Chinese police have dismantled a large illegal foreign exchange operation after a tip-off from US authorities, leading to prison sentences for two men accused of running an underground money transfer and laundering network linked to overseas criminal activity.
US tip triggers China probe
China’s Ministry of Public Security (MPS) said the case began in April 2024 after US agencies alerted Chinese authorities that a man surnamed Tong, a Chinese national, was suspected of laundering money for drug traffickers. Acting on the information, the MPS directed the Liaoning provincial police to verify the intelligence.
Following preliminary checks, police registered a case for suspected illegal foreign exchange operations and transferred it to the Shenyang Public Security Bureau, which had jurisdiction over Tong’s registered residence.
Arrests and nationwide investigation
Shenyang police formed a special task force and launched a wide-ranging investigation, overcoming fragmented leads, overseas evidence hurdles and differences between Chinese and US legal systems. On May 20, 2024, police arrested Tong and another suspect surnamed Chen in Wuhan, Hubei province, as they allegedly attempted to flee China.
Investigators dispatched 25 evidence-collection teams across 16 provinces and 43 cities to verify transactions. The case ultimately involved more than 2,000 individuals, hundreds of companies, 49,000 bank accounts and over 10.5 million transaction records.
How the illegal exchange worked
Police said Tong had been operating a car dealership in the US since 2017, initially offering informal currency exchange services before shifting fully to illegal forex trading. Between January 2020 and June 2021, Tong allegedly used a “mirror transfer” method: associates in China collected renminbi from clients via multiple domestic bank cards, while Tong paid equivalent sums in US dollars overseas, charging a 1–2% commission.
Audits showed that more than 16 million yuan (about $2.2 million) was illegally exchanged. Investigators also found that Tong used cryptocurrencies such as Bitcoin and Tether to facilitate transactions, after being introduced to a Mexican businessman who proposed converting US cash into digital assets.
Verdict and cooperation with US
The MPS said evidence did not prove Tong had full knowledge of the criminal origin of some funds, but confirmed his activities violated China’s foreign exchange regulations and disrupted financial order. The case was transferred to prosecutors in November 2024.
In September 2025, the People’s Court of Huanggu District sentenced Tong to one year and seven months in prison and Chen to one year and four months, along with fines.
Chinese police said details of the case were shared with US authorities through bilateral anti-money laundering cooperation channels, with both sides agreeing to strengthen enforcement against cross-border financial crimes.