By Kathryn Westmore

Within a relatively short period of time, Chinese money laundering organisations (CMLOs) have become one of the pre-eminent global money laundering threats. Using centuries-old techniques, modern-day CMLOs have evolved into multi-billion-dollar operations, providing quick, cheap and efficient money laundering services to transnational organised crime groups (OCGs). In some countries, such as the US, CMLOs have come to dominate the market, and their activities are growing in the UK and Europe. This paper seeks to explore the reasons why CMLOs have become so successful and how their activities have developed. It identifies that the imposition of strict capital controls by China has created a demand from wealthy Chinese individuals for ways in which they can move money out of the country to access Western currencies. CMLOs are able, for a fee, to provide this from the funds that they launder on behalf of transnational crime groups. CMLOs also take advantage of large Chinese diaspora populations both as potential clients and as part of their operations; for example, through the recruitment of “money mules” to deposit criminal proceeds into bank accounts controlled by the CMLOs. These factors, combined with OCGs’ increasing demand for “professional” money laundering services and the involvement of Chinese groups in the fentanyl drug trade, have created the perfect conditions for CMLOs to flourish. This paper goes on to apply a “state threats” lens to the activities of CMLOs, building on the work of researcher and risk consultant Matthew Redhead,1 to inform readers how countries in the West could respond to the threat. Ultimately, the research concludes that there is no evidence to suggest that the activity of CMLOs is being directed by the Chinese state. While there is evidence that Chinese money laundering schemes can, and do, involve Chinese government officials and members of the Chinese Communist Party, that is very clearly not the same as saying that the schemes are state directed. This conclusion, therefore, prompts a follow-up question, which the paper explores, as to the prospect of collaboration between the West and China in tackling CMLO activity. 

SOC ACE Research Paper 36. University of Birmingham. 2025. 34p.

By U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

Summary:

This Commission Spotlight examines how China-linked scam centers are fueling corruption and violence in Southeast Asia, paving the way for greater Chinese influence in the region, and directly harming Americans in the process. Its findings are based on the Commission’s March 2025 hearing on “Crossroads of Competition: China in Southeast Asia and the Pacific Islands”; fact-finding trips to the Philippines, Indonesia, Vietnam, and Cambodia; and open source research.

Key Findings:

Chinese criminal networks operate industrial-scale scam centers across Southeast Asia that steal tens of billions of dollars annually from people around the world—a massive criminal enterprise that rivals the global drug trade in scale and sophistication.

The Chinese criminals behind scam centers have built ties—some overt, some deniable—to the Chinese government by embracing patriotic rhetoric, supporting China’s Belt and Road Initiative (BRI), and promoting pro-Beijing propaganda overseas. As a result, Chinese crime syndicates have expanded across Southeast Asia with, at a minimum, implicit backing from elements of the Chinese government.

The spread of China-linked scam compounds in Southeast Asia is fueling corruption and violence, promoting human trafficking, undermining the ability of governments in the region to control what happens in their territory, and promoting human trafficking.

China is exploiting the problem of scam compounds to increase its leverage over Southeast Asian governments, conduct intelligence and influence operations, and expand its security footprint in the region.

Beijing has selectively cracked down on scam centers that target Chinese victims, leading Chinese criminal organizations to conclude that they can make greater profits with lower risk by targeting citizens of wealthy countries such as the United States.

Americans are now among the top global targets of China-linked scam centers, with an estimated $5 billion lost to online scams in 2024 alone—a 42 percent increase over the previous year.

Washington, DC:

U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

2025. 12p.