Mexican Drug Cartels Collaborate with Chinese Money Laundering Network
A recent report from the Wall Street Journal reveals that Mexican drug cartels are teaming up with a network in China to generate substantial profits from drug sales for Chinese citizens in the U.S.
The Sinaloa Cartel, once headed by Joaquin “El Chapo” Guzman, is said to be collaborating with a Chinese group based in the U.S. They are allegedly channeling large sums of money through American banks, which eventually reaches Chinese nationals residing in the United States.
This operation typically begins in Mexico, where cartels rake in billions from distributing affordable drugs to the U.S. Chinese Americans reportedly travel to Mexico to collect cash directly from the cartels. The cash is then deposited into a network of accounts at major U.S. banks and later sold to affluent Chinese clients who pay in yuan. Money laundering groups purchase inexpensive goods from China, which are sent to Mexico, where they are sold under the pretense of legitimate trade. The profits, converted into pesos, are funneled back to the cartels.
According to the report, the presence of U.S.-based Chinese money laundering operations has surged due to financial restrictions imposed by the Chinese government. Individuals are limited to transferring only $50,000 out of China in foreign currency. Many wealthy Chinese are facing sanctions, making it essential for them to explore alternative financial routes, especially for significant expenses like buying property in the U.S. or funding education for their children at American universities.
The Journal also noted that U.S. operatives frequently open multiple bank accounts using forged documents and communicate with their Mexican partners through encrypted messaging apps. Each transaction typically incurs a cut of about 1-2%.
Some operatives have reportedly entered the country using student visas. An instance documented in the Journal involved cash being retrieved from various homes in Los Angeles, linked to known associates of the Sinaloa cartel and their money laundering counterparts. Law enforcement observed that when questioned, a Chinese high school student acknowledged collecting over $60,000 in cash and was found to possess bills that had tested positive for drug residues.
On June 18, 2024, the Department of Justice (DOJ) announced arrests in connection with a conspiracy involving cartels and money launderers associated with the Sinaloa Cartel and Chinese banks. These arrests followed an extensive investigation dubbed “operation runners.”
The DOJ stated, “The Sinaloa cartel has been at the center of the significant fentanyl influx into the United States over the past eight years, resulting in violence and suffering on both sides of the border. The cartel generates substantial amounts of U.S. currency that must be returned to Mexico to fund their operations.”
In May 2023, a high-ranking official from the Department of Homeland Security (DHS) informed the Senate that Mexican cartels have begun using Chinese-sourced chemicals and equipment to fabricate fentanyl-laced pills.
Matthew Milholin, assistant director of DHS’ Homeland Security Investigations, remarked, “As Mexican cartels industrialize fentanyl production, they source precursor chemicals from China to integrate with operations in Mexico.” He highlighted that Chinese investments and markets are increasingly intertwined with Mexico’s illegal enterprises, including drug trafficking and money laundering.
