How to Launder Scam Money

By Aleks Ring

When we talk about romance scams, we tend to give our attention to the heartbreak or the dollar amount stolen (rightfully so). But we rarely talk about this stolen money in terms of illicit funds. Romance scams, or as I like to call them, the most violent scams of all, are a multi-billion-dollar industry and on a rise. Of course, romance scams have been around for decades, but this new type is exactly why I am writing this article.

Why did I call it new? Think 2020. Stick with me. The pandemic pushed most of us online to scroll and watch… cats do funny things, everyone starting their sourdough and all the cleaning hack videos. And while we sat inside and watched Tiger King and Tinder Swindler on Netflix, something else was developing – a new world of fraud. Romance scams involving cryptocurrency (and in some cases traditional currency) were exploding online.

To pull off the Tinder Swindler you need logistics, fake jets, and a wardrobe budget. To scam online? Just some decent Wi-Fi and phone charger.
Crypto is used as a money laundering tool because it is easy to move, it requires no involvement from the banks, governments, or third-party approvers. It is global, it is fast, and best of all, it is immutable, meaning you cannot call and reverse a crypto transfer like you can with your bank. Great feature, especially if you are laundering money.

Scammers are pulling in so much cash they can’t possibly launder it all and call it “clean.” So how do you launder billions of crypto, you ask? Turns out, simple and all you need is a few things…

To start off, you need to establish Chinese Money Laundering Networks (CMLNs) [1]:
It sounds like an intro to a Hollywood action movie, but it’s real: CMLNs are large, elaborate networks within the U.S. (and globally) whose sole purpose is to launder illicit money. They do this by collecting illicit cash from trafficking, fraud, or corrupt business activities, partner up with other nefarious actors, and launder on large scale.

Once they have their players and bankers lined up, they:

• –  Convert money into U.S. dollars or other assets (like Mexican or Colombian peso) using a chain of intermediaries.
• –  Move value through banks, remittance shops, trade invoices, crypto on-ramps, or cash couriers.
• –  Layer and integrate the funds via shell companies, real estate, and legitimate business fronts.
  So, who are the players?

1. Mexican drug cartels

You read that right. Chinese organized crime and Mexican cartels are playing nice to launder cash. The cartels have the bribery and banking hookups; the Chinese have the funds and the routes. Win-win for everyone involved.

2. Real estate

Illicit funds are layered through shell companies or third parties who buy property below or above market. Properties are held, flipped, or leveraged to generate “clean” proceeds or mortgage loans that look legitimate.

Why real estate? Because big-ticket purchases swallow massive sums without raising too many eyebrows. Corporate ownership and nominee buyers conveniently hide who’s really pulling the strings.

And it’s not just theory, investigations have linked hundreds of millions in suspicious U.S. transactions to Chinese buyers. One standout case in New Hampshire: Nongfu Spring, China’s largest beverage company, paid $67 million for land worth just $15 million. Oh, and it just happened to sit next to a water supply, FAA control center, airport, and military facility [2]. No red flags here.

3. Illegal marijuana farms

Large scale illegal grows have been identified where organized crime cultivates cannabis as a vehicle to launder proceeds. These operations are not backyard plots.

They can be multistate, highly capitalized farms that require labor, logistics, and distribution networks. So, far 22 states have been identified that have Chinese-owned/operated marijuana farms. ProPublica’s reporting is a notable deep dive into how organized crime is operating in the illegal cannabis market across the U.S., from Oklahoma to Maine. [3]

4. Old school banking and exchanges: classics never die

Shell companies, layered transactions, trade-based schemes, and shady hawala networks are still staples of laundering. Money slips through correspondent banks, opaque OTC brokers, and loosely regulated exchanges.

Take the case of Zhi Dong Zhang [4]. He set up stash houses across the U.S., where associates collected cartel cash, chopped it into bite-sized deposits, and funneled it into banks. Investigators eventually tied his network to 170 bank accounts and more than 150 shell companies – a whole laundromat chain in human form. None of it would be possible without the reliable banking system.

5. Money mules: victims and couriers

Money mules are the middlemen of laundering: moving funds for others, sometimes for a fee, often without realizing the money is dirty. They add extra layers that make tracing harder. Recruitment is simple: job ads, social media, “easy money” offers, or romance scams.

Romance scam victims often become money mules, without realizing it. But in some cases, even when they know, they keep going. Sending that money is the last thread tying them to the fake lover who wrecked them. It’s not just about the cash, it’s about clinging to the final piece of a relationship they once believed was real, even if they know deep down it was all a scam.

The real key here is trust. People say, “I can’t believe someone sent money to a stranger,” but if you’ve spent months sharing dreams, secrets, and daily life with someone, are they really a stranger?

But how do people end up in these situations? Well, the answer is far simpler than you want it to be. It is a mix of human factor and masterclass manipulation.

The military is one of the most impersonated professions in romance scams. I wanted to know why, so I tested a theory. I post often about fraud and crypto, but nothing gets attention like my military posts. Engagement usually skyrockets. And there it was, the thing I didn’t consider before: people just plain and simple love the military – it is a very patriotic thing, regardless of where you live. The military also gives you instant credibility, as service is associated with honor and integrity. People don’t question the uniform.

And that’s exactly why scammers impersonate soldiers: it works. We love to see service members, we assume integrity, and we rarely stop to doubt their story.

A long way of writing to say: Be kind, be skeptical – always. Question everything and assume everything and everyone is fake online.

[1] FinCEN, 2025. FinCEN Issues Advisory and Financial Trend Analysis on Chinese Money Laundering Networks.

[2] Newsweek, 2025. China’s Richest Man Buying Water Supply of New Hampshire Town Sparks Alarm.

[3] ProPublica, 2024. Gangsters, Money and Murder: How Chinese Organized Crime is Dominating America’s Illegal Marijuana Market.

[4] Kharon, 2025. How Chinese Networks are Using U.S. Banks to Launder Cartels’ Cash.