The FT investigates links between Chinese underground banking and global crime cartels
Chinese money launderers are facilitating the fentanyl epidemic and helping international drug traffickers, like Mexican cartels and the Italian mafia, launder the proceeds of crime. The FT investigates the connection between capital flight from China and global organised crimeCHRIS URBEN: Chinese money launderers have partnered with Mexican drug cartels to efficiently launder the proceeds of the fentanyl trafficking.
JAMES KYNGE: And what these underground banks do is they transfer money according to something that's called mirror transfer. A person, let's say, on the one end of the network will arrive with a sack full of money in cash, deposit it at the underground bank. And then through this mirror transfer, another person will pick up the same amount of money from the other branch of the same underground banking network.
They would put the cash on trucks. They would drive them across the border. They would find ways of sending the money to people in the US who needed cash and would buy products with them, et cetera. But the DEA and enforcement agencies across America had a playbook for how to tackle this. My first year we seized here in New York City 7,000 kilos of cocaine. When you're intercepting tens of thousands of kilos, you're really causing a lot of harm to the cartel. We were focused primarily on tractor trailers coming from the west coast to the east coast.
FEMALE ANCHOR: Another fentanyl bust in the Bronx, just blocks away from the daycare where a one-year-old boy died. Prior to Nardello, I spent 24 years with the DEA as a special agent. This is Mexico. This is the United States. And this is China. The currencies do not cross borders, the pesos, the dollars, the Chinese RMB. Think of billion dollar pots of each currency in those countries.
At this point in time, those funds are released to the Mexican cartel. They've now been made whole. Their funds have been laundered for them. That million dollars now is sitting in a stash house controlled by Chinese money launderers. They then get on WeChat or a bulletin board and advertise the sale of those US dollars within the United States.
And they decided, let's get out. Let's walk the block and determine if we can see where he went or where he was. As they were walking down the street, they heard what they thought to be money counters. So when they went closer to this building, on the first floor, they had had the window open just a little bit. And there were six to eight money counters being run and over $10 million in this stash location.
And it was so much stronger. And that's all they wanted. The cartels, they see the opportunity to make money. And it's just like the street dealers around here. They see the opportunity to make the quick money. And they can make a lot of money real fast. MIKE CHAPMAN: We're seeing the end result of what is an international major problem. My name is Mike Chapman. I'm the Sheriff here in Loudoun County, Virginia. I've been the sheriff for just over 12 years, just got re-elected.
The problem with fentanyl is that you can produce so much. And it takes so little to overdose. You're talking about a lot of pills that you can get across the border. And it doesn't take up much space. And it's so deadly. And it's easy to distribute. Being as deadly as fentanyl was, we said, enough's enough. And we started bringing all the elements of the government together to really focus our energies and our efforts towards these groups because it was a national security issue. It was a matter of life and death.
RAYMOND DONOVAN: I was a special agent in charge for the special ops division. And Chris was coming in to headquarters. And so what I did was I asked Chris to be in charge of what we call the counter-threat team. We started to understand that there was this global network that was at scale that could move money with speed, within a day, unheard of before. We want to talk about the Zhishi Li investigation. And he pled guilty here recently in Eastern District of Virginia. And he was an amazing money launderer.
Another component of the challenge, there's not very many Mandarin speakers in DEA. There's not very many Mandarin data scientists in DEA. We have very quickly moved to a mode, where the Ministry of Public Security in China and other organisations seem to be cooperating quite closely to begin to try and shut down the fentanyl flow from China.
DENNIS WILDER: There have been whole books written on organised crime in China historically. And this is not a new problem. The Guomindang, the nationalist party, used them during the civil war. The communists used them during the civil war and afterwards. Places like Hong Kong we have seen the government using them to go after democracy protesters.
So there's all kinds of incentives for Chinese people to send their money abroad, either to invest in foreign assets or simply to buy stock. In the past, we've looked at this issue and several hundred billion US dollars worth of capital flight has exited China and gone around the world. At the moment, it's quite possible that the amount of Chinese money leaving China exceeds even those very high levels.
So they need to be a professionalised outfit. They need to be highly organised. They need to operate almost like a bank, keep ledgers, understand the scale of the cash pools in various different jurisdictions, understand the liquidity available to them. And that's not easy. So to do that, you need infrastructure. And you need clever people, sophisticated people. And you need lots of people. It's something that we're seeing as a growing threat to the UK and across the world.
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