A new report by the Financial Crimes Enforcement Network (FinCEN) has uncovered alarming figures showing that U.S. banks facilitated over $312 billion in money laundering transactions between 2020 and 2024. Contrary to the narrative often pushed by regulators that highlights cryptocurrencies as a primary tool for illicit finance, the data shows that the traditional financial system remains the central channel for large-scale laundering activities.
According to FinCEN’s findings, American banks processed more than $62 billion annually for Chinese money laundering networks with strong ties to Mexican drug cartels. In total, over 137,000 suspicious activity reports (SARs) were filed under the Bank Secrecy Act, revealing an extensive infrastructure for criminal financial operations. These groups use U.S. banking institutions to disguise illegal profits, bypass capital controls in China, and fuel the global drug trade.
FinCEN director Andrea Gacki emphasized the seriousness of the situation, stating that these networks not only launder cartel proceeds but also drive human trafficking, healthcare fraud, and real estate scams. Notably, the report highlights that real estate transactions accounted for $53.7 billion in suspicious activity, underscoring how traditional assets remain highly vulnerable to exploitation.
While crypto has often been portrayed as a major enabler of financial crime, data suggests otherwise. The United Nations estimates that over $2 trillion is laundered globally each year, while blockchain analytics firm Chainalysis reported only $189 billion in illegal crypto transactions over the past five years. In other words, crypto-based laundering represents less than 1% of global illicit finance, compared to the trillions flowing through banks annually.
Angela Ang, head of policy at TRM Labs, pointed out that the findings validate a growing consensus: underground banking networks act as a shadow financial system, often working hand-in-hand with organized crime. Unlike blockchain, where transactions leave a permanent record, traditional financial channels provide layers of opacity that criminals continue to exploit.
The report comes at a time when policymakers are ramping up scrutiny on digital assets while overlooking the entrenched vulnerabilities within TradFi (traditional finance). Industry experts warn that excessive focus on crypto could leave regulators blind to the much larger risks embedded in legacy banking systems.
Conclusion
The FinCEN revelations serve as a stark reminder that money laundering is not a crypto problem—it’s a banking problem. With U.S. banks at the center of laundering networks worth hundreds of billions, regulators must rethink their enforcement priorities. While blockchain technology offers traceability and transparency, the traditional financial system continues to serve as the preferred vehicle for large-scale illicit finance. If policymakers truly aim to combat global money laundering, they must shift their focus from demonizing crypto to addressing the systemic weaknesses of traditional banking.
