China’s communist regime is overlooking massive money laundering schemes conducted by Chinese nationals to support cartels flooding the United States with lethal opioids.
The Chinese Communist Party (CCP) gives cover to money laundering schemes supporting the production of synthetic drugs that kill hundreds of thousands of Americans, according to testimony received during an April 26 hearing of the House Subcommittee on Healthcare and Financial Services.
“Criminal organizations based in [China] have captured the money laundering organizations of the cartels,” said Subcommittee Chair Lisa McClain (R-Mich.).
“We have to work together to find solutions to fight against the CCP.”
The subcommittee examined how Chinese money laundering organizations (MLOs) have become an indispensable part of Latin American cartels and are depended upon to launder illicit funds needed for producing and financing fentanyl and fentanyl-related compounds.
“Cartels are making millions as Chinese organized crime is laundering money and providing the precursor elements needed to produce, finance, and traffic narcotics moving across the border,” McClain said.
Chinese money laundering organizations are capable of laundering cash in a matter of hours, whereas cartels used to take weeks to months to launder the same amounts of money, McClain said, which had “significantly increased the cartels’ bottom line.”
Fentanyl was the foremost cause of death of Americans aged 18–45 in 2021. That year, more than 100,000 Americans died from a drug overdose, of which over 75,000 died from opioids like fentanyl.
Channing Mavrellis, director of the illicit trade program at the Global Financial Integrity think tank, said that Chinese MLOs have been so successful because they exploit China-specific exchanges and manufacturing centers to profit off the drug trade.
The system relies on Chinese citizens residing in the United States who act as money brokers between the cartels and China-based launderers who convert the money into tangible goods.
Essentially, proceeds from drug trades are given to a Chinese broker in the United States. That broker then advertises the dollars for sale to Chinese nationals in China, who purchase the equivalent sum in local currency and use that currency to purchase goods, which they then send to Latin America. An operative in Latin America then sells those goods in local currency for the cartel.
This system, Mavrellis said, is highly lucrative and successful.
In 2021, she recounted, a Chinese MLO network operating in Chicago and New York laundered tens of millions of dollars in drug proceeds for Mexican cartels. One of this network’s couriers, a Chinese national who was a legal permanent U.S. resident, had an average cash pickup of $500,000.
In another example, she said, a Chinese businessman with U.S. citizenship laundered nearly $30 million of drug proceeds for Mexican, Colombian, and Guatemalan cartels by using a casino in Guatemala, a U.S.-based seafood export company, and U.S. and Chinese bank accounts.
McClain said the money laundering efforts could not have continued under the radar as long as they have without the CCP’s “complicity” in overlooking such schemes.
Anthony Ruggiero, former senior director for counterproliferation and biodefense at the National Security Council, said the Biden administration had not tackled the issue of how Chinese banks continue to allow such behavior.
The administration, he said, appeared “afraid” to use the tools at its disposal for fear of exacerbating international tensions.
“There’s this fear of going after Chinese banks,” Ruggiero said. “They fear the impact on the global economy.”
To that end, Ruggiero said that Chinese banks still coveted access to Western markets and that the United States should make that access contingent upon conditions, including cracking down on Chinese MLOs.
“The Chinese Communist Party and the Chinese financial system, when they [Biden administration] want to crack down … they have the tools to do that,” he said.