Chinese Nationals are Teaming Up with Mexican Drug Cartels to Launder Millions of Dollars
A Chinese national awaits being sentenced in a Chicago court early in 2021 for laundering over $530,000 for Mexican drug cartels.
The Chinese national in question, Gan Xianbing, was convicted earlier in February for money laundering and running a money-transfer business without a license. This business moved cartel revenue that was generated stateside offshore. Gan believes he is innocent and claims that American law enforcement entrapped him.
This case was not heavily publicized. However, U.S. officials told Reuters that criminal operatives such as Gan are part of an alarming trend in the present-day drug war. They claim that small networks of Chinese criminals are changing the way drug money is laundered and are pushing out Mexican and Colombian money brokers who have traditionally dominated this craft.
U.S. law enforcement experts assert that Chinese actors moving large quantities of cash was practically unheard of about a decade ago.
The Reuters report highlighted these criminals’ principal strength:
Routing cartel drug profits from the United States to China then on to Mexico with a few clicks of a burner phone and Chinese banking apps – and without the bulky cash ever crossing borders.
The report continued detailing how these transnational criminal actors operate:
The launderers pay small Chinese-owned businesses in the United States and Mexico to help them move the funds. Most contact with the banking system happens in China, a veritable black hole for U.S. and Mexican authorities.
U.S. prosecutors declared in a September 24 sentencing memo for Gan’s case that these Chinese money brokers whose operations are based in Mexico “have come to dominate international money laundering markets.”
The cooperation between Latin American cartels and Chinese money brokers has created a new multi-billion dollar business model that is giving American political leaders headaches. This comes at a time when U.S.-China relations are quickly fraying.
According to U.S. prosecutors, Gan cooperated with another Chinese another Chinese money broker to run a prolific laundering ring. Homeland Security Investigations agents at Los Angeles International Airport arrested Gan on his way to Mexico from Hong Kong. The U.S. government claimed that Gan moved between $25 million to $65 million in illicit drug revenues from 2016 up until the time of his arrest.
This ring is based in Guadalajara and has been rumored to have worked with multiple cartel organizations such as the infamous Sinaloa Cartel.
The U.S. government has been focusing its attention on cracking down on these rings. In two other cases in Virginia and Oregon, federal prosecutors brought forth charges against individuals who were allegedly involved with at least two other Chinese money laundering outfits since October of 2019. These cases are still pending.
Gan refused to give a testimony in court and ended up pleading not guilty to three counts of money laundering, one count of conspiracy to launder money, and another count of running a money transmitting business without a license. The Chinese national was acquitted for the conspiracy charge.
According to a sentencing plea document from his lawyers, Gan was revealed to not have been the mastermind of the operation. He was allegedly a seafood exporter who was tricked into having his bank account used to launder money by Pan Haiping, another Chinese national domiciled in Mexico.
Reuters went into more detail about Gan’s allegations of not being complicit in money laundering:
Attorney Aaron Schwartz, who was part of the defense team, said he wanted to make it clear that Gan did not cooperate with the U.S. government because his client feared for the safety of his family in Guadalajara, where the powerful Jalisco New Generation cartel holds sway. Gan’s lawyers also allege Gan was entrapped in a sting operation by Homeland Security Investigations agents working with an informant who helped arrange the transactions that resulted in their client’s conviction.
Pan Haiping was arrested in Mexico earlier this year for allegedly being involved in money laundering. Two American sources who know about this investigation and a Mexican federal police source claim that Pan Haiping is waiting to be extradited to the United States.
In March 2019, the U.S. government indicted Pan Haiping for charges of laundering nearly $500,000 for Mexican drug cartels, operating an illegal money transmitting business in Illinois, and engaging in a conspiracy to launder money using bank accounts in China, which included an account that belonged to Gan.
DEA officials report that money brokers like Gan and Pan Haiping are growing precipitously throughout Chinese diasporas in North America, Latin America, and Europe.
Although it still remains to be seen if direct Chinese government involvement can be proven in these money laundering cases, it would not be surprising if the CCP tapped into these transnational networks to project its influence.
Since its market-based reforms of the 1980s, China has emerged as a rising great power and these kinds of powers do whatever it takes to win. The U.S. will need to start focusing more on its border security and keep tabs on Chinese nationals in the Western Hemisphere and within its borders. China is a new rival that will use unconventional methods to outcompete the U.S.
The U.S. will have to abandon its foolish nation-building projects in order to properly confront China and also secure its backyard from potential transnational threats.