The U.S. Treasury Department is urging financial institutions across the country to intensify monitoring of suspected Chinese money laundering operations that are helping fund the deadly flow of fentanyl into American communities.
In a sweeping advisory issued Thursday, the department detailed how these networks are increasingly working in tandem with Mexican drug cartels to move illicit funds through the U.S. financial system, according to The Associated Press.
The advisory specifically calls on banks, brokers, and financial service providers to identify and report customers who may fit profiles commonly linked to money laundering for cartels.
These profiles include Chinese nationals such as students, retirees, and housewives with significant but unexplained wealth, or individuals who are unwilling to disclose the origin of their funds.
According to Treasury officials, many of these individuals may not even realize they are participating in criminal activity. Rather, they are often attempting to circumvent China’s strict currency controls — a system that limits foreign currency conversions for individuals to approximately $50,000 per year.
“It is not uncommon for Chinese individuals to evade such restrictions by turning to underground banks where their money is converted into foreign currencies, often U.S. dollars,” the advisory explains.
These underground banking systems, while designed to help Chinese nationals skirt restrictions at home, have become key players in laundering massive sums of cartel-linked drug money, particularly tied to fentanyl, cocaine, and methamphetamine.
The Chinese Embassy in Washington did not offer an immediate response to the advisory on Thursday.
The FinCEN (Financial Crimes Enforcement Network), a division of the Treasury Department, also released a report Thursday revealing that these Chinese money laundering networks are expanding their activities beyond just drug cartels.
The report notes a rise in suspicious financial activity related to human trafficking and adult senior day care centers in New York — facilities that are now being used to funnel illicit cash.
FinCEN says it analyzed more than 137,000 Bank Secrecy Act reports filed between January 2020 and December 2024. The total amount of suspicious activity identified in the reports reached approximately $312 billion.
Last year, federal prosecutors uncovered a massive scheme in which Chinese underground banking groups in the U.S. laundered more than $50 million in drug proceeds for Mexico’s notorious Sinaloa Cartel. The money was tied to the sale of fentanyl, cocaine, and other narcotics.
The advisory’s release comes as President Donald Trump continues to confront both the fentanyl crisis and broader U.S.-China tensions in his second term. Trump has maintained a hard stance on Chinese financial activities while simultaneously making clear that Chinese students remain welcome in American universities.
“I hear so many stories about ‘We are not going to allow their students,’ but we are going to allow their students to come in. We are going to allow it. It’s very important — 600,000 students,” Trump said during a meeting with South Korean President Lee Jae Myung in the Oval Office on Monday.
Still, the administration is pressing financial institutions to be highly alert. Treasury officials warn that some Chinese nationals studying or residing in the U.S. could be vulnerable to recruitment by underground banking syndicates, particularly if they are struggling financially or seeking ways to move large sums of money.
The administration’s new guidance emphasizes that simply fitting a certain profile is not enough to trigger enforcement, but encourages financial institutions to remain alert for a combination of red flags — such as inconsistent account activity, unexplained cash deposits, or refusal to provide source documentation.
As fentanyl-related deaths continue to rise across the country, the administration’s message is clear: financial institutions must become frontline defenders in the effort to disrupt the illicit networks fueling America’s opioid crisis.
