US Banks Facilitate Chinese Crime Networks, Yet Regulators Target Crypto More Aggressively – Is Crypto Being Unfairly Singled Out?

US Banks Move $312 Billion For Chinese Money Laundering Networks While Crypto Faces Heat

Chinese money laundering networks have routed staggering sums through US financial institutions, according to a new analysis by the Financial Crimes Enforcement Network (FinCEN).

Between January 2020 and December 2024, banks processed $312 billion in suspicious transactions linked to Chinese criminal networks, averaging $62 billion per year.

The findings come as cryptocurrency platforms continue to face intense regulatory scrutiny, despite handling a fraction of illicit funds compared to traditional banks.

How Chinese Gangs Partner With Mexican Drug Cartels

FinCEN reports reveal sophisticated collaborations between Chinese money launderers and Mexico-based drug cartels.

Mexican law restricts large dollar deposits in local banks, while China’s currency controls limit the ability of citizens to move funds abroad.

Exploiting this regulatory gap, cartels sell illicit US dollars to Chinese actors seeking to bypass Beijing’s capital controls.

These operations extend beyond drug trafficking into human trafficking, healthcare fraud, and real estate, with $53.7 billion flagged in suspicious real estate transactions alone.

Human trafficking also features prominently, with 1,675 reports identified, alongside $766 million linked to adult day care fraud in New York.

Chinese networks have relied on complicit bank employees, counterfeit documents, and money mules who falsely report occupations to move funds undetected.

Traditional Banks Bear The Brunt Of Criminal Activity

The analysis shows banks processed $246 billion of the suspicious funds, while money service businesses handled $42 billion and securities firms $23 billion.

Historical cases highlight long-standing vulnerabilities: Wachovia moved $350 billion for Mexican cartels between 2007 and 2010, Danske Bank handled $228 billion from Russian networks, and HSBC facilitated hundreds of millions in cartel funds through customised cash deposit boxes.

TD Bank also laundered more than $470 million through Chinese networks in New York and New Jersey, paying over $3 billion in settlements.

Why Crypto Is Still In Regulators’ Crosshairs

Despite the vast sums moving through banks, cryptocurrency continues to draw regulatory attention.

Senator Elizabeth Warren recently stated, “Bad actors are increasingly turning to cryptocurrency to enable money laundering,” urging stricter rules.

Yet data suggests crypto’s share of illicit activity is limited.

Chainalysis reports that over five years, illicit crypto transactions totalled $189 billion, compared to trillions laundered annually through traditional finance.

In 2024, illicit crypto activity reached $51.3 billion, an 11.3% increase, but still dwarfed by bank activity.

Source: Chainalysis

AUSTRAC in Australia and European authorities have targeted crypto exchanges for compliance issues, requiring external audits and investigating allegedly laundered funds exceeding $100 million.

Meanwhile, banks continue to process billions in illicit transactions with comparatively minimal penalties, highlighting a persistent regulatory imbalance.

FinCEN Confirms Traditional Finance Is The Primary Channel

FinCEN Director Andrea Gacki noted,

“These networks launder proceeds for Mexico-based drug cartels and are involved in other significant, underground money movement schemes within the United States and around the world.”

Blockchain analytics firm TRM Labs echoes the sentiment, with Angela Ang stating,

“Illicit activity is but a small fraction of the crypto ecosystem. We estimate that it is less than 1% of overall crypto volume. FinCEN's findings align with a broader pattern—these underground banking networks function as a shadow financial system for organized crime worldwide.”

While crypto draws headlines and political pressure, the data underscores that Chinese money launderers primarily rely on traditional banking networks to move billions globally, exposing enduring weaknesses in the financial system.

Are Regulatory Pressures Reshaping the Financial Playing Field

Coinlive observes that the regulatory spotlight on crypto, despite its relatively small role in global money laundering, raises questions about the sector’s resilience and adaptability.

If traditional banks can move hundreds of billions with limited consequences, while digital platforms face disproportionate scrutiny, the market may need to rethink how compliance, transparency, and innovation coexist.

This tension challenges crypto projects to confront structural weaknesses, prove real-world utility, and navigate a landscape where perception can outweigh scale.

It begs the question, can these platforms survive under regulatory pressure, or will systemic bias reshape the hierarchy of global finance?