Combating Chinese Money Laundering for Mexican Drug Cartels
Bottom line up front: China is laundering money for Mexican DTO’s and the feds are hesitant to address it.
Overview
In a recent House Oversight Subcommittee on Health and Financial Services hearing, witness testimonies warned that the Biden administration is hesitant to confront Chinese banks for their role in cartel money laundering, fearing that it could negatively impact the global economy. This article delves into the increasing role of Chinese Money Laundering Organizations (MLOs) in washing illicit cartel funds and their connection to fentanyl production and smuggling into the United States.
The Role of Chinese Money Laundering Organizations
Cartel Money Laundering and Fentanyl Production
Chinese MLOs have become central players in washing illicit cartel funds and providing precursor chemicals for fentanyl production, which is subsequently sent over the U.S. southern border. According to a Drug Enforcement Administration (DEA) intelligence report from 2019, China is the primary source of fentanyl and related substances smuggled into the United States. Fentanyl in powder form is directly smuggled into the U.S., processed, and mixed with or sold as heroin in the U.S. drug market.
The Chinese Money Laundering Model
The Chinese money laundering model was pioneered by Chinese-American gangster Xizhi Li, who replaced Colombian and Lebanese launderers by more quickly and cheaply processing illicit proceeds through Chinese banks. Investigations have found that Chinese government officials and Communist Party elites were involved in the money laundering operation.
China's Involvement in Drug Trafficking
Retired Admiral Craig Faller, former SOUTHCOM Director of Operations, told the Senate Armed Services Committee in 2021 that China was the “number one underwriter” of drug trafficking in the Western hemisphere, and Chinese officials are tacitly supporting laundering operations.
Former FBI official and Director of the Office of the National Counterintelligence Executive Frank Montoya Jr. said in 2022 that there was an ideological and strategic motivation behind the Chinese drug money laundering operation.
According to Christopher Urben, Former Assistant Special Agent in Charge of the DEA Special Operations Division, the growth of the Chinese MLO operations enabled a significant increase in fentanyl production and trafficking into the U.S. and threatened the integrity of the U.S. financial system.
The Biden Administration's Dilemma
Anthony Ruggiero, Senior Fellow at the Foundation for Defense of Democracies, said the Biden administration has hesitated to address the role of the Chinese financial system in laundering cartel money over fears that it could negatively impact the global economy.
Frequently Asked Questions (FAQ)
Q: What role do Chinese MLOs play in cartel money laundering and fentanyl production?
A: Chinese MLOs have taken a central role in washing illicit cartel funds and providing precursor chemicals for fentanyl production that is then sent over the U.S. southern border.
Q: How does the Chinese money laundering model work?
A: The Chinese money laundering model, pioneered by Chinese-American gangster Xizhi Li, quickly and cheaply processes illicit proceeds through Chinese banks, replacing Colombian and Lebanese launderers.
Q: What is China's involvement in drug trafficking?
A: China is the primary source of fentanyl and related substances smuggled into the United States, and Chinese officials are known to tacitly support money laundering operations.
Q: Why is the Biden administration hesitant to confront Chinese banks?
A: The Biden administration is hesitant to address the role of the Chinese financial system in laundering cartel money due to fears that it could negatively impact the global economy.
Sources
House Oversight Subcommittee on Health and Financial Services hearing on April 26, 2023
DEA intelligence report from 2019
Senate Armed Services Committee hearing in 2021