May 29, 2025
By Our Correspondent
TRM Labs, a blockchain intelligence company, has revealed the complex network of Chinese underground banking systems that have become the financial hub of international criminal activity in a paper titled All Roads Lead to China.
These networks, which make use of both conventional and contemporary financial systems, are supporting billions of dollars in illicit activities, ranging from the trafficking of fentanyl by Mexican cartels and Triad-run casinos to the laundering of bitcoin for North Korean hackers.
According to the research, these operations are the most sophisticated and extensive underground financial pipeline in the world.
Fei qian, or “flying money,” is an informal value transfer system that predates contemporary banking and is at the core of these networks.
Fei qian, which was originally used to transfer money covertly, has changed with the digital era by integrating cryptocurrencies to allow for quick, international transactions.
TRM Labs demonstrates how these networks frequently evade conventional financial scrutiny by taking advantage of the anonymity provided by cryptocurrency to launder enormous quantities of money.
The study describes their involvement in the Bybit breach, one of the biggest cryptocurrency heists to date, in which over-the-counter (OTC) brokers in China and Hong Kong helped launder digital assets that were stolen and mostly connected to North Korean cybercriminal organizations.
The networks’ frighteningly effective handling of high-stakes financial crime is demonstrated by this incident alone.
A new era of international illegal finance is being ushered in by the convergence of cybercrime, drug trafficking, and sanctions evasion, with Chinese underground banks acting as a crucial hub.
According to the research, these networks allow state and non-state actors—such as Russia and North Korea—to have a mutually beneficial connection while avoiding international sanctions.
These networks build an almost impenetrable financial environment by combining trade-based money laundering, shell corporations, and crypto mixers—tools that obfuscate transaction trails.
For example, Triad organizations use these channels to transfer revenues from illegal gaming enterprises, while Mexican cartels use them to launder the proceeds of fentanyl trafficking.
In addition to increasing the scope of financial crime, this interconnected web puts conventional law enforcement strategies to the test.
Chinese clandestine banking is becoming a major concern to law enforcement organizations around the world.
According to sources cited in the paper, these networks are the “most formidable underground financial pipeline” because of their global reach and agility.
These decentralized systems function through reliable middlemen, unlike centralized financial institutions, which makes them challenging to track down and dismantle.
TRM Labs highlights that breaking these networks calls for a multipronged approach that includes targeted sanctions on important facilitators, improved blockchain analytics, and international collaboration.
Stronger regulatory frameworks are also recommended in the research to combat the abuse of OTC brokers and cryptocurrency mixers, which are crucial nodes in the money laundering process.
As international regulators and law enforcement struggle with the growth of financial crime, TRM Labs’ findings are timely.
The paper presents a strategy for addressing this escalating threat by charting the complex relationships among different networks, crypto laundering, and global crime syndicates.
The obstacle is still formidable, though, as halting these networks will necessitate cooperation and creativity to surpass their flexibility.
According to TRM Labs, comprehending and upending this ecosystem is crucial for global security as well as economic reasons.
