DEA Discovers Mexican Narco Money Laundering Scheme w Chinese Nationals

Yaqui for Borderland Beat from: USDOJ y Unotv

The Drug Enforcement Administration (better known by its acronym in English, DEA) and federal prosecutors discovered a sophisticated triangular international criminal operation in which Mexican drug traffickers  use  Chinese citizens  living in the United States for  money laundering and thus deliver their earnings south of the border. 

In the process, the  Chinese  get cash in the United States, which they would otherwise not have access to because of the new banking restrictions in China. Thus, Mexican drug traffickers sought to convert into pesos the profits obtained from the sale of drugs in the United States, taking advantage of the trade war between the United States and China.

In view of the fact that China tightened its banking regulations, the US authorities detected that the demand for dollars from rich Chinese citizens living abroad increased. USDOJ Presser next page:

Three Chinese citizens identified in money laundering investigation:

Oregon federal prosecutors accused  Chinese  Shefeng Su, 39, Xinhua Li Yan, 46 (both residents of Portland) and Xiancong Su, 39, of  money laundering  for about $ 29 million between October 2015 and March 2018.

The three toured the country selling large amounts of dollars from illegal drug trafficking to other Chinese citizens living in the United States, according to prosecutors.

None of them are detained and are believed to be no longer in the United States, federal officials told Oregon Public Broadcasting. No lawyer represents the three Chinese, according to the case files. The three were accused of conspiring to launder money in Oregon and in seven other states.

"What this accusation tells us is that Mexican money laundering specialists employ increasingly sophisticated methods." Deputy federal prosecutor Katie de Villiers, in charge of the asset recovery and money laundering division of the Oregon district.

How does the Mexican drug traffickers plan to launder money using Chinese citizens?

Su, Li Yan and Su were intermediaries. They took the  profits of Mexican cartels  and sold the cash in dollars to  Chinese,  according to the indictment.

Buyers then paid with bank transfers from their accounts in China , ie the accounts of  Su, Li Yan . There is no limit to what can be transferred between  Chinese accounts.

Middlemen, such as Su, Li Yan and Su, bought goods in China with payments (electronics and clothing, especially) and sent it to members of cartels in Mexico , where they were sold. The conversion of the dollars obtained in the United States into Mexican pesos that can be deposited in Mexican banks was completed.

Prosecutors say that more than $19 million dollars were transferred between more than  251 Chinese bank accounts in the framework of this plot of Mexican narcos.

  

First clues of the three Chinese involved in money laundering from the Mexican DTOs:

On February 4, 2017, Texas police arrested Shefang Su and Xiancong Su. They had almost $1.3 million dollars in cash. "The money was vacuum packed and there were loose bills that police dogs smelled like drugs," the indictment says.

On February 2, 2018, Shefeng Su collected about $ 500,000 in a canvas bag in an Atlanta parking lot. Days later Su "coordinated the delivery of a large amount of cash in Flushing, New York, by a subject subsequently arrested during the confiscation of several kilos of fentanyl," prosecutors said in his presentation.

Prosecutors say the three individuals coordinated about 300 cash deliveries across the country, in cities such as Detroit, Los Angeles, Boston, Chicago, Fort Worth, Houston, the New York neighborhood of Brooklyn and Atlanta.

“These are not the three leaders of an organization. They are three members of an organization, but there are others who continue to do the same, ” the authorities considered. 

Commercial trade war favors money laundering of Mexican DTOs through the Chinese:

Mexican banking laws allow depositing a maximum of $4,000 dollars per month in Mexican accounts.

"That is not enough for drug trafficking organizations." Katie de Villiers, deputy federal prosecutor in charge of the asset recovery and money laundering division of the Oregon district.

Mexican narcos  need to convert dollars into pesos to be able to disperse their profits to Mexico.

In parallel, the laws of capital flight from China, with its hardened trade war, allow Chinese who live outside access only $50,000 dollars a year from their bank accounts, which is also insufficient for rich Chinese, of agreement with Villiers.

The relationship between Chinese in the United States and Mexican drug cartels dates back almost 20 years, according to authorities.

"The geopolitical aspect is new," said Cam Strahm, DEA agent in Oregon.

The trade war between China and Washington increased the demand for dollars among Chinese people living in the United States. In the past there were ways to circumvent the rule of $50,000 dollars a year, but the trade war has led to an increase in controls, which now Mexican DTOs take advantage of , Katie de Villiers said.

Three Indicted for International Money Laundering Scheme Pairing Mexican Drug Traffickers and Chinese Nationals

PORTLAND, Ore.—Billy J. Williams, U.S. Attorney for the District of Oregon, announced today the indictment of three people for their roles in a complex scheme to launder proceeds from the sale of illegal narcotics by facilitating the transfer of bulk cash from Mexican drug trafficking organizations to Chinese nationals residing in the U.S.

Shefeng Su, 39, Xinhua Li Yan, 39, and Xiancong Su, 46, are each charged with conspiracy to commit money laundering. Shefeng Su and Li Yan were residents of Portland during the timeframe alleged in the indictment.

According to the indictment, the defendants’ money laundering scheme was designed to remedy two separate problems: drug trafficking organizations’ inability to repatriate drug proceeds into the Mexican banking system and wealthy Chinese nationals restricted by China’s capital flight laws from transferring large sums of money held in Chinese bank accounts for use abroad.

The first group, drug traffickers, are challenged by their inability to transport U.S. currency acquired from the sale of illegal narcotics in the U.S. to Mexico while avoiding detection by law enforcement and Mexican banking regulators. Mexico’s anti-money laundering regulations limit the amount of cash deposits of U.S. dollars that Mexican financial institutions can receive. As a result, drug trafficking organizations work with professional money launderers to bundle and sell bulk U.S. dollars in order to convert them to pesos, a more readily depositable currency in Mexico.

The second group, Chinese nationals living outside China, are challenged by China’s limit on the amount of personal funds that can be transferred out of Chinese bank accounts for use in a foreign country. Currently, China limits these transfers to $50,000 per year. As a result, some Chinese nationals have a need to acquire large quantities of U.S. dollars via other means.

The defendants’ scheme facilitated the transfer of cash between these two groups. Their money laundering organization would facilitate the transfer of funds from the buyer’s Chinese bank account to another Chinese bank account held by the money laundering organization. Once the Chinese renminbi (RMB) were transferred between these bank accounts, the funds were repatriated back to Mexico and converted to pesos to complete the money laundering cycle. This scheme has been described by some as the “Chinese Underground Banking System.”

All three defendants are at-large and believed to be outside the U.S.This case was investigated by the Drug Enforcement Administration (DEA) and IRS-Criminal Investigation (IRS-CI) and is being prosecuted by the U.S. Attorney’s Office for the District of Oregon.

An indictment is only an accusation of a crime, and defendants are presumed innocent unless and until proven guilty.