Treasury Urges Banks to Watch for Fentanyl-Linked Money Laundering Tied to Chinese Nationals and Mexican Cartels

The U.S. Treasury Department is directing financial institutions to heighten their scrutiny of transactions potentially linked to the surge of fentanyl devastating communities nationwide. In an advisory issued Thursday, the department highlighted how Mexican cartels are increasingly working with Chinese networks to funnel illicit funds through American banks and brokers.

The Trump administration has asked banks to identify and report customers who may be laundering cartel proceeds, particularly Chinese nationals who fit certain profiles. According to Treasury, such individuals could include students, retirees, or housewives exhibiting unexplained wealth, as well as those unwilling to disclose the origins of their funds. Officials argue that many of these people are being unwittingly exploited by cartels seeking to circumvent Beijing’s strict currency controls, which cap annual foreign currency conversions at around $50,000 per individual.

Because of those restrictions, Chinese citizens frequently turn to underground banking operations, where their renminbi can be converted into U.S. dollars or other currencies. These informal systems, Treasury contends, are being leveraged by traffickers to move drug money across borders.

The Chinese Embassy in Washington did not immediately respond to requests for comment on Thursday.

Also on Thursday, the Treasury’s Financial Crimes Enforcement Network, or FinCEN, released findings detailing how Chinese money laundering groups are branching out beyond drug-related activities. The agency noted that U.S. financial institutions are increasingly flagging suspicious transactions linked to human trafficking, as well as adult senior day care facilities in New York that authorities say have been co-opted for laundering purposes. FinCEN’s analysis drew on more than 137,000 reports filed under the Bank Secrecy Act between January 2020 and December 2024, documenting roughly $312 billion in questionable activity.

Federal investigators last year exposed what prosecutors described as a sophisticated alliance between Mexico’s Sinaloa Cartel and Chinese underground bankers in the United States. That network allegedly laundered $50 million generated from fentanyl, cocaine, and other narcotics.

The Treasury’s warning to banks comes as President Donald Trump underscores his commitment to maintaining educational ties with China despite broader geopolitical tensions. Addressing concerns about student visas during a meeting Monday with South Korean President Lee Jae Myung in the Oval Office, Trump said, “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.”

By fLEXI tEAM