A recent investigative report by NBC News has shed light on the intricate and rapidly expanding involvement of Chinese money launderers in the operations of Mexican cartels. This development has significant implications for U.S. national security, as these Chinese brokers have not only become essential in laundering drug money but have also ventured into the illicit marijuana trade. This article delves into the detailed workings of these money laundering operations, the role of Chinese criminal groups, and the broader context of drug trafficking and money laundering.

The Rise of Chinese Money Launderers

Shocking Discoveries

For much of his career as a federal drug agent, Ray Donovan focused on capturing notorious Mexican cartel boss Joaquin “El Chapo” Guzman. However, in 2014, as fentanyl trafficking surged in the U.S., Donovan’s team made a startling discovery. Reviewing telephone records of suspected traffickers, they found an unprecedented pattern of calls to China. This marked the beginning of a new era where Chinese criminal groups began laundering drug money for Mexican cartels on an unprecedented scale.

Scale of Operations

By 2018, the DEA’s elite Special Operations Division launched Project Sleeping Giant to target Chinese-linked drug activity and money laundering. The initiative revealed that Chinese money brokers were involved in laundering drug proceeds in major U.S. cities such as New York, Los Angeles, Chicago, and Miami. These brokers arranged for cartels to receive the equivalent amount in pesos or cryptocurrency in Mexico, often through complex systems of informal trade and wealthy Chinese nationals looking to move money out of China.

Methodology of Money Laundering

Informal Trade and Mirror Transactions

The Chinese money brokers keep a ready supply of cash in Mexico through informal trade. Associates in China purchase goods like high-end electronics and ship them to Mexico, where they are sold at cheaper rates to generate cash for the cartels. Additionally, Chinese nationals buy U.S. dollars from these brokers to circumvent China’s $50,000 limit on money transfers, creating a lucrative secondary revenue stream.

Encrypted Communication

Using encrypted platforms like WeChat, the Chinese brokers conduct mirror transactions. Chinese customers transfer money to accounts controlled by the laundering organisation in exchange for U.S. dollars. This system is safer and cheaper than traditional laundering methods, enabling the Chinese brokers to dominate the market.

National Security Implications

Dual Revenue Streams

The Chinese money laundering system has exponentially increased the profits of the Sinaloa and CJNG cartels, which are major players in the fentanyl crisis. Experts and former DEA agents warn that the vast amounts of laundered money could be used for nefarious purposes such as corporate espionage or election meddling, given the tacit support these criminal syndicates receive from China’s intelligence services.

Lack of Government Action

Despite the significant threat posed by these networks, U.S. efforts to combat them have been limited. Former DEA agents highlight the challenges of penetrating these financial networks due to the need for extensive resources and political will. The pandemic further shifted law enforcement focus to seizing fentanyl and arresting traffickers, rather than dismantling the financial networks.

The Marijuana Connection

Expansion into Marijuana Trade

Investigators discovered that Chinese money laundering groups were also heavily involved in marijuana trafficking. These groups purchased homes in states like Colorado and California to grow marijuana, distributing it across the country. Since 2021, Chinese-run marijuana farms have been identified in 23 states, with Oklahoma and Maine emerging as hotspots due to relaxed laws and affordable land.

Broader Criminal Activities

The profits from the marijuana trade are used to fund other criminal activities, including human trafficking. The DEA reported that many Chinese nationals involved in marijuana farming are trafficking victims. This expansion into the marijuana market has further enriched and empowered Chinese criminal groups.

Legislative and Regulatory Challenges

Regulatory Oversight

Senator Susan Collins and other lawmakers have expressed concerns about the Chinese government’s involvement in these criminal activities. While the FBI has not found direct ties between the government and marijuana grows, the complexity of these operations warrants thorough investigation.

The Need for a Coordinated Response

Experts argue that dismantling these networks requires a coordinated approach involving multiple government agencies. This includes enhancing regulatory measures, improving monitoring of encrypted communication platforms like WeChat, and increasing the number of Mandarin speakers in federal law enforcement.

Source:
NBC News