Unpacking FinCEN’s Advisory on Chinese Money Laundering Networks (CMLNs)

In August 2025, the Financial Crimes Enforcement Network (FinCEN) issued a critical advisory (FIN-2025-A003) spotlighting a growing and sophisticated threat: Chinese Money Laundering Networks (CMLNs). These networks have become deeply embedded in global financial crime, forming strategic alliances with Mexican drug cartels to facilitate complex laundering schemes that span borders and industries.

This emerging threat demonstrates a decade-long evolution in how illicit funds are moved, masked and monetized.

A Symbiotic Partnership: Cartels and CMLNs

At the core of the CMLN-cartel alliance lies a mutually beneficial exchange. Chinese investors, constrained by strict capital controls under China’s State Administration of Foreign Exchange (SAFE), are limited to transferring $50,000 USD annually and must register or gain approval for outbound investments. Yet, many seek access to western assets such as real estate, luxury goods and hard currency.

Meanwhile, Mexican drug cartels are flush with cash from illicit drug sales and need to launder it to make it usable. CMLNs serve as the bridge between these two needs, connecting Chinese demand for USD and western luxuries with the cartels’ supply of illicit funds. By facilitating transactions on both ends, CMLNs profit from the flow of money and goods without the need to move physical cash across borders.

How CMLNs Operate

CMLNs are not centralized organizations but operate as webs of individuals who have cultivated relationships over time. Their operations hinge on recruiting money mules and couriers, often targeting students on educational visas who may be financially vulnerable and unaware of the criminal implications. Some participants are knowingly complicit, while others are misled or coerced.

These mules, sometimes referred to as “smurfs,” deposit small amounts of cash to avoid triggering the $10,000 threshold that would require the responsible financial institution (FI) to file a Cash Transaction Report (CTR) with FinCEN. In bolder cases, mules exceed the threshold, but the accounts used are typically short-lived and quickly closed, evading detection. Once deposited, the funds are funneled through the financial system through shell companies, real estate purchases or luxury goods.

Tactics That Bypass Borders

One of the most effective laundering techniques used by CMLNs is the mirror transaction. This method avoids cross-border transfers and physical cash movement. With mirror transactions cartel cash remains in the U.S., while a CMLN member in Mexico transfers pesos to the cartel’s account, minus any associated laundering fees. A similar mirror transaction occurs in China for Chinese investors, granting them access to USD in the U.S. without violating capital controls.

Another tactic involves individuals who purchase goods “on behalf of” others, also known as “daigou” buyers. CMLNs instruct these buyers to acquire electronics, jewelry and luxury items, which are then shipped to China or used to settle cartel debts across borders.

Why Cartels Choose CMLNs

Speed and cost-efficiency are the key advantages for CMLN use. CMLNs leverage their global networks to launder money faster and cheaper than traditional professional money launderers (PLMs). Their dual-revenue model, charging both cartels and Chinese investors, allows them to spread costs and undercut competitors, making them an attractive outsourcing option for criminal organizations.

Red Flags to Watch For

FinCEN’s advisory outlines several indicators that may signal CMLN activity, including:

• Mismatch between deposits and reported income (e.g., a student depositing large sums of cash)
• Inconsistent identification documents (e.g., identical passport and visa photos years apart)
• Frequent large purchases of cashier’s checks with cash
• Luxury goods businesses with disproportionate income

For a full list of red flags, FIs should refer to the official FinCEN advisory FIN-2025-A003.

A Global Threat Beyond Cartels

While the advisory focuses on the CMLN-cartel connection, these networks operate globally and launder proceeds from a wide range of illicit activities, including human trafficking, human smuggling, fraud and cybercrime. Their reach is expanding, and their tactics are becoming harder to detect.

Key Takeaways

FinCEN’s advisory is a wake-up call for FIs, compliance teams and regulators. CMLNs are evolving rapidly, and understanding their methods and motivations is essential to disrupting their operations. Vigilance, education and proactive detection strategies will be key in the fight against this global threat.

Disrupt CLMNs with NICE Actimize 

As part of a broader, global web of organized financial crime, traditional monitoring systems often fall short in detecting CMLNs. 

NICE Actimize’s Community Analytics delivers a transformative edge to disrupt organized crime and money laundering rings. Powered by embedded AI and community-based graph algorithms, Community Analytics enables FIs to expose more risk, faster, using fewer resources. Unlike traditional deterministic systems that focus on isolated transactions, Community Analytics uncovers hidden clusters of criminal activity, from mule networks and drug trafficking to human smuggling and collusion.

By detecting behavioral anomalies and revealing interconnected bad actors, Community Analytics equips compliance teams to proactively manage risk, streamline investigations and pinpoint organized crime with unmatched precision. It’s a smarter, more scalable way to stay ahead of evolving threats.

Explore the Community Analytics brochure to learn how your institution can evolve beyond legacy AML detection and stay ahead of sophisticated threats like CMLNs.

Request a demo and see firsthand how Community Analytics and NICE Actimize can help your team uncover hidden criminal networks with precision and speed.