China’s Money Laundering Networks Turn to Crypto to Evade Capital Controls
China’s long-running campaign to restrict capital flight is being undermined by its own criminal networks that are increasingly turning to Bitcoin and other digital assets to move money across borders, according to a new study. Chinese money laundering networks are leveraging cryptocurrencies like Bitcoin and USDT to circumvent strict capital controls, allowing individuals to quietly move wealth abroad.
Key Findings: Chinese Money Laundering Networks and Crypto
According to Kathryn Westmore, a senior research fellow at the Royal United Services Institute’s Center for Finance and Security, Chinese money laundering organizations (CMLOs) now routinely use virtual assets as conduits for illicit cash. These digital assets, including Bitcoin and stablecoins like Tether USDT, serve as a tool for individuals to move wealth abroad, bypassing strict capital controls. The shift comes amid a broader rise in cryptocurrency-related crime, with investor losses totaling over $2.3 billion in 2025, and pig slaughter scams netting victims $4 billion in 2024.
CMLOs and Western Criminal Operations
Westmore’s research reveals that Chinese money laundering groups have also become key financial intermediaries for Western criminal operations, including the fentanyl supply chain. The report details how drug proceeds collected in the US are converted into Bitcoin or USDT and then routed to offshore accounts of wealthy Chinese clients seeking discreet channels to transfer funds abroad. Many Chinese sellers of fentanyl precursor chemicals now accept Bitcoin and USDT directly, effectively turning digital assets into a settlement infrastructure for synthetic opioid trading.
Global Cooperation Needed to Combat Crypto-Based Money Laundering
Because crypto rails are deeply woven into these transnational money laundering schemes, Westmore warns that the problem is too big for any single government to handle. Blockchain analytics firm Elliptic has confirmed these claims, documenting on-chain payments to China-based chemical suppliers connected to global fentanyl distribution networks. The use of crypto goes beyond money laundering services, highlighting the need for international cooperation to combat this growing issue.
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