Flying Money: From Tang-era remittances to modern underground finance

A tea merchant in Tang-era China stands in a busy market with a problem that is older than commerce itself. He needs to move a large amount of money from one place to another, but he does not want to carry heavy copper coins across long distances. The roads are rough, the journey is long, and bandits are common. [10]

So he does something that looks modern: he hands money to a trusted intermediary and receives a paper instrument that can be redeemed elsewhere. The value moves, but the coins do not. In historical accounts of fei ch’ien, literally “flying money,” merchants could deposit funds, receive a bill or voucher, and collect the equivalent in another location, using authenticity checks that relied on matching records. [1]

That basic insight is simple and powerful. If money can be represented as a claim, then information and trust can move value faster and safer than metal in a sack.

Centuries later, the same idea still works. It just wears different clothes.

The modern version: money that moves without “moving”

In modern financial crime and compliance, “flying money” is used as shorthand for a type of informal value transfer. It is not a brand name or a single platform. It is a way of moving value that relies on people, relationships, and settlement between intermediaries rather than a direct bank-to-bank transfer.

Regulators describe this more clinically. The U.S. Financial Crimes Enforcement Network (FinCEN) defines an informal value transfer system (IVTS) as a system or network that receives money for the purpose of making funds, or an equivalent value, payable to a third party in another geographic location. It may happen outside the conventional banking system, and it may be offered through ordinary businesses like grocery stores, restaurants, travel agencies, or import-export companies. [2]

That last part matters. Informal value transfer does not always look like “finance.” It can look like commerce, community service, or a side activity inside a business that already handles cash and customers.

Most of the time, the purpose can be entirely legitimate. Families support relatives. Small traders settle purchases. Migrants send wages home. [3][13] The mechanism is not automatically criminal.

The risk is that the same mechanism is also useful to anyone who wants speed, discretion, and fewer records.

A code, a message, a payout

To understand why flying money is hard to trace, it helps to picture a simple transaction, end to end.

A sender walks into a shop in Country A. It might be a travel agency. It might be a small wholesaler. It might be a person who is “known in the community.” The sender hands over cash and names a recipient in Country B. The operator writes something down and gives the sender a code.

That code is the hinge of the system.

A message goes to a counterpart in Country B with the amount and the code. The recipient in Country B presents the code and collects the money. FinCEN’s advisory describes exactly this kind of step-by-step flow, where the code functions as the identifier that makes the payout possible without a formal bank transfer trail linking the two sides. [2]

At this point, many people ask the obvious question: if no money crossed the border, where did the payout money come from?

The answer is: it was already there.

The operator in Country B pays out from local cash reserves or local liquidity. The operator in Country A keeps the cash. The two operators are now “out of balance,” and they settle later.

That “later” is where the hard part begins.

Settlement is where the story changes

If flying money were only a quick way to pay out cash across borders, it would still be relevant. But the deeper issue is how the network settles debts between intermediaries.

Sometimes settlement is simple. Flows go both ways, and the books balance. Migrants remit in one direction, trade payments come back the other direction, and liabilities cancel out.

But when flows do not balance naturally, the system needs a way to settle. That is when informal value transfer starts to blend into other money movement methods, including:

• cash placement through deposits and monetary instruments

• structured deposits designed to avoid triggering standard reporting

• trade-based settlement that hides value inside invoices

• high-value asset purchases that store value and convert it into something that looks legitimate later

These settlement methods can be used in legitimate commerce. They can also be used to hide criminal proceeds.

The mechanism does not tell you the intent. The pattern does.

Why “flying money” shows up in criminal finance

Criminal networks have the same core problem as the Tang tea merchant, only with higher stakes. They need to move value from where it is earned to where it is needed. They need reliability. They need speed. They want minimal visibility.

And they often face a practical obstacle: the cash pile is in the wrong place.

One modern example appears in discussions about U.S. drug proceeds. Cash is generated in U.S. dollars inside the United States, while value is needed elsewhere. Moving bulk cash across borders is risky and has become harder under stronger controls. That gap creates demand for alternative settlement pathways, including informal transfer and mirror exchanges. [4]

From the outside, it can look like money teleporting. From the inside, it is a set of coordinated swaps and settlements.

Mirror swaps: the swap that makes the trail feel broken

A “mirror swap” is a useful mental model because it explains how value can move without the same money moving.

One side holds cash in Country A. Another side needs value in Country B. Instead of sending the cash from A to B, the network pays out in B from existing liquidity. The cash in A is then sold, deposited, or used to settle some other obligation, while the operators reconcile the imbalance through trade or other methods.

Capital controls can amplify the demand for these swaps. China’s enforcement of limits on outbound transfers has been described in UNODC reporting, including increased emphasis on enforcement and restrictions on transferring money on behalf of other parties. [16] When legitimate channels are limited or monitored more strictly, alternative channels become more attractive. [15][16]

What looks like a single cross-border transfer problem becomes a matchmaking business: someone wants money out, someone else wants money in, and someone in the middle earns a fee to make the books balance.

Trade-based money laundering: value hidden in invoices

If flying money has an engine, trade can be that engine.

Trade-based money laundering (TBML) works by hiding value transfer inside ordinary-looking import and export activity. The shipment and paperwork become cover for what is actually happening: the transfer of value between parties who want settlement without a clear money trail.

Over-invoicing and under-invoicing are classic TBML techniques. If an exporter invoices goods above fair market price, extra value can be moved under the cover of a legitimate payment. If goods are under-invoiced, value can be shifted in the opposite direction. TBML sources emphasize that only analysis and investigation reveal the real reasons behind large discrepancies between declared value and market reality. [11]

This connects directly to flying money settlement for a simple reason. Brokers need ways to reconcile imbalances. Trading companies, import-export corridors, and invoice manipulation can do that at scale, while looking like normal business activity. [17]

This is also why some of the most useful red flags are not “one weird invoice,” but repetitive behavior across time:

• pricing that does not match the goods

• goods that do not match the company’s profile

• frequent use of opaque intermediaries

• payment patterns that appear disconnected from trade logic until the full chain is mapped

TBML is not only about fake trade. It is often about real goods with manipulated paperwork.

Structuring, CTRs, and the “small deposits” tactic

When settlement happens with cash, another old tactic appears: breaking big money into small pieces.

In the United States, banks must file Currency Transaction Reports (CTRs) for cash transactions of $10,000 or more by or on behalf of the same person on the same business day. [18] Separate from that, institutions file Suspicious Activity Reports (SARs) when transactions are inconsistent with expected activity or otherwise suspicious, even if they are below threshold. [19]

“Structuring” is the practice of depositing or withdrawing in smaller amounts to avoid triggering a CTR. It has shown up repeatedly in enforcement actions and is explicitly described in U.S. Department of Justice materials as a tactic used to avoid reporting large cash deposits. [20]

Structuring is useful to networks that need to place cash without drawing attention. It also creates a compliance reality: threshold systems catch some behavior, but pattern detection catches more. High-frequency cash activity just below reporting triggers, repeated across accounts and branches, often says more than a single deposit ever could.

Real estate: when value wants a home

After value is moved and partially legitimized, it often needs somewhere to sit.

Real estate is attractive because it can absorb large amounts, store value, and later produce “clean-looking” proceeds through rental income or resale. In the U.S., FinCEN Geographic Targeting Orders (GTOs) required certain title insurance companies to identify natural persons behind companies used to pay “all cash” for high-end residential real estate in places like New York City and Miami. [17]

That is a regulatory response to a broader pattern: high-value assets can become the end point of a laundering cycle. Sometimes it is an all-cash purchase. Sometimes it is layered payments that look like savings, business income, or loans. Sometimes it is the use of entities that make ownership hard to see.

The important thing is not that “real estate is suspicious.” It is that opaque ownership plus unclear source of funds plus payment structures that do not fit the buyer’s profile create risk.

The environmental crime connection: when fish bladders become financial crime

It can be tempting to treat environmental crime as separate from “traditional” organized crime. The financial layer makes that separation hard to defend.

Environmental crime involves supply chains, brokers, smugglers, and high-value products that must be paid for and settled across borders. That makes it a natural candidate for the same value transfer and laundering mechanisms used in other transnational crime.

Totoaba trafficking is a stark example. The swim bladder, or maw, can fetch very high prices on illicit markets. Reporting has described prices ranging from tens of thousands up to around $80,000 per kilogram in black market contexts, with demand tied to status signaling, gifting, and investment-like behavior. [21][22] Other sources question the claimed health benefits that help drive demand narratives. [23]

When a product is high value and relatively small, it travels easily. When the supply chain spans Mexico, the U.S., and China, settlement becomes an international problem. Reporting and investigative work describe how smuggling and trafficking networks move products along routes that avoid direct scrutiny, including by air, and how trusted networks help move and settle money in parallel. [5][6][7]

The point is not that every wildlife trade payment uses flying money. The point is that the convergence is real: the same kinds of trusted intermediaries, trade cover, and opaque settlement mechanisms can appear in environmental crime as well as in narcotics, fraud, and human smuggling. [5][6]

Trust is also why investigations are hard

A bank investigator is trained to follow money through accounts. Flying money is designed to make that approach incomplete.

The transfer that matters may not be visible at all. The visible activity might be the settlement activity, which can be disguised as trade payments, retail cash activity, or business revenue.

There is also a social barrier. Networks built on trust, kinship, and community ties are difficult to penetrate, and sources discussing fei ch’ien emphasize that trust is a core element and a major reason these networks are difficult for law enforcement to map from the outside. [3]

That does not mean they are invisible. It means they are rarely understood through a single data source.

What this means for AML teams

Flying money is best treated as a pattern category. It is a way of thinking about value movement where:

• the visible transaction record is incomplete

• the settlement happens later or elsewhere

• trade, cash, and community networks may serve as the rails

From a controls perspective, the practical goal is to spot when a customer or business appears to be operating as an informal payment intermediary, or when transactional and trade behavior suggests hidden settlement.

Three control priorities tend to matter most:

1) Customer understanding that connects to behavior.
FinCEN notes that IVTS services can operate through ordinary businesses. [2] That makes basic “business type” labels less reliable. The real question is whether the account activity fits the stated purpose, customer profile, and expected geographic footprint.

2) Monitoring that treats thresholds as signals, not answers.
CTR requirements are clear, but SAR decisions depend on the pattern. [18][19] Structuring behavior often lives below the clean lines of threshold reporting. [20] Monitoring should focus on velocity, repetition, funnel-like behavior, and unexplained pass-through activity.

3) Trade scrutiny that looks for value movement logic.
If settlement can be embedded in invoices, then the trade profile matters. [11][17] Pricing anomalies, inconsistent goods descriptions, counterparty clustering, and payment timing that does not fit trade terms are all worth attention.

A small set of red-flag patterns that often align with misuse includes:

• repeated cash activity that appears intentionally structured and is followed by rapid transfers or monetary instrument purchases [18][19][20]

• trade clients whose invoice values and payment flows do not make economic sense when compared to the goods and the business profile [11][17]

• accounts that appear to provide payment services through an unrelated business front, consistent with IVTS descriptions [2]

Equally important is restraint. Informal remittance is not inherently suspicious. Cross-border support for family is normal. Trade businesses can be messy without being criminal. The work is to connect the story to the data, and to escalate only when the pattern indicates hidden settlement, disguised value transfer, or clear inconsistency.

The same idea, different stakes

The Tang merchant wanted to avoid bandits. The modern broker wants speed and reliability. A criminal network wants value to arrive without the trail. A wildlife trafficking chain wants payment that does not expose the route.

The mechanism is not new. What changes is scale, speed, and the number of ways settlement can be hidden.

Flying money is ultimately an insight about payments: value can move on trust and information, and the settlement can happen later, somewhere else. That is why it is powerful. That is also why it matters for AML.

Sources

1. ChinaKnowledge, “Feiqian” (flying money) overview: http://www.chinaknowledge.de/History/Terms/feiqian.html

2. FinCEN Advisory on informal value transfer systems (IVTS), definitions and step example: https://www.fincen.gov/system/files/advisory/advis33.pdf

3. Cassara statement to the Cullen Commission (underground remittance systems, diaspora spread, trust): https://ag-pssg-sharedservices-ex.objectstore.gov.bc.ca/ag-pssg-cc-exh-prod-bkt-ex/341%20-%20002%20J.%20Cassara%20-%20Final%20Statement%20to%20the%20Cullen%20Commission.pdf

4. U.S. Congress hearing transcript (flying money, mirror exchange, cartel cash problem framing): https://www.congress.gov/118/meeting/house/115810/documents/HHRG-118-GO27-Transcript-20230426.pdf

5. Mongabay commentary (environmental crimes hidden by flying money laundering schemes): https://news.mongabay.com/2025/06/environmental-crimes-are-often-hidden-by-flying-money-laundering-schemes-commentary/

6. Earth League International (ELI), Environmental Crime Convergence Report (June 2023): https://earthleagueinternational.org/wp-content/uploads/2023/06/ELI-Environmental-Crime-Convergence-Report-June-2023.pdf

7. ELI “Vaquita Operation Fake Gold” (totoaba supply chain context): https://earthleagueinternational.org/vaquita-operation-fake-gold/

8. House committee document (IMF 2 to 5 percent GDP framing; flying money example with code): https://docs.house.gov/meetings/BA/BA10/20230323/115542/HHRG-118-BA10-Wstate-CassaraJ-20230323.pdf

9. “Trade-Based Money Laundering: The Next Frontier in International Money Laundering Enforcement,” quote referenced in notes (page 193).

10. National Geographic, Silk Road overview (robbers and route conditions): https://education.nationalgeographic.org/resource/silk-road/

11. “Trade-Based Money Laundering,” pages 16 to 18 (invoice manipulation, under and over invoicing) as cited in notes.

12. “Trade-Based Money Laundering,” guanxi reference (page 75) as cited in notes.

13. UNESCO Courier, “Overseas Chinese, a long history”: https://courier.unesco.org/en/articles/overseas-chinese-long-history

14. International Organization for Migration (IOM), China page (migrant context referenced in notes): https://www.iom.int/countries/china

15. “Mobile Payments and Mirror Swaps” report (capital flight demand and mirror swaps): https://icaie.com/wp-content/uploads/2023/07/Mobile-Payments-and-Mirror-Swaps-Print-Version.pdf

16. UNODC, Casino Underground Banking Report 2024 (capital controls and enforcement): https://www.unodc.org/roseap/uploads/documents/Publications/2024/Casino_Underground_Banking_Report_2024.pdf

17. Banking Exchange, “Flying money may land in U.S.” (GTOs, trade-linked settlement references): https://www.bankingexchange.com/news-feed/item/6079-flying-money-may-land-in-u-s

18. CTR description quoted in notes (Cassara and Poncy, “Trade-Based Money Laundering,” page 197).

19. SAR description quoted in notes (Cassara and Poncy, “Trade-Based Money Laundering,” page 199).

20. U.S. Department of Justice press release (structuring and cashier’s checks in laundering case): https://www.justice.gov/archives/opa/pr/federal-indictment-alleges-alliance-between-sinaloa-cartel-and-money-launderers-linked

21. InsightCrime brief on totoaba swim bladder prices and demand: https://insightcrime.org/news/brief/fish-bladder-big-business-china-mexico-smugglers/

22. The New Yorker feature on ELI and the trade (pricing and gifting framing): https://www.newyorker.com/magazine/2023/05/22/earth-league-international-hunts-the-hunters

23. ScienceDirect article (totoaba swim bladder health benefit skepticism): https://www.sciencedirect.com/science/article/pii/S2352513421003173