U.S. court sentences Chinese money laundering organization courier to 9 years; group laundered $92 million in drug money

WASHINGTON

A U.S. federal court in the Western District of North Carolina on the 21st (local time) sentenced Shu Jun Zhen, 31, of New York, a cash courier for a Chinese money laundering organization (CMLO), to nine years in prison. The court also ordered forfeiture of nearly $23 million. The U.S. Justice Department said in a press release that day that the organization laundered more than $92 million in illicit funds, including proceeds from the distribution of drugs mostly brought into the United States through Mexico. Zhen is the second member of the organization to receive a heavy sentence.

Zhen collected cash from drug traffickers and deposited it into shell company accounts

According to court records cited by the Justice Department, Zhen was a "prolific courier" for the organization. Zhen received drug sale proceeds from drug traffickers in the United States and deposited them into bank accounts of shell companies registered by other members of the organization. When making deposits, Zhen alternated between a real identity and false identities. The bulk cash Zhen personally collected and deposited amounted to about $23 million.

Zhen pleaded guilty in July 2025 to three counts: one count of conspiracy to commit money laundering, one count of money laundering to conceal the nature and source of criminal proceeds, and one count of engaging in financial transactions in property derived from crime worth more than $10,000. Zhen admitted knowing that the money handled included drug trafficking proceeds.

At the time of the guilty plea on July 7, 2025, the Justice Department's press release described Zhen as 36 years old and living in Staten Island, New York. The release on this sentencing gave the age as 31. The amount collected and deposited was also given at the time as "nearly $25 million," and this time as about $23 million. The 2025 materials said Zhen collected and deposited cash at the direction of organizer Enhua Fang and manager Jianfei Lu.

All six defendants pleaded guilty; organizer laundered $90 million in under two years

A total of six people were charged in the case. The Justice Department announced on July 7, 2025, that the final three members charged had pleaded guilty. Three others had pleaded guilty on April 30 of the same year. Federal money laundering conspiracy and concealment money laundering each carry a maximum sentence of 20 years in prison per count, and transactions in criminal proceeds exceeding $10,000 a maximum of 10 years per count.

In its 2025 announcement, the Justice Department described Fang, 38, a native of China, as the organizer. Fang directed couriers to collect bulk cash across the United States. The couriers deposited the money into shell company accounts controlled by the organization, typically in amounts exceeding $10,000. Fang used multiple cell phones, changed numbers frequently and communicated with overseas members and U.S. drug traffickers through several kinds of encrypted messaging apps. Fang admitted to personally laundering at least $90 million in less than two years.

Lu was a courier and manager. While Fang stayed in China, Lu directed cash collection and deposits and obtained fake driver's licenses for couriers. The couriers used these licenses to deposit illicit funds at major U.S. banks. Lu admitted knowingly participating in laundering of $25 million to $65 million.

The roles of the three who pleaded guilty on April 30, 2025, were also disclosed. Maoxuan Xia, then 29, a native of China, was "one of the most active members" of the organization and traveled across the United States collecting drug money. Xia admitted to personally laundering more than $30 million in less than two years. Shao Neng Lin, then 58, of Baldwin Park, California, and Zhou Yu, then 42, a native of China, opened and operated shell company accounts for the organization. The two each admitted receiving about $20 million into their own accounts.

Manager Lu sentenced to 15 years, courier Zhen to 9 years

The earlier heavy sentence came in August. According to the Justice Department and IRS Criminal Investigation (IRS-CI), Judge Susan C. Rodriguez of the U.S. District Court for the Western District of North Carolina on August 18 sentenced Lu to 15 years in prison and forfeiture of $25 million. Lu pleaded guilty in July 2025 to five counts: one count of money laundering conspiracy, two counts of concealment money laundering and two counts of transactions in criminal proceeds exceeding $10,000. Lu also admitted knowing that the funds included drug trafficking proceeds. Criminal Division Assistant Attorney General Duva said at the time, "Chinese money laundering networks have become a key enabler to the Mexican cartels."

The press release on Zhen's sentencing did not name the presiding judge. The case was prosecuted by Jayce Born and Kenneth Kaplan of the Justice Department Criminal Division's Money Laundering, Narcotics and Forfeiture Section (MNF) and Nick Miller and Seth Johnson of the U.S. Attorney's Office for the Western District of North Carolina. The investigation was conducted by the Drug Enforcement Administration (DEA) Charlotte office and the IRS Criminal Investigation Charlotte office, with assistance from the North Carolina State Bureau of Investigation (SBI).

The Justice Department also released a photo of about $670,000 in U.S. currency and 12 firearms seized from a drug trafficking organization that used the money laundering organization. The same photo also appeared in the August press release on Lu's sentencing.

Criminal Division chief says Chinese money laundering networks are a condition for the drug trade's survival

A. Tysen Duva, Assistant Attorney General of the Justice Department's Criminal Division, said in the press release that money launderers help drug traffickers evade the law by moving and hiding their profits, which is why investigating and prosecuting them is critically important. Duva went on to say, "Chinese money laundering networks are not peripheral to the drug trade – they are essential to its survival." Duva said the Criminal Division, as part of the Homeland Security Task Force initiative, is targeting every link in the drug supply chain to stop criminals "poisoning Americans."

Russ Ferguson, U.S. Attorney for the Western District of North Carolina, said his office is attacking international criminal cartels on every front, including dismantling the Chinese money laundering networks that prop them up. Ferguson said that today his office had secured a sentence for a person who laundered drug proceeds and sent money back to these international criminal organizations, an amount of "over $90 million of illicit funds in less than two years." Ferguson said these cases are complex but prove one thing: these sophisticated cartels are no match for the U.S. Justice Department.

Investigative agencies echoed the message. Michael J. Connolly, Acting Special Agent in Charge of the DEA Atlanta Division, said the case demonstrates the power of law enforcement cooperation through the Homeland Security Task Force. Connolly said agencies are joining forces to hold accountable those who facilitate drug trafficking and to dismantle the funding sources of criminal organizations. Donald "Trey" Eakins, Special Agent in Charge of the IRS Criminal Investigation Charlotte office, said money laundering organizations are the "lifeblood" of criminal groups, allowing them to move, hide and reinvest illicit profits. Eakins said Zhen played an important role in laundering millions of dollars in illicit funds.

Homeland Security Task Force launched by Trump executive order with aim of eliminating cartels

The Justice Department classified the case as part of the Homeland Security Task Force (HSTF) initiative. The task force is based on Executive Order 14159, "Protecting the American People Against Invasion," signed by President Donald Trump on January 20, 2025. Section 6 of the executive order directed the attorney general and the secretary of homeland security to establish federal Homeland Security Task Forces in all states. Subsection (c) of the same section set the task forces' objective as ending the presence of criminal cartels, foreign gangs and transnational criminal organizations throughout the United States.

The Justice Department described the task force as a whole-of-government partnership aimed at eliminating criminal cartels, foreign gangs, transnational criminal organizations, and human smuggling and trafficking rings. It said particular weight is given to crimes involving children and to removing the most violent criminal aliens. At the guilty plea stage in 2025, the case was announced as an "Operation Take Back America" case, and in the sentencing announcements of August and October 2026 it was presented as a Homeland Security Task Force case.

U.S. Treasury warns Chinese money laundering networks sell cartel dollars to Chinese nationals

The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) issued an advisory (FIN-2025-A003) on August 28, 2025, alerting financial institutions to how Mexican cartels use Chinese money laundering networks (CMLNs). According to the advisory, cartels need to launder dollars earned in the United States, while Chinese nationals want dollars to evade China's currency controls. The advisory called the relationship between the two groups a "mutualistic relationship."

The advisory also noted the regulations on both sides. Chinese nationals can convert only about $50,000 worth of yuan into other currencies per year, and need prior approval to send yuan directly abroad. Since 2010, Mexico has restricted cash dollar deposits at banks, allowing individuals to deposit up to $4,000 a month and businesses in border and tourist areas up to $14,000 a month. Some businesses are granted exceptions.

The money moves through "mirror transactions." When a U.S.-based network receives dollars from a cartel, its Mexico-based counterpart sends the same amount in pesos, minus a fee, to the cartel's Mexican account. The U.S.-based network sells the dollars to Chinese buyers. The buyers send the equivalent amount in yuan plus a substantial fee to an operator's account in China. The U.S.-based network usually launders the dollars into the U.S. financial system and then makes them available for the buyers to use in the United States.

The advisory warned that these networks are increasingly recruiting Chinese students and graduates of U.S. universities as money mules and cash couriers. It said that when opening bank accounts they often list their occupation as student, housewife, retiree or laborer. Methods such as supplying couriers with forged Chinese passports or co-opting financial institution employees were also described. Couriers sometimes split deposits across multiple branches to avoid reporting thresholds and sometimes deposit large sums at once. The advisory listed 18 red flags and asked financial institutions to include the key term "CMLN-2025-A003" when filing suspicious activity reports (SARs). As an example, it cited "Operation Fortune Runner" by the U.S. Attorney's Office for the Central District of California, announced on June 18, 2024. In that case, more than $50 million in drug proceeds moved between Sinaloa Cartel associates and Chinese underground money exchangers. FinCEN also released Spanish-language versions of the advisory and analysis report on January 13, 2026.

FinCEN analysis finds $312 billion in suspicious transactions over five years

In a financial trend analysis released the same day, FinCEN said there were 137,153 Bank Secrecy Act (BSA) reports from January 2020 to December 2024 involving suspected Chinese money laundering network activity. The suspicious transactions in these reports totaled about $312 billion. Of these, 17,389 reports covering more than $53.7 billion were suspicious transactions related to real estate. There were also 1,675 reports with possible links to human trafficking or smuggling.

John K. Hurley, Treasury Under Secretary for Terrorism and Financial Intelligence, said at the time that money laundering networks linked to holders of People's Republic of China passports enable cartels to poison Americans with fentanyl, engage in human trafficking and sow chaos in communities across the country. Hurley said the United States would not stand by while malign actors launder illicit proceeds through its financial system. FinCEN Director Andrea Gacki said Chinese money laundering networks are global and pervasive and must be dismantled.

Two Chinese nationals charged in Eastern Virginia with laundering Sinaloa and CJNG funds remain at large

Other cases of the same type are also under way. The Justice Department announced on May 22 that a federal grand jury in the Eastern District of Virginia had indicted Chinese nationals Ruhuan Zhen and Hongce Wu on April 24, 2025, and that the indictment had been unsealed the previous day. The charge is conspiracy to commit money laundering involving transnational criminal organizations. Prosecutors allege the two laundered cocaine and fentanyl proceeds for the Sinaloa Cartel and the Jalisco New Generation Cartel (CJNG) from at least November 2016 to April 2025.

The methods described in the indictment are mirror transfers, overseas bank accounts, encrypted messaging apps, a system of verifying banknote serial numbers, and trade-based money laundering. The co-conspirators were found to have operated in the United States, Mexico, Central and South America, and China, among other places. The Justice Department said the two "remain at large." The statutory maximum penalty for the charge against them is 20 years in prison. An indictment is merely an allegation, and the two are presumed innocent until proven guilty.

Sources (KST)

• U.S. Department of Justice Office of Public Affairs · 2026-10-22 04:20 (local 10-21 15:20 ET) · Press release 26-1240 Prolific Chinese Money Launderer Sentenced for Laundering Drug Trafficking Proceeds Following Homeland Security Task Force Investigation · https://www.justice.gov/opa/pr/prolific-chinese-money-launderer-sentenced-laundering-drug-trafficking-proceeds-following
• U.S. Department of Justice Office of Public Affairs · 2026-08-18 (local) · Press release 26-941 Prolific Chinese Money Launderer Sentenced to 15 Years in Prison for Laundering Drug Trafficking Proceeds · https://www.justice.gov/opa/pr/prolific-chinese-money-launderer-sentenced-15-years-prison-laundering-drug-trafficking
• IRS Criminal Investigation (IRS-CI) · 2026-08-18 (local) · Prolific Chinese money launderer sentenced to 15 years in prison for laundering drug trafficking proceeds following Homeland Security Task Force investigation · https://www.irs.gov/compliance/criminal-investigation/prolific-chinese-money-launderer-sentenced-to-15-years-in-prison-for-laundering-drug-trafficking-proceeds-following-homeland-security-task-force-investigation
• U.S. Department of Justice Office of Public Affairs · 2025-07-07 (local) · Press release 25-698 Final Three Members Charged in Prolific Chinese Money Laundering Scheme Plead Guilty to Laundering Tens of Millions in Drug Proceeds · https://www.justice.gov/opa/pr/final-three-members-charged-prolific-chinese-money-laundering-scheme-plead-guilty-laundering
• U.S. Department of Justice Office of Public Affairs · 2025-05-01 (local) · Press release 25-451 Three Members of a Prolific Chinese Money Laundering Organization Plead Guilty to Laundering Tens of Millions of Dollars in Drug Proceeds · https://www.justice.gov/opa/pr/three-members-prolific-chinese-money-laundering-organization-plead-guilty-laundering-tens
• U.S. Department of Justice Office of Public Affairs · 2026-05-22 (local) · Press release 26-534 Members of Transnational Money Laundering Organization Charged with Laundering Cartel Funds · https://www.justice.gov/opa/pr/members-transnational-money-laundering-organization-charged-laundering-cartel-funds
• U.S. Treasury FinCEN · 2025-08-28 (local) · FinCEN Issues Advisory and Financial Trend Analysis on Chinese Money Laundering Networks · https://www.fincen.gov/news/news-releases/fincen-issues-advisory-and-financial-trend-analysis-chinese-money-laundering
• U.S. Treasury FinCEN · 2025-08-28 (local) · Advisory FIN-2025-A003 Use of Chinese Money Laundering Networks by Mexico-Based Transnational Criminal Organizations to Launder Illicit Proceeds · https://www.fincen.gov/system/files/2025-08/FinCEN-Advisory-CMLN-508.pdf
• U.S. Federal Register · posted 2025-01-29 · Executive Order 14159 Protecting the American People Against Invasion (90 FR 8443) · https://www.federalregister.gov/documents/2025/01/29/2025-02006/protecting-the-american-people-against-invasion
• X @DOJCrimDiv · 2026-05-22 (local) · Post on unsealing of Eastern Virginia indictment · https://twitter.com/DOJCrimDiv/status/2057826105336144034