The US Charges Chinese “Underground Bankers” Of Laundering $50 Million In Drug Cartel Proceeds

A five-year investigation by US officials revealed that one of Mexico’s most powerful drug cartels had formed a union with Chinese underground banking groups operating in the U. S. to launder the money received from the sales of cocaine, fentanyl, and other substances, says federal prosecutors on Tuesday.

Mexican cartel also utilized Chinese hidden money exchanges for laundering $50m gained from drug trafficking that involved the import of large quantities of fentanyl, cocaine, and methamphetamine between 2019 and 2023, stated the US Department of Justice in its release on Tuesday.

The DOJ claimed that the California-based network then reportedly gave money made in the US to cartel members in Mexico and other countries.

Drug dealers chose to associate with “underground money exchanges” to utilize the high demand rate of the US dollars among Chinese citizens who use black market channels to transfer cash out of China where the annual transfer is prohibited at $50000, the prosecutors stated.

“The seller of US dollars ‘provides account details for a Chinese bank account and instructions for the investor to deposit Chinese currency- renminbi into that account. Once the owner of the Chinese account can see the deposit an equivalent amount of US dollars is wired to the buyer in the USA,” The DOJ explains.

“The 24 alleged suspects charged with plotting to distribute methamphetamine and cocaine as well as multiple money laundering offenses.”

“Edgar Joel Martinez-Reyes, 45, originally from East Los Angeles, is the main defendant, and according to the prosecution, he oversaw couriers who came to the LA region to collect the drug money. Martinez-Reyes worked hand in hand with the leader of the Chinese money laundering suspects and always traveled together with him to Mexico to negotiate contracts with cartels,” the authorities say.

The DOJ also stated that law enforcement agents in the case recovered $5m in narcotics proceeds, 42kg of methamphetamine, 137kg of cocaine, and 3,000 ecstasy pills.

“Never-ending desire for more cash is what fuels the Mexican criminals involved in drug business that has resulted in the worse drug menace in the American society,” as stated by Drug Enforcement Administrator, Anne Milgram.

“The feeling of endorsing drug money to sustain the Sinaloa cartel’s operations, which provides them with the capacity to produce their lethal substance and distribute them across the United States,” Milgram further said.

“Drug Enforcement Administration’s main operational objective is to protect the lives of American citizens through the dismantling of cartels and other entities that fund these groups.”

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Since the November meeting between President Joe Biden and Chinese leader Xi Jinping in Woodside, California, Federal law enforcement has continued to cooperate with the Ministry of Public Security in China, as U.S. Attorney Martin Estrada mentioned.

As per Estrada, “At least 22 of the 24 individuals named in the complaint have already been taken into custody by the police. The defendants are being charged with one count of conspiring to assist in the distribution of cocaine and methamphetamine; one count of money laundering: and the last charge is for operating an unauthorized money-transferring business.”

China’s Ministry of Public Security also announced in a social media post on Wednesday that it had detained a suspect in a “drug-related money laundering case” based on a US notice.

Reporting on this instance, the ministry also commented on an online forum that “this is a relatively new successful experience in the anti-drug collaboration between China and the United States.”

It noted that these underground bankers were being employed by the Sinaloa gang to transfer the cash earned out of their unlawful activities in the US to Mexico.

The increased use of these Chinese exchanges in buying and selling US currency is due to its “ready market” according to the DOJ as some Chinese found informal means to avoid a ‘formal banking system’ because Beijing limits the amount of money they can transfer overseas.

The DOJ also noted that most of the 24 suspects mentioned in the indictments will be presented in a court in Los Angeles “in the proceeding weeks”.

The US has held China itself responsible for this problem and for supplying the country with deadly drugs such as fentanyl, a claim that China refutes.

As many as 70,000 Americans have died from overdosing on the synthetic drug in 2022, and Washington accuses China of providing the ‘Chinese-made’ opioids behind the worst drug epidemic in U. S history.