The ‘recent phenomenon’ of Chinese nationals laundering money for Mexican drug cartels
This story was first published by The Dark Wire Investigation Foundation
The Mexican drug cartels and China have joined forces on a lethal campaign to poison thousands of people each year with potent narcotics and experts are hailing a recent Justice Department conviction as a small step in combatting the vast and lucrative operation.
This week, Homeland Security Investigations (HSI) revealed a small part of that nefarious operation with the sentencing of Xianbing Gan, 51, a Chinese national who was laundering money on behalf of Mexican drug traffickers. He was sentenced in Illinois to 14 years in prison on three counts of money laundering and one count of operating an unlicensed money transmitting business.
In 2018, Gan organized the transfer of $534,206 made from narcotics sales from Chicago to Chinese banks. The money was for the Mexican cartels running the drug trafficking operations.
Gan was living in Guadalajara, Mexico at the time and was arrested at the Los Angeles International Airport in November 2018 when he was on a layover between a Hong Kong to Mexico flight.
Assistant U.S. Attorneys Sean J.B. Franzblau and Richard M. Rothblatt argued in the government’s sentencing memorandum that Gan “was part of a recent phenomenon in which a relatively small network of Chinese money brokers based in Mexico have come to dominate international money laundering markets.”
They said Gan and others are typically “also engaged in a legitimate business and use that business as a cover to further money laundering activity.”
“It does not matter that defendant never personally distributed narcotics – drug distribution and money laundering are two-sides of the same malignant coin,” they said.
China expert Gordon Chang called the sentencing “a landmark.” He told this reporter that Chinese money launderers are now dominating the illicit movement of cash globally.
“Gan and other Chinese ‘money brokers,’ working for Latin American drug gangs, are quickly displacing Mexican and Colombian money launders,” Chang said. “They are also taking over the movement of dirty cash elsewhere. With burner phones and Chinese banking apps, the Chinese gangs are, Reuters tells us, ‘moving vast sums quickly and quietly.’ Gan’s ring, based in Guadalajara, worked for the Sinaloa Cartel and other drug gangs.”
Moreover, Chang said the Chinese Communist Party is culpable and that these money laundering operations would have to involve the Chinese government, which has nearly full control of its people.
“Gan’s ring was not working alone,” he continued. “The Communist Party of China is, either directly or indirectly, responsible for money laundering. The Party runs a near total surveillance state and tightly controls the banking system. No one could launder sums through the Chinese financial system without the regime’s knowledge. It is particularly telling that China’s authorities did not cooperate with U.S. requests for assistance in connection with the investigation into Gan’s operation.”
“Beijing has also been uncooperative regarding large and far-flung Chinese drug gangs responsible for much of illegal fentanyl coming into the United States. Yes, China’s regime should be held responsible for both Chinese money laundering and fentanyl distribution,” Chang said.
HSI wouldn’t comment on whether or not China cooperated with the investigation and referred this reporter to the U.S. Attorneys office, which didn’t respond.
In May 2019, the Chinese government scheduled fentanyl analogs and precursor chemicals as controlled substances. According to federal law enforcement sources, however, the move has been merely a show. Fentanyl is nearly 100 times more potent than morphine and has been largely to blame for the continued surge in overdose deaths in the U.S.
Former head of the Drug Enforcement Administration’s (DEA) Derek Maltz Special Operations Division says the partnership between Chinese transnational criminal organizations and the Mexican cartels is “dangerous.” And the partnership has endured for years, he said.
“It’s nice to see law enforcement exposing and disrupting the global money flow back to the cartels from drug sales in America,” Maltz told this reporter. “The Chinese crime networks have been supplying the cartels with ton quantities of precursor chemicals to produce methamphetamine for many years. The Chinese criminals expanded their role substantially and have ramped up their engagement with the cartels. They are providing record levels of deadly fentanyl and the precursor chemicals to the ruthless cartels to make fentanyl in labs in Mexico.”
In the Drug Enforcement Administration’s most recent Drug Threat Assessment, the agency highlighted that a number of DEA offices reported an uptick in Mexican Drug Trafficking Organizations using Asian Money Laundering Organizations to move drug money through the Chinese Underground Banking System virtual currencies and bulk currency storage and shipment.
“The Chinese are now offering critical money services to the cartels using sophisticated methods that are difficult to infiltrate. They are moving multi millions of drug dollars back to China by using encrypted communication apps and Chinese bank accounts. This is a huge national security challenge for America as the poisonous drugs are killing our citizens at record levels” Maltz explained.
The issue is having devastating effects on the American populace as drug overdose deaths continue to increase. The U.S. Centers for Disease Control (CDC) reported that 87,200 Americans died from drug overdoses in a 12-month period between September 2019 and September 2020. Maltz expects that the numbers will continue to rise and says the lethal partnerships between our enemies will greatly contribute to that.
“Thanks to Homeland Security Investigations, DEA and other agencies for working tirelessly to keep Americans safe,” Maltz said. “I wish the mainstream media and the leaders in the U.S. government would establish a sense of urgency to deal with this escalating crisis. Our future generation of so many young Americans are being murdered at unprecedented numbers and we need way more engagement to combat this significant threat. The outstanding investigation against Mr. Gan demonstrates how the transnational organized crime networks around the world will continue to exploit our weaknesses and antiquated laws. In my view, the Chinese crime networks have launched a form of chemical war against America as they destroy so many families around the US and destabilize our society.”
You can follow Jennie Taer on Twitter @JennieSTaer