U.S. financial institutions filed more than 137,000 reports totaling about $312 billion in suspicious activity tied to suspected Chinese money laundering networks from 2020 through 2024, according to an analysis by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) that became the central focus of a June 9 House subcommittee hearing on cartel finance.
The figure reflects transactions flagged in Bank Secrecy Act reports, not a confirmed total of laundered funds or criminal proceeds. Liana Rosen, a Congressional Research Service specialist on international sanctions and financial crimes, told lawmakers that such reports are the starting point for investigations and that public information does not show what share of the $312 billion led to enforcement action.
The House Financial Services Subcommittee on Oversight and Investigations held the hearing to examine how Chinese money laundering networks, known as CMLNs, help drug cartels move proceeds through the U.S. financial system.
Subcommittee Chairman Dan Meuser (R-Pa.) said the networks offer cartels fast transfers, low fees, and, in some cases, guaranteed payment even when law enforcement seizes illicit funds.
Moving Value Without Moving Cash
Witnesses described CMLNs as professional laundering networks that serve two customer bases: criminal groups seeking to clean illicit proceeds and, separately, some Chinese citizens seeking access to U.S. dollars beyond China’s capital-control limits.In one arrangement described by Rosen, a CMLN buys U.S. dollars generated by drug sales in the United States, then pays the cartel an equivalent amount, minus a fee, through other channels. The same network can then sell the U.S. dollars to buyers seeking to move value outside China’s formal currency controls.
“The dirty U.S. dollars actually stay in the U.S.,” Rosen said, while related value is settled through accounts, trade, or other channels.
John Cassara, a retired Treasury special agent who previously worked at FinCEN and Treasury’s Office of Terrorism and Financial Intelligence, said that model weakens traditional anti-money-laundering tools because investigators can no longer rely on tracking cash as it crosses borders.
“Chinese money launderers are experts at money transfer without money movement,” Cassara said. “The dirty money increasingly stays in place. Value is exchanged or swapped.”
Cassara said the Bank Secrecy Act was created in an era when investigators could follow large flows of drug money through financial institutions. He said the system is less effective against underground banking, mirror swaps, trade-based laundering, and other methods in which illicit value is offset rather than physically transferred.
Banks, Real Estate, and Shell Companies
Meuser said the $312 billion in suspicious activity passed through 489 depository institutions, more than 200 money service businesses, and other financial institutions.FinCEN said its review covered reports filed by financial institutions from January 2020 through December 2024 and found activity associated with suspected CMLN-related operations across banking, money services, securities and futures, casinos, real estate, and other sectors.
Several lawmakers focused on whether shell companies and opaque ownership structures make it harder for law enforcement to trace criminal proceeds.
Rep. Nikema Williams (D-Ga.) asked Cassara why real estate laundering through anonymous limited liability companies matters as a national security and financial-crime issue.
Cassara said real estate is one of the most common ways money launderers place, layer, and integrate illicit proceeds. He later told Williams that beneficial ownership information is “the one missing piece” law enforcement needs.
Crypto and Reporting Gaps
Democrats used part of the hearing to press witnesses on cryptocurrency and beneficial ownership rules, arguing that digital-asset platforms and shell companies can give criminal networks more ways to hide funds.Rep. Maxine Waters (D-Calif.), the committee’s ranking member, asked Louis DeTitto, CEO of MissionLytics and a former financial-crime analytics executive at Bank of America, whether crypto companies should detect and report suspected financial crime like banks do.
DeTitto said CMLNs exploit cryptocurrency and that, as a former law-enforcement officer and financial-intelligence analyst, he would want information from cryptocurrency exchanges as well.
“I want all of it, including at cryptocurrency exchanges,” he said.
Beijing Link Debated
The hearing also exposed disagreement over how far lawmakers and witnesses should go in tying the laundering networks to Beijing.During her testimony, Rosen cautioned that CMLN terminology does not itself establish a link to the ruling Chinese Communist Party.
Leland Lazarus, founder and CEO of Lazarus Consulting and a former State Department diplomat in China and the Caribbean, told lawmakers there is no “smoking gun” or “hardcore evidence” directly linking Chinese criminal laundering networks to top Chinese leadership.
He said, however, that Chinese criminal actors in several countries have used business associations and friendship associations to engage with Chinese officials, embassies, consulates, or state-owned enterprises. Lazarus described that as a “symbiotic relationship.”
Lazarus urged Congress and the administration to raise underground banking and money laundering directly with Chinese leader Xi Jinping.
“Beijing has the capacity to crack down on underground banking,” Lazarus said. “When Beijing wants to act, it can.”
What Congress May Do Next
Witnesses urged lawmakers to strengthen law enforcement coordination, improve beneficial ownership transparency, scrutinize high-risk trade and financial corridors, expand sanctions and enforcement tools, and better use data analytics to identify networks rather than isolated transactions.Cassara said the United States already receives large amounts of financial intelligence, but that leads often do not become cases because there are not enough investigators to work them.
“We don’t have enough agents out there to make these cases,” Cassara said.
He returned to the same point when Rep. Warren Davidson (R-Ohio) asked about enforcement incentives.
Cassara said law enforcement often focuses on people and products because those cases are easier than following the money. Financial investigations can take years and may not result in a prosecution, he said.
Rosen told Davidson that public records do not show what portion of the $312 billion in suspicious activity resulted in enforcement action or disrupted networks.
That gap left one of the hearing’s central questions unresolved: how much of the financial activity flagged by U.S. institutions is being converted into prosecutions, seizure, or dismantled laundering networks.
