Welcome to our AML News and Updates Newsletter - September 2025 👏
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Now back to our newsletter:
Let's see an outline of the topics to be covered in this edition:
Discussion of the month: What Are Chinese Money Laundering Networks and How They Operate
Regulatory Developments:
EBA Consults on Revised Internal Governance Guidelines
FinCEN Alerts on CVC Kiosk Scam Risks
The Bank of International Settlements issued a bulletin on “An approach to anti-money laundering compliance for crypto assets”
FATF published several resources
Other News:
AUSTRAC Initiates Legal Action Against “Mounties” for AML/CTF Failures
The New York State Department of Financial Services (NYDFS) announced a $48.5 million settlement with “Paxos Trust Company”
DeNederlandscheBank (DNB) fined “bunq B.V” for AML failures
Found this publication useful?
Let’s start…
What Are Chinese Money Laundering Networks and How They Operate
In August 2025, FinCEN - the US bureau of the U.S department of the Treasury - released an advisory warning to financial institutions about the growing threat of Chinese Money Laundering Networks (CMLNs). These networks are working directly with major Mexican drug cartels to clean large amounts of drug money inside the United States - right now, in real time.
This isn’t just a U.S. issue. Similar Chinese networks are operating in many other countries, including Canada, the UK, Australia, and across Southeast Asia. While the systems may look slightly different from place to place, the logic is the same: move money quietly, avoid government controls, and clean the proceeds of crime.
Why Chinese Money Laundering Networks Exist
To understand why CMLNs are so active, you need to look at two key issues.
1. In China, strict currency controls limit what people can do. Chinese citizens are only allowed to exchange up to $50,000 into foreign currency each year. For those who want to invest abroad, pay for overseas education, or buy real estate in the U.S., that’s not enough. So many turn to underground systems to get around these rules.
2. Meanwhile, Mexican drug cartels are holding huge amounts of U.S. dollars from selling drugs inside the U.S. But they can’t easily get that money back to Mexico or put it into the formal banking system - Mexican banks also restrict U.S. dollar deposits because of anti-money laundering laws.
So, CMLNs step in as the middlemen. They help Chinese citizens get access to dollars and help the cartels turn their drug money into clean, usable funds.
How the Scheme Works
Here's a simplified version of how a typical deal might work…
EBA Consults on Revised Internal Governance Guidelines
The European Banking Authority has released a consultation paper to strengthen governance and AML/CTF controls within EU banks and investment firms. Key proposals include mandating a distinct AML compliance function and enhancing board oversight. This move aims to harmonize standards and prevent governance failures witnessed in recent financial scandals.
FinCEN Alerts on CVC Kiosk Scam Risks
FinCEN has issued a notice addressing the rising AML/CFT risks linked to Convertible Virtual Currency (CVC) kiosks, highlighting schemes where scammers exploit these machines for fraudulent transfers. Financial institutions are urged to enhance monitoring and reporting frameworks to detect suspicious activities involving virtual currencies.
The Bank of International Settlements issued a bulletin on “An approach to anti-money laundering compliance for crypto assets”
The bulletin highlights that traditional methods relying on trusted intermediaries are less effective in decentralised, permissionless blockchains. Instead, the bulletin highlights the potential of blockchain’s public transaction history to enhance AML and regulatory compliance - such as in FX - by tracing the provenance of individual cryptoasset units, including stablecoins.
FATF published several resources
On 28th August, the FATF released a series of new resources aimed at strengthening how countries and stakeholders assess money laundering risks. The publications include:
Money Laundering National Risk Assessment Toolkit – Annexes A–C
FATF launches National Risk Assessment toolkit to help countries identify greatest ML risks
Annex C: Package of NRA Tools (World Bank, IMF, Council of Europe)
Quick guide on assessing the ML risks of virtual assets (VA) and VASPs
Quick guide on assessing the ML risks of legal persons and arrangements
Quick guide on assessing the ML risks of the informal economy
AUSTRAC Initiates Legal Action Against Mounties for AML/CTF Failures
AUSTRAC has commenced civil proceedings against Mounties, a prominent Australian club, for significant breaches of the AML/CTF Act. The club’s inadequate risk assessments and transaction monitoring systems exposed it to money laundering risks. This action underscores AUSTRAC’s zero-tolerance policy towards systemic compliance failures, especially in high-risk sectors like gambling.
The New York State Department of Financial Services (NYDFS) announced a $48.5 million settlement with Paxos Trust Company
Praxos Trust Company was found to have systemic AML failures, including inadequate due diligence on its former partner Binance. The investigation found Paxos lacked effective controls to monitor illicit activity, allowing $1.6 billion in suspicious transactions between 2017 and 2022, including dealings with sanctioned entities. Deficiencies in its KYC/CDD processes, transaction monitoring, and investigative protocols further heightened money laundering risks. The settlement requires Paxos to pay a $26.5 million penalty and invest $22 million to remediate its compliance program under NYDFS oversight.
That’s all for this month!
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Best regards,
Anna Stylianou