A recent U.S. government report uncovers a financial link between the Mexican drug cartels and China.
Discovering how drug cartels are financed and how the money is laundered is important if progress is to be made in fighting these criminal organizations.
From RegTech Times: “The United States has raised alarm over a massive money laundering network connecting China and Mexican drug cartels. Officials revealed that more than $300 billion in suspicious transactions passed through American banks over the last five years. These transactions are believed to be tied to criminal groups that work hand-in-hand with cartels in Mexico.”
“The U.S. Financial Crimes Enforcement Network (FinCEN) said that about $312 billion worth of suspicious money transfers were reported between January 2020 and December 2024. These networks are accused of helping cartels hide their drug money by moving it through a complex web of international transactions.”
This report ends about nine months ago, but who can doubt that this is still going on?
“Investigators explained that these groups often rely on ordinary-looking people, sometimes listed as students, homemakers, or retirees. These individuals act as ‘money mules,’ holding large sums of unexplained cash in their accounts to disguise the real source. The system makes the money appear legal, while in reality, it comes from drug trafficking.”
So how does this operation work?
“The laundering method has been described as a sophisticated exchange of currencies across three countries. Drug cartels in the United States usually make their profits in dollars. Instead of directly depositing these dollars into Mexican banks, which are tightly monitored, brokers step in. They collect the dollars, hand over pesos to the cartels in Mexico, and then use Chinese underground banking systems to balance the transactions.”
“Chinese citizens, eager to move money out of their country due to strict capital rules, play a key role. They provide the renmimbi in China, while brokers pay out dollars in the U.S. and pesos in Mexico. This triangular exchange allows everyone involved to benefit while hiding the true origin of the funds.”
“The system has also been fueled by the growing demand for fentanyl, a synthetic opiod that has become one of the deadliest drugs in the U.S. Many of the chemicals needed to make fentanyl are shipped from China to Mexico. From there the cartels process the drug and send it north, reaping billions in profits. The two most powerful Mexican cartels, Sinaloa and Jalisco New Generation, are believed to dominate this trade.”
For another aspect of Chinese-Mexican criminal cooperation, read my previous article Chinese/Mexican “Dragon Cartel” Moves “Cocaine of the Sea” Through Vancouver Port in Exchange for Fentanyl Ingredients .