New DEA Report Says Mexican Cartels Working With Chinese People To Launder Money And Traffic Drugs

It’s common knowledge that Chinese firms manufacture precursor chemicals shipped to Mexico, which are then converted into fentanyl. However, a new report by the DEA says there’s a growing trend of Chinese businesspeople laundering profits for the cartels on the flip side of the operation. Chinese middlemen are also in on the illegal trafficking activity.
According to the report, “Drug trafficking organizations based in Mexico and South America are increasingly utilizing China-based underground banking systems as their primary money-laundering mechanism.” The report says “China-based underground banking systems,” or “CUBS,” are aiding Mexican drug cartels and wealthy Chinese businesspeople in moving money without detection.
Sinaloa Cartel

“Sinaloa Cartel has built a mutually profitable partnership with China-based precursor chemical suppliers to obtain the ingredients they need to make synthetic drugs, and with Chinese money laundering organizations (MLOs) to return “clean” drug proceeds to the cartel in Mexico,” says the report.
CUBS

“Money brokers who operate within the China-based underground banking systems (CUBS) increasingly act as money launderers for Mexico- and South America-based drug trafficking organizations in order to maintain liquidity in the CUBS. Chinese nationals use these underground banking systems to surreptitiously convert their cash assets in China into equivalent cash assets in the United States,” says the report.
How The Money Is Laundered

The report says, “Methods by which illicit proceeds are laundered include: Chinese underground banking systems, which sprung up in response to the Chinese government’s attempt to curb capital flight (assets being taken out of China and reinvested in foreign countries) as a way for Chinese nationals to convert cash assets in China into U.S. assets.”
Main Source Is China

The report says, “China-based chemical suppliers are the main source of the chemicals used in the production of illicit fentanyl. The Sinaloa and Jalisco cartels manufacture fentanyl in clandestine labs they oversee in Mexico, in both powder form and pressed into fake pills, and traffic it into the United States through any of the many entry points they control.”
Marijuana

“Chinese and other Asian drug trafficking organizations collect millions of dollars in illicit drug proceeds from cultivating and trafficking marijuana and the money is used to fund other criminal activities, to include trafficking in other drugs, money laundering, and human trafficking. The traffickers and investors also protect their illicit marijuana cultivation sites through violence. Booby traps and weapons are found at most outdoor grow sites to discourage intrusion by wildlife, law enforcement, and thieves. Victims of human trafficking are coerced, often abusively, to work at both indoor and outdoor grow sites for little or no pay,” says the report.
Precursor Chemicals And India

“China-based suppliers are still the main source for the precursor chemicals used by the cartels in Mexico to produce illicit fentanyl and methamphetamine, but India is also emerging as a major source country for these chemicals,” says the report.
Seaports

The report says, “Seaports are key to getting industrial-scale chemical shipments from China into Mexico, most fentanyl precursors arrive via air cargo or through postal facilities. The cartel also uses the ports to traffic methamphetamine, illicit fentanyl, and cocaine out of Mexico to destinations around the world.”
Cryptocurrency

“China-based chemical suppliers prefer cryptocurrency payments over other forms, and encrypted messaging and communications platforms. The Mexican cartels use international export brokers, consignees, third-party countries, and other methods to anonymize the contents and source of the chemical shipments,” says the report.
Nitazenes

“Nitazenes are synthetic opioids, like fentanyl – but some nitazenes can match or surpass the potency of fentanyl…Chemical suppliers – mainly located in China – introduce new nitazenes when the ones currently used become riskier to produce due to regulatory actions and drug scheduling, or users look for novel opioids that are not yet illegal,” says the report.
Meth Precursor Chemicals

“As with the chemicals used in making fentanyl, methamphetamine precursor chemical shipments originating from China are disguised through deliberate mislabeling, shipping to legitimate or front companies in Mexico or Central America who then re-ship the chemicals to Mexico, and diversion from other legitimate industries for smuggling to clandestine labs in Mexico,” says the report.
Jin Hua Zhang

The report says, “Leader of $25 Million International Money Laundering and Drug Conspiracy Pleads Guilty In September 2023. Jin Hua Zhang of Staten Island, New York pled guilty to money laundering charges. The defendant also distributed kilograms of cocaine and MDMA in Massachusetts. First discovered in Boston, Zhang’s money laundering organization and its members were later detected in locations across the United States and internationally. Investigators determined that Zhang’s network laundered funds for drug traffickers, internet scammers, and other criminal groups. In one year alone, Zhang’s organization laundered more than $25 million in drug money and other illicit profits. Zhang’s network has been traced to Hong Kong, China, Cambodia, India, Brazil, and other locations.”
Endangered Fish

“Members of the Sinaloa Cartel conspire with Chinese organized crime groups in Sonora, Mexico to traffic totoaba, an endangered fish prized in Asia for its gas-filled sac, or swim bladder. Totoaba is caught only in Mexico, and its swim bladder nets tens of thousands of dollars on China’s black markets.”
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