Law enforcement officials say that America’s drug war is now in cyberspace, with transnational criminal organizations (TCOs) being the main players. These TCOs are supported by Chinese money laundering outfits.
“Mexican cartels’ ability to traffic deadly fentanyl into the United States is greatly enhanced by Chinese money laundering,” said Steven Cagen, assistant director of the Countering Transnational Organized Crime Division, Homeland Security Investigations.
“These organizations have a vast global infrastructure to clean illicit proceeds for various criminal organizations, mostly including Mexican cartels.”
Mr. Cagen was one of several witnesses to testify before the House Homeland Security Subcommittee on Border Security and Enforcement on July 12.
Kemp Chester, senior advisor to the Director of National Drug Control Policy, highlighted that China is a major producer of precursor chemicals for fentanyl. However, the Chinese government is refusing to take action to stop the production of these chemicals.
Instead, it appears that China is either standing by or enabling TCOs in the manufacture and distribution of this deadly drug.
According to Mr. Chester, Chinese money laundering operations are making drug dealers richer at an unprecedented pace. Money laundering that used to take weeks or months now takes just a few hours.
The money launderers still use traditional methods such as mingling cash with legitimate business proceeds or bartering for illegal goods. However, they have also embraced modern techniques like cryptocurrency and electronic banking on the dark web to disguise and move their profits.
Channing Mavrellis, director of the illicit trade program at the think tank Global Financial Integrity, revealed that Chinese money laundering operations exploit China-specific exchanges and manufacturing centers.
She explained that drug proceeds are given to Chinese brokers in the United States, who then advertise the dollars for sale to Chinese nationals in China. These Chinese nationals purchase the equivalent sum in local currency and use it to buy goods. The goods are then sent to Latin America, where they are sold for local currency that is ultimately passed to the cartel.
The Lucrative System
Ms. Mavrellis emphasized that this system is highly lucrative.
Mr. Chester noted that in the past, the Chinese Communist Party (CCP) cooperated in the fight against drugs. However, about a year ago, relations between the CCP and the United States soured.
“They hold a major role in this problem, and they should, as any great nation hold a major role in its solution as well, and we look forward to them engaging with us,” Mr. Chester said.
George Papadopoulos, principal deputy administrator for the Drug Enforcement Administration (DEA), revealed that just last month, his agency exposed part of the Chinese involvement in fentanyl production.
DEA announced the results of Operation Killer Chemicals, an investigation focused on precursor chemicals used to make fentanyl. Mr. Papadopoulos stated that DEA agents charged eight Chinese citizens and, for the first time, four Chinese companies with conspiracy to manufacture and import fentanyl into the United States.
“These individuals and companies sold enough precursor chemicals to produce millions of potentially deadly doses,” Mr. Papadopoulos said.
According to Tyrone Durham, director of the Nation States Threat Center for the Department of Homeland Security, China provides an almost perfect environment for entering the drug trade. The country has a large, loosely regulated chemical manufacturing infrastructure and a porous border.
He explained that it is easy for Chinese criminals to manufacture the chemicals, smuggle them out of the country disguised as legitimate products, and then divert them to Mexican cartels or other drug operations.
“China is the source of most of the precursor chemicals for fentanyl,” Durham concluded.
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