Homeland Security Warns of Rising Chinese Involvement in Mexican Cartel Money Laundering

Chinese criminal organizations are increasingly aiding Mexican cartels in laundering money, according to statements from the United States Homeland Security. A senior official within the department highlighted that these Chinese groups facilitate the exchange of illicitly obtained funds for US dollars, often leaving behind no discernible paper trail. Ricardo Mayoral, Assistant Director at Homeland Security Investigations, emphasized the growing concern posed by Chinese money laundering organizations (CMLOs) in combating transnational organized crime.

Speaking at a hearing of the US Senate Caucus on International Narcotics Control, Mayoral disclosed alarming statistics, stating, “The number of Homeland Security Investigations investigations involving the PRC (People’s Republic of China) continues to increase every year.” He revealed that in fiscal year 2023, over 600 investigations were initiated, marking a staggering 1,000% increase compared to fiscal year 2019, with many of these investigations focusing on CMLOs.

Mayoral elaborated on the sophisticated methods employed by these organizations, including the use of encrypted communication apps and intricate money laundering schemes. He underscored the significant role CMLOs, often linked with China-based criminal entities, play in supporting the multi-billion-dollar criminal enterprises operated by Mexican-based cartels and other transnational criminal organizations (TCOs).

One common technique highlighted by Mayoral is the use of ‘mirror transactions’ to launder funds for cartels. This method involves transferring money between different accounts without physically moving cash. Mayoral illustrated the process, explaining how a CMLO receives cash from a TCO, then moves an equivalent amount between Chinese accounts, often under the guise of a legitimate company. Subsequently, foreign currency is credited to the drug trafficker’s account, completing the laundering process.

To integrate illicit funds into the banking system, the initial cash obtained from the TCO is typically deposited into a bank account controlled by the CMLO. This step may involve using intermediaries or making multiple small cash deposits over time to evade detection. Once the cash is successfully deposited, the CMLO proceeds with mirror transactions, effectively laundering the funds without leaving a trace connecting the criminal proceeds to the final recipient.

Mayoral emphasized the effectiveness of this laundering method in enabling crime gangs to circumvent the risks and costs associated with smuggling bulk cash across borders. He noted that due to the heightened scrutiny of large cash transactions in the US, CMLOs often source US dollars from TCOs operating within the country, creating a symbiotic relationship between the two entities.

In conclusion, the collaboration between Chinese criminal organizations and Mexican cartels in laundering illicit funds poses a significant challenge to law enforcement agencies. As these groups employ increasingly sophisticated methods, combating transnational organized crime requires enhanced cooperation and vigilance across borders.

By fLEXI tEAM