Three separate police investigations in Italy recently uncovered around 1 billion euros in proceeds from drug trafficking of the Calabrian ‘Ndrangheta, Colombian drug cartels, and Albanian organized criminal groups. The more important finding may have been who it was determined had laundered the illicit money: Chinese underground bankers.
These cases illustrate how Chinese shadow brokers have emerged as the money launderers of choice of the world’s transnational criminal networks, facilitating payments across continents and cleaning up the proceeds of serious criminal activities. The increasing use of this system by criminals around the world is alarming European and U.S. authorities. The flows of money are particularly hard to spot, as the cash isn’t physically moved from one country to another and there is largely no paper trail.
“The use of idioms that are difficult to understand, the extreme mobility of the individuals involved, and the capacity to operate make Chinese criminality hard to repress effectively,” Italy’s national anti-mafia agency, the DIA, said in its 2025 mission report.
The DIA said Chinese criminals managed to create over time a full-fledged illegal banking system, based on fei chien, or flying money, which enables users to transfer money from one point to another entirely on the basis of trust.
The centuries-old system involves depositing a sum with a money broker in one country while another agent in the network elsewhere in the world pays the equivalent amount to the intended recipient. Brokers make money charging commissions and frequently also on the exchange rate. The transfers can happen almost instantly.
The transaction is then balanced out at a later stage through flows of money in the opposite direction, through the physical exchange of cash or other valuables—including cryptocurrencies, as it emerged from a number of recent cases—or through trade-based money laundering.
Fei chien works substantially in the same way as hawala, another money transfer method common in other parts of Asia, the Middle East, and Africa, which has also been abused by criminals around the world.
They both rely on tight-knit communities of individuals, almost impenetrable to outsiders, where trust among brokers and users allows the smooth functioning of these systems.
In at least one recent case, Chinese brokers and hawaladars collaborated to launder money for different groups of drug and migrant smugglers.
In January, European authorities arrested 17 mostly Syrian and Chinese individuals. According to the Spanish police, which arrested 15 of the suspects, the Arab branch of the network collected money across the world, while a separate Chinese branch supplied the cash to criminals based in Spain, in exchange for cryptocurrencies. They are accused of having laundered more than $21 million in proceeds over several years as a service to trafficking groups.
The use of these so-called informal value transfer systems rose in recent decades in the Western world along with migration, playing a vital role for remittances to countries where banking and other money transfer systems are limited or very expensive. In some countries, such as the United Kingdom, they aren’t illegal per se.
Chinese brokers are part of the large diasporas in the United States, Canada, Europe, and Latin America. These brokers help affluent Chinese seeking to move wealth abroad, evading China’s currency controls, which limit the amount of money its citizens can move out of the country to roughly $50,000 a year, experts and law enforcers say.
The more alarming part came when it became evident that these brokers had begun to offer these services to some of the most dangerous criminal networks around the world.
“Nowadays, the market for cash is predominantly in the hands of Chinese criminal networks. The rest is managed by other groups, such as the Pakistani, Lebanese, and Syrians,” Antonio Nicaso, an expert on criminal organizations at Queen’s University in Kingston, Ontario, told Foreign Policy.
Police investigations have unveiled that these networks are widely used by the ‘Ndrangheta, Latin American cartels, and Albanian drug traffickers, he said.
“I have recently been to Colombia and Brazil, and authorities told me the same thing. The Chinese are offering the service everywhere. It’s alarming because the ‘follow the money’ idea doesn’t apply. The money isn’t moving,” he said.
Nicaso and other experts say one key reason why the Chinese emerged as the brokers of choice is the very low commission they charge: less than 2 percent of the amount transferred, Nicaso said.
Evidence that Italian drug cartels were using Chinese brokers began to emerge in recent years. A series of investigations and law enforcement reports show the phenomenon is on the rise.
A 2023 Italian probe found that when a gang of ‘Ndrangheta mobsters had to ship 8 million euros from Italy to Colombian narcos, they entrusted the pile of cash to shadow Chinese money brokers.
It took them six car trips from Calabria to Rome and Naples over two months to carry the cash to the illegal brokers. These brokers transferred the funds instantly to the narcos, who had sold the mobsters half a ton of cocaine in 2020, according to court documents seen by Foreign Policy.
This 8 million euro payment was just one of many other similar transactions documented by a transnational investigation, which led to the arrest of more than 130 members of the ‘Ndrangheta network in coordinated raids in half a dozen European countries in May 2023.
More recently, another investigation unveiled last November found that a criminal ring linked to the Sicilian Cosa Nostra used Chinese brokers in Rome to pay 600,000 euros for an import of cocaine from Ecuador.
U.S. authorities have been turning their attention to Chinese brokers and their ties to Latin American drug cartels over the past few years, too, including, most alarmingly, with the fentanyl trade.
In its 2024 National Money Laundering Risk Assessment, the U.S. Treasury Department said Chinese money laundering organizations “have become more prevalent and are now one of the key actors laundering money professionally in the United States and around the globe.”
It defined the groups as insular and decentralized, which makes them difficult to penetrate.
Although they provide money laundering services to transnational criminal organizations, their primary objective is to acquire and subsequently sell U.S. dollars and other currencies using informal value transfer systems to Chinese nationals seeking to evade the country’s controls.
The Treasury Department said these organizations regularly source the cash they need from transnational criminal groups operating in the United States.
In a typical scheme, once the cash is retrieved in the United States, a comparable sum of Mexican pesos is released through the flying money system to a cartel in Mexico, enabling it to exchange dollars coming from the sale of drugs in the United States for pesos.
“Dirty dollars remain in the United States, where at least in part, they are broken down into smaller amounts and deposited into U.S. bank accounts opened by money mules, which sometimes involve international students,” the Treasury report said.
Several recent investigations in the United States show that Chinese brokers engaged in such money laundering operations involving banks, witnessing the huge returns from the smuggling into the country of cocaine, methamphetamine, and fentanyl, which last year contributed to the deaths of more than 80,000 Americans, according to the U.S. Centers for Disease Control and Prevention.
Last year, TD Bank agreed to pay $3 billion in penalties after authorities found that a Chinese criminal operation had bribed employees and laundered millions of dollars in fentanyl proceeds through branches of the lender in New York and New Jersey.
In other cases, banks weren’t accused of any wrongdoing. However, experts are urging them to stop illicit funds in these networks from entering the financial system by tightening controls.
“Banks remain the weakest link in money laundering,” said Federico Varese, a professor of criminology at the University of Oxford.
An additional challenge posed by these shadow money brokers is that China has extensive commercial relations with much of the rest of the world.
“Most of the difficult money laundering system to crack is trade-based money laundering,” said Vanda Felbab-Brown, a senior fellow at the Brookings Institution.
“If you were a money laundering operation out of Bolivia or Lesotho, you would find it very hard to explain why you’re moving money between, say, Bolivia and Mongolia or between Lesotho and Kyrgyzstan. But for China, given its global presence in the economy, explaining those movements of money is very easy,” she said.
The spread of Chinese money launderers is causing different levels of alarm in different areas of the world, Felbab-Brown said. However, it has become high on law enforcement’s agenda in most of the Western world.
In the United States, due to its links with the fentanyl crisis, is likely where the issue is causing more alarm.
Last year, under the Biden administration, the United States and China agreed to strengthen their collaboration in combating money laundering, in particular in relation to the trafficking of fentanyl and its precursors.
On day one of his second term, U.S. President Donald Trump ordered international cartels to be designated terrorist organizations.
“This can unleash unrestricted financial warfare on Mexican drug organizations, their facilitators, and the Chinese money laundering organizations that move and control the proceeds of fentanyl,” said Elaine Dezenski, the senior director and head of the Center on Economic and Financial Power at the Foundation for Defense of Democracies.
“Interdicting the [fentanyl] pills is really, really challenging, while cutting off the money supply between the cartels and money launderers, in the U.S., is a different story. This is where, I think, there’s a lot more potential to make some inroads,” she said.
Going after these networks of brokers has proved to be challenging and will likely continue to do so. Many countries have stepped up law enforcement efforts and international collaboration on investigations, which will be paramount in the fight against this phenomenon as, by definition, it involves many different countries. The collaboration between China and Western countries, in particular, will be crucial.
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