023.320(b)(3).
52. 31 U.S.C. § 5318(g)(3); see, e.g., 31 CFR 1020.320(f).
53. The purpose of the hotline is to expedite the delivery of this information to law enforcement. Financial institutions
should immediately report any imminent threat to local-area law enforcement officials.
54. A report of each deposit, withdrawal, exchange of currency, or other payment or transfer, by, through, or to a
financial institution that involves a transaction in currency of more than $10,000. Multiple transactions may be
aggregated when determining whether the reporting threshold has been met. See 31 CFR §§ 1010.310-313, 1020.310-
313, 1021.310-313, 1022.310-313, 1023.310-313, 1024.310-313, and 1026.310-313.
55. A report filed by a trade or business that receives currency in excess of $10,000 in one transaction or two or more
related transactions. The transactions are required to be reported on a joint FinCEN/Internal Revenue Service form
when not otherwise required to be reported on a CTR. See 31 CFR §§ 1010.330-331. A Form 8300 also may be filed
voluntarily for any suspicious transaction, even if the total amount does not exceed $10,000.
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Bank and Financial Accounts (FBAR),56 Report of International Transportation of Currency
or Monetary Instruments (CMIR),57 Registration of Money Services Business (RMSB),58 and
Designation of Exempt Person (DOEP).59
Due Diligence
Banks, brokers or dealers in securities, mutual funds, and futures commission merchants
and introducing brokers in commodities (FCM/IBs) are required to have appropriate risk-
based procedures for conducting ongoing customer due diligence that include, but are not
limited to: (i) understanding the nature and purpose of customer relationships for the purpose
of developing a customer risk profile; and (ii) conducting ongoing monitoring to identify
and report suspicious transactions and, on a risk basis, to maintain and update customer
information.60 Covered financial institutions are required to identify and verify the identity
of beneficial owners of legal entity customers, subject to certain exclusions and exemptions.61
Among other things, this facilitates the identification of legal entities that may be owned or
controlled by foreign politically exposed persons (PEPs).
Senior foreign political figures and due diligence obligations for private banking accounts
In addition to these due diligence obligations, under section 312 of the USA PATRIOT Act
(31 U.S.C. § 5318(i)) and its implementing regulations, covered financial institutions must
implement due diligence programs for private banking accounts held for non-U.S. persons that
are designed to detect and report any known or suspected money laundering or suspicious
activity conducted through or involving such accounts.62 Covered financial institutions must
establish risk-based controls and procedures for ascertaining the identities of nominal and
beneficial owners of such accounts and ascertaining whether any of these owners are senior
foreign political figures, and for conducting enhanced scrutiny on accounts held by senior
foreign political figures that is reasonably designed to detect and report transactions that may
involve the proceeds of foreign corruption.63
56. A report filed by a U.S. person that has a financial interest in, or signature or other authority over, foreign financial
accounts with an aggregate value exceeding $10,000 at any time during the calendar year. See 31 CFR § 1010.350;
FinCEN Form 114.
57. A form filed to report the transportation of more than $10,000 in currency or other monetary instruments into or out
of the United States. See 31 CFR § 1010.340.
58. A form filed to register a money services business (MSB with FinCEN, or to renew such a registration.
See 31 CFR § 1022.380.
59. A report filed by banks to exempt certain customers from currency transaction reporting requirements.
See 31 CFR § 1010.311.
60. See 31 CFR §§ 1020.210(a)(2)(v), 1023.210(b)(5), 1024.210(b)(6), 1026.210(b)(5).
61. See 31 CFR §§ 1010.230, 1010.650(e)(1) (defining “covered financial institution”).
62. See 31 CFR § 1010.620. The definition of “covered financial institution” is found in 31 CFR § 1010.605(e)(1). The
definition of “private banking account” is found in 31 CFR § 1010.605(m). The definition of “non-U.S. person” is
found in 31 CFR § 1010.605(h).
63. See 31 CFR § 1010.620(c).
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AML/CFT program and correspondent account due diligence requirements
Financial institutions are reminded of AML/CFT program requirements,64 and covered financial
institutions are reminded of correspondent account due diligence requirements under Section
312 of the USA PATRIOT Act (31 U.S.C. § 5318(i)) and implementing regulations.65 As described
in FinCEN Interpretive Release 2004-1, the AML/CFT program of an MSB must include risk-
based policies, procedures, and controls designed to identify and minimize risks associated
with foreign agents and counterparties.66
Information Sharing
Information sharing among financial institutions is critical to identifying, reporting, and
preventing CMLN-related and other illicit financial activity. Financial institutions and
associations of financial institutions sharing information under the safe harbor authorized by
section 314(b) of the USA PATRIOT Act are reminded that they may share information with
one another regarding individuals, entities, organizations, and countries suspected of possible
terrorist financing or money laundering.67 In accordance with the requirements of section 314(b)
and its implementing regulations, FinCEN strongly encourages such voluntary information
sharing as it relates to money laundering or possible terrorist financing in connection with
Foreign Terrorist Organizations (FTOs)68 and Specially Designated Global Terrorists (SDGTs).69
The Financial Crimes Enforcement Network’s Advisory Program
communicates priority money laundering, terrorist financing, and other
illicit finance threats and vulnerabilities to the U.S. financial system.
Financial institutions may use this information to support effective, risk-
based, and reasonably designed anti-money laundering and countering
the financing of terrorism (AML/CFT) programs and suspicious activity
monitoring systems to help generate highly useful information for law
enforcement and national security agencies.
64. See 31 CFR §§ 1010.210, 1020.210, 1021.210, 1022.210, 1023.210, 1024.210, 1025.210, 1026.210, 1027.210, 1028.210,
1029.210, 1030.210.
65. See 31 CFR § 1010.610.
66. See FinCEN, Anti-Money Laundering Program Requirements for Money Services Businesses with Respect to Foreign
Agents or Foreign Counterparties, Interpretive Release 2004-1, 69 Fed. Reg. 74,439 (Dec. 14, 2004); see also FinCEN,
“Guidance on Existing AML Program Rule Compliance Obligations for MSB Principals with Respect to Agent
Monitoring” (Mar. 11, 2016).
67. See 31 CFR § 1010.540; see also FinCEN, “Section 314(b) Fact Sheet” (Dec. 2020).
68. See U.S. Department of State, “Foreign Terrorist Organizations.”
69. Executive Office of the President, “Executive Order 13224” (Sept. 23, 2001).
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For Further Information
FinCEN’s website at www.fincen.gov contains information on how to register for FinCEN Updates.
Questions or comments regarding the contents of this Advisory should be addressed to the FinCEN
Regulatory Support Section at www.fincen.gov/contact.
The mission of the Financial Crimes Enforcement Network is to safeguard
the financial system from illicit use, counter money laundering and
the financing of terrorism, and promote national security through
strategic use of financial authorities and the collection, analysis, and
dissemination of financial intelligence.
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