The United States has raised alarm over a massive money laundering network connecting China and Mexican drug cartels. Officials revealed that more than $300 billion in suspicious transactions passed through American banks over the last five years. These transactions are believed to be tied to criminal groups that work hand-in-hand with cartels in Mexico.
The US Financial Crimes Enforcement Network (FinCEN) said that about $312 billion worth of suspicious money transfers were reported between January 2020 and December 2024. These networks are accused of helping cartels hide their drug money by moving it through a complex web of international transactions.
Investigators explained that these groups often rely on ordinary-looking people, sometimes listed as students, homemakers, or retirees. These individuals act as “money mules,” holding large sums of unexplained cash in their accounts to disguise the real source. The system makes the money appear legal, while in reality, it comes from drug trafficking.
Mexican lawyer Ilan Katz noted that the FinCEN advisory appeared to carry both a law enforcement purpose and a political tone, suggesting it could influence how global markets view China.
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How the Scheme Works
The laundering method has been described as a sophisticated exchange of currencies across three countries. Drug cartels in the United States usually make their profits in dollars. Instead of directly depositing these dollars into Mexican banks, which are tightly monitored, brokers step in. They collect the dollars, hand over pesos to the cartels in Mexico, and then use Chinese underground banking systems to balance the transactions.
Chinese citizens, eager to move money out of their country due to strict capital rules, play a key role. They provide the renminbi in China, while brokers pay out dollars in the US and pesos in Mexico. This triangular exchange allows everyone involved to benefit while hiding the true origin of the funds.
The system has also been fueled by the growing demand for fentanyl, a synthetic opioid that has become one of the deadliest drugs in the US. Many of the chemicals needed to make fentanyl are shipped from China to Mexico. From there, the cartels process the drug and send it north, reaping billions in profits. The two most powerful Mexican cartels, Sinaloa and Jalisco New Generation, are believed to dominate this trade.
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Former US president Donald Trump made trade involving Mexico and China a central issue during his administration. His government clamped down on fentanyl entering the US and imposed sanctions on several Mexican banks believed to be involved in laundering cartel funds. This move caused shockwaves through Mexico’s financial sector.
Rising Tensions Between Countries
The discovery of these networks has added pressure to already tense relations between the US, Mexico, and China. Washington has made the fight against fentanyl and drug cartels a top priority. In recent years, the US government also classified several Latin American drug trafficking groups as terrorist organizations. This step opened the door to potentially stronger actions, including military measures.
Mexico’s current president, Claudia Sheinbaum, has faced mounting pressure from Washington to allow greater US involvement in tackling the cartels. Her government has responded by increasing arrests and drug seizures within Mexico. At the same time, Chinese authorities have said they are stepping up enforcement against chemicals used to make fentanyl.
Despite these moves, tensions remain high. The Chinese ambassador to Mexico has argued publicly that the United States is unfairly blaming China for its own internal drug crisis. Meanwhile, the US continues to warn banks and financial institutions to remain alert, as the laundering networks tied to Chinese brokers and Mexican cartels show no signs of slowing down.