{"id":18763,"date":"2025-02-22T18:01:22","date_gmt":"2025-02-22T17:01:22","guid":{"rendered":"https:\/\/drugprevent.org.uk\/ppp\/?p=18763"},"modified":"2025-05-20T19:09:43","modified_gmt":"2025-05-20T18:09:43","slug":"how-dirty-money-from-fentanyl-sales-is-flowing-through-china","status":"publish","type":"post","link":"https:\/\/drugprevent.org.uk\/ppp\/2025\/02\/how-dirty-money-from-fentanyl-sales-is-flowing-through-china\/","title":{"rendered":"How Dirty Money From Fentanyl Sales Is Flowing Through China"},"content":{"rendered":"

Wall Street Journal\u00a0 \u00a0 \u00a0 by Patricia Kowsmann, Dylan Tokar and Brian Spegele\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Feb. 18, 2025 \u00a0\u00a0 <\/em><\/p>\n

Chinese money brokers are teaming up with Mexican cartels, greasing the wheels of the fentanyl trade, U.S. officials say<\/strong><\/p>\n

On an October morning in 2022, an alleged drug trafficker drove a white pickup truck into the parking lot of a Global Fresh Market in San Gabriel, Calif., and stopped alongside a blue Maserati.<\/p>\n

After a quick discussion with a woman in the Maserati, the man placed a large black bag in the sportscar\u2019s back seat. Members of a U.S. government task force, who were watching, say it contained some $300,000 in cash.<\/p>\n

The drop was part of what U.S. officials say is a new front in America\u2019s war on drugs: an emerging partnership that has made China a crucial pit stop for dirty money flowing from the\u00a0U.S.\u2019s fentanyl crisis, according to law-enforcement officials and court documents.<\/p>\n

Chinese money brokers, part of an underground banking system that has long served the country\u2019s immigrant diaspora, have become go-to partners for fentanyl traffickers and other criminal groups needing to launder illicit drug profits, officials say.<\/p>\n

Long operating in the shadows, the Chinese brokers use intermediaries, such as the woman in the Maserati, to collect drug profits from fentanyl dealers. Then, through a series of transactions, they sell those dollars to Chinese customers who want cash in the U.S. for purposes such as buying real estate or other investments, but can\u2019t legally send money directly from China because of capital controls there.\u00a0 The drug dealers end up with clean money in the process, law-enforcement officials say.<\/p>\n

In the case involving the Maserati, dubbed \u201cOperation Fortune Runner,\u201d members of the Drug Enforcement Administration task force spent years investigating one such network, including thousands of hours of street-level surveillance. Traffic stops of suspects turned up cash stowed in a Fruity Pebbles cereal box and a gift bag with \u201cHappy Birthday\u201d printed on the side.<\/p>\n

The investigation eventually led to indictments of 24 individuals last year, involving more than $50 million in drug proceeds prosecutors say Chinese brokers were laundering for associates of Mexico\u2019s Sinaloa drug cartel.<\/p>\n

Evidence of a deepening relationship between drug cartels and Chinese money brokers presents a\u00a0challenge for President Trump, who has vowed to end the fentanyl crisis that causes the\u00a0death of tens of thousands of Americans\u00a0every year.<\/p>\n

So far, his focus has been on cutting off the flow of fentanyl and the\u00a0precursor ingredients\u00a0that are used to make it into the U.S.,\u00a0imposing tariffs\u00a0against producing countries, including a new 10% tariff on Chinese imports to the U.S. earlier this month.<\/p>\n

But shutting down the sprawling network of money brokers, who U.S. officials think are critical to greasing the wheels of the trade, could also prove difficult.<\/p>\n

In testimony to the House Select Committee on the Chinese Communist Party last year, a former DEA official estimated global drug sales reach $500 billion to $750 billion annually. The official said he believed Chinese networks were laundering a sizable chunk of it.<\/p>\n

\u201cThe fentanyl crisis starts in China, and it ends in China,\u201d Jarod Forget, DEA\u2019s acting chief of operations, said in an interview.<\/p>\n

China\u2019s Foreign Ministry, in a written response to questions, didn\u2019t directly address the role of Chinese nationals laundering drug proceeds. It said the root of the fentanyl crisis lies in the U.S. itself, and Trump\u2019s tariffs ignored the results of\u00a0U.S.-China cooperation, which has included cracking down on fentanyl production in China.<\/p>\n

\u201cBlaming others will not solve this problem,\u201d the Foreign Ministry said. \u201cPressure and threats are not the right way to deal with China.\u201d<\/p>\n

While deaths from overdoses have fallen, fentanyl remains the U.S.\u2019s deadliest drug. Last year, the amount of fentanyl the DEA seized\u2014more than 55 million pills and nearly 8,000 pounds of powder\u2014was estimated by the DEA to be enough to kill every American.<\/p>\n

How the system works\u00a0<\/strong><\/span><\/p>\n

Drug cartels have always faced the problem of getting their profits from illegal sales in the U.S. converted into clean money and sent back home. Some have tapped middlemen who charge a high commission to help launder the money through a series of transactions that involve Colombian pesos, in what is known as the black-market peso exchange, according to U.S. officials.<\/p>\n

Chinese money brokers came in with a much faster and cheaper service. They had a competitive edge because so many people in China want U.S. dollars, U.S. officials say.<\/p>\n

The transaction begins in the U.S. Drug traffickers sell fentanyl or other narcotics to U.S. customers for cash. They then turn over that cash to a Chinese money broker.<\/p>\n

The Chinese money broker now advertises the U.S. dollars on WeChat, a Chinese app. To buy them, a Chinese customer will transfer yuan, including a commission, into the broker\u2019s bank account in China.<\/p>\n

The Chinese broker then releases the U.S. dollars to Chinese customers who want to spend money in the U.S., acquiring real estate, paying college tuition, gambling, or making other investments.<\/p>\n

Now the Chinese money broker needs to get the yuan to the drug traffickers in Mexico. One way to do that is for the broker to exchange the yuan for pesos in Mexico through a business that is looking to buy Chinese goods for export to Mexico.<\/p>\n

The Chinese goods are exported to Mexico and sold. The Chinese broker now has Mexican pesos, which it can hand over to the Mexican cartel, minus a 1\u20132% commission.<\/p>\n

Under China\u2019s capital controls, meant to keep too much money from flowing out of the country, Chinese citizens are limited to buying only $50,000 worth of foreign currency each year. As China\u2019s economy slows and its real-estate and stock markets languish, more Chinese\u00a0want to move money overseas\u00a0to protect their wealth. Tapping into underground banks connected to the fentanyl trade is a way to do that, U.S. officials say.<\/p>\n

This is how it works: The Mexican cartels\u2019 U.S. operatives provide the U.S. cash they received from selling fentanyl to a broker working for a Chinese money-laundering ring, all in the U.S. Through the Chinese messaging app\u00a0WeChat, the brokers advertise the cash to people in China who could use the money on U.S. soil, according to current and former law-enforcement officials.<\/p>\n

Once a Chinese buyer of the U.S. dollars is found, that person transfers the equivalent in Chinese yuan, plus a hefty commission, to a bank account in China belonging to the money launderers. The Chinese customer then receives access to the cash bought in the U.S.<\/p>\n

The cartel\u2019s money, now clean, is sitting in the Chinese money broker\u2019s bank account in China. The money can then get back to the cartel in a couple of ways. It can be used to buy fentanyl precursors for the cartel, starting the cycle again.<\/p>\n

Or, the yuan can be used to buy Chinese manufactured goods that are then shipped to Mexico and sold for pesos, which are then handed to the cartels.<\/p>\n

Some Chinese nationals using the service might not know it involves drugs, U.S. officials say.<\/p>\n

\u201cThis is now one of the most prominent, if not the most prominent way in the world that people launder money,\u201d said Craig Timm, a former money-laundering official in the U.S. Department of Justice who is now at the Association of Certified Anti-Money Laundering Specialists.<\/p>\n

Chinese money brokers have also differentiated themselves from competitors by taking on some of the risk associated with this multistep process. Instead of waiting until the process is complete to release pesos to Mexican cartels, they operate essentially on credit, transferring money to drug traffickers soon after receiving a cash delivery in the U.S., officials say.<\/p>\n

The commission they charge drug traffickers is small, because they also make money from selling U.S. dollars to customers of their underground banking network.<\/p>\n

\u201cWhen the Colombians controlled it, it cost 7% to 10%. The Chinese were charging 1% to 2%. It was unheard of,\u201d said Chris Urben, a former DEA agent who saw firsthand the emergence of Chinese money launderers in the New York area.<\/p>\n

\u201cAll of a sudden, we were seeing Chinese money launderers picking up drug money all across the U.S.,\u201d added Urben, now a managing director at private investigations firm Nardello & Co.<\/p>\n

Many former law-enforcement officials say more cooperation with China is needed.<\/p>\n

\u201cA lot of the money under the scheme is flowing through banks in China where the Chinese have oversight,\u201d said Anthony Ruggiero, a former senior U.S. Treasury official now at the Foundation for Defense of Democracies.<\/p>\n

The DEA and other agencies have launched a spate of investigations in the U.S. In one case, two Chinese nationals were charged with laundering money for Mexican cartels after agents went undercover as money couriers. Both were later convicted, with one of the men receiving a 10-year sentence in December for taking part in efforts to launder $62 million.<\/p>\n

The task force surveilling the cash drop in San Gabriel, Calif., in 2022 was part of a special DEA team that worked wiretaps on drug trafficking investigations. Their target was an alleged Chinese money-laundering ring run by a man named Sai Zhang who did business with alleged drug dealers, including the Sinaloa cartel, and cash runners such as the woman in the blue Maserati, who wasn\u2019t identified in court records.<\/p>\n

Officers spent several years following the suspects, watching them pick up and drop off bags throughout the Los Angeles area.<\/p>\n

On the October morning in San Gabriel, officers said they were relying on a wiretapped phone conversation between two members of Zhang\u2019s ring who were organizing the pick up of $300,000.<\/p>\n

After the bag was handed off to the blue Maserati, agents followed the car to a residence, where the money was allegedly mixed with other drug proceeds and parceled out to underground banking customers, people familiar with the matter said. Later, police pulled over a driver who had left the residence and found $25,000, according to court documents.<\/p>\n

Zhang was among the people charged with laundering money, running an unlicensed money transmitting business and facilitating drug trafficking. He has pleaded not guilty and is awaiting trial. A lawyer for Zhang didn\u2019t respond to requests for comment.<\/p>\n

Chinese authorities said in June they had arrested in the mainland one of the men indicted for allegedly working with the network.<\/p>\n

Source: https:\/\/www.wsj.com\/world\/china\/china-fentanyl-trade-network-9685fde2?mod=hp_lead_pos5<\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Wall Street Journal\u00a0 \u00a0 \u00a0 by Patricia Kowsmann, Dylan Tokar and Brian Spegele\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Feb. 18, 2025 \u00a0\u00a0 Chinese money brokers are teaming up with Mexican cartels, greasing the wheels of the fentanyl trade, U.S. officials say On an October morning in 2022, an alleged drug trafficker drove a white pickup truck into the parking lot […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[32,129,122,19],"tags":[],"class_list":["post-18763","post","type-post","status-publish","format-standard","hentry","category-crime-violence-prison","category-culture","category-fentanyl","category-usa"],"_links":{"self":[{"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/posts\/18763","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/comments?post=18763"}],"version-history":[{"count":0,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/posts\/18763\/revisions"}],"wp:attachment":[{"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/media?parent=18763"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/categories?post=18763"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/tags?post=18763"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}