Financial institutions handling large amounts of cash, such as commercial and tribal casinos, are being urged by the US Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) to be on the lookout for suspected money laundering activities from Chinese money laundering networks (CMLNs) and Mexican drug cartels.
According to FinCEN, which is responsible for protecting the US financial system against criminal activities such as money laundering and terrorism funding, casinos remain a popular destination for illicit money transfers.
Between January 1, 2020, and December 31, 2024, casinos submitted 4,645 Suspicious Activity Reports pertaining to CMLNs and Mexico drug cartels, according to a FinCEN guideline on transnational criminal organizations and CMLNs in Mexico. Approximately $1 billion was the entire amount of suspicious money that was transferred inside casinos.
According to government financial regulators, Mexican drug gangs heavily rely on CMLNs as professional money launderers to clean up their illicit drug money in the US. According to FinCEN, the relationship is fueled by laws enacted by the Mexican government that prohibit large sums of US currency from being deposited into the Mexican financial system in an effort to combat drug cartels, as well as currency laws from the People's Republic of China that restrict the amount of money that Chinese nationals can send overseas.
Casinos Playing a Role
According to FinCEN, the majority of CMLNs are Chinese nationals with US residence status. It is believed that a large number of students studying in the US are Chinese.
“US-based CMLNs may sell US dollars purchased from Mexico-based drug cartels through advertisements on social media or by leveraging personal networks involving Chinese citizens and/or businesses seeking to evade the PRC’s currency control laws. Ultimately, Chinese citizens’ demand for large quantities of US dollars and the cartels’ need to launder their illicit US dollar proceeds has resulted in a mutualistic relationship wherein the cartels sell off their illicitly obtained US dollars to CMLNs who, in turn, sell the US dollars to Chinese citizens seeking to evade China’s currency control laws,” the FinCEN advisory read.
One suspected CMLN individual was the focus of 87 Bank Secrecy Act reports throughout the four years, 85 of which were filed by casinos, according to the FinCEN report. Despite not having a job or the financial means to support such a cash flow, the person of interest transferred $22 million in questionable transactions.
According to the FinCEN investigation, the person frequently engaged in questionable gaming behaviors, such as chip walking, which is the practice of purchasing gaming chips without actually using them for gambling. Since at least 2007, the individual on the 87 reports has been the focus of suspicious activity files.
Warning Signs
Banks are being alerted by FinCEN to be on the lookout for clients who use Chinese passports as identification and who frequently receive money through transfers and wire transfers that are out of proportion to their stated vocation and whose source cannot be linked to a valid source of income.
According to FinCEN, casinos should be aware of a number of warning signs that could indicate someone is trying to launder money. These include situations in which a client claims to be a student but is hesitant to divulge their funding source.