For decades, Chinese criminal organizations have covertly operated in major U.S. cities such as New York and San Francisco. Their activities, which include cybercrime and wildlife trafficking, have largely flown by without law enforcement noticing due to their nonviolent nature.
Historically, these groups have remained more active and visible in the Pacific and Asia, especially in nations such as Singapore and Australia, where they have targeted Chinese companies with their money-laundering operations. However, their new partnerships with drug-trafficking groups in Latin America have elevated them to the status of leading money launderers globally.
In 2018, the U.S. Drug Enforcement Administration’s (DEA) Special Operations Division initiated Project Sleeping Giant, a coordinated effort among various government agencies to combat Chinese-associated money-laundering and drug activities. The DEA had identified some Chinese money brokers who were engaged in the fentanyl trade in locations including Miami, Los Angeles, Chicago and New York. Over the following months, investigators began to uncover the extent of Chinese involvement with Mexican cartels.
The money-laundering process starts with Mexican cartel members delivering cash from fentanyl sales to Chinese money brokers in the United States. After that, these intermediaries make sure the cartels in Mexico get paid the same amount in pesos or cryptocurrencies. Large sums of money are occasionally delivered straight to cartel stash houses by a Chinese partner in Mexico.
In Mexico, the brokers use unofficial trade networks to keep a regular supply of cash on hand. Purchasing expensive devices, associates in China, especially in Guangzhou, ship the devices to Mexico. Later, Mexican companies sell these products for less money, giving the cartels the money they need.
Unlike traditional methods, this Chinese money-laundering system doesn’t involve physically moving cash across borders. It’s safer, faster and cheaper, allowing Chinese brokers to charge the cartels less than other groups, thanks to their additional revenue stream from Chinese customers buying U.S. dollars.
DEA analysts identified individuals around the country by carefully examining these Chinese money-laundering networks between 2018 and 2020. It was found that a large number of them had a passing acquaintance with a specific Queens, New York, neighborhood. Plans were made to target more than 100 money launderers in various cities, but the COVID-19 pandemic and a surge in fentanyl deaths shifted federal focus to drug seizures and trafficker arrests.
Before the pandemic, investigators found that money-laundering organizations were also involved in the cannabis trade. The brokers in New York were buying properties in states such as California and Colorado to cultivate cannabis, which was then distributed to cities across the country. However, the DEA had largely ceased pursuing cannabis cases following a 2013 U.S. Department of Justice (DOJ) memorandum discouraging federal enforcement in states that had legalized cannabis.
Chinese groups seized control of the cannabis business from Mexican cartels, who had moved on to more lucrative substances such as fentanyl and heroin because there was less chance of prosecution. There are 23 states where Chinese-owned marijuana businesses are known to operate, and the money made from these operations is frequently used to finance additional crimes, including human trafficking.
Oklahoma has been a production center since 2021 due to its cheap land and lax medical cannabis legislation. More than 3,000 farms have been closed by local authorities, with 80%–90% of these farms being connected to Chinese organized crime.
Recently, Chinese manufacturers have moved to Maine, where it is thought that an estimated 100 illicit businesses are still in operation, although more than 40 have been shut down since January. According to former DEA agents, attempts to dismantle Chinese criminal networks have been hampered by the move away from marijuana charges.
Although there are no clear connections between marijuana businesses and the Chinese government, inquiries are still underway, according to a June testimony given by FBI director Christopher Wray. Meanwhile, a report by a bipartisan house committee revealed that the Chinese government supports the production of illicit drugs that are exported to the United States.
Chinese officials, however, deny these allegations. Liu Pengyu, a spokesperson for the Chinese Embassy, stated that China has been cooperating with U.S. antimony-laundering operations and emphasized that Chinese citizens are urged to follow local laws abroad.
While U.S. officials have long criticized China for inadequate cooperation in combating the drug trade, a recent exception occurred in June when federal law enforcement in California indicted 24 individuals, 9 of whom were Chinese nationals, for laundering $50 million in illegal drug proceeds for the Sinaloa cartel. One suspect, Peiji Tong, was arrested by Chinese authorities after fleeing the U.S. This indictment follows similar cases in North Carolina, Massachusetts, Virginia and Arkansas.
Even with these initiatives, congressional representatives and veteran DEA officers emphasize that much more work has to be done.
This issue of Chinese cartels cornering sections of the marijuana industry without being licensed to engage in commercial industry activities undercuts not only licensed cannabis companies but also ancillary entities such as Innovative Industrial Properties Inc. (NYSE: IIPR) that are denied an opportunity to serve more legitimate businesses since the market is being cornered by these illicit actors.
About CNW420
CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of an article each business day at 4:20 p.m. Eastern – a tribute to the time synonymous with cannabis culture. The concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.
To receive SMS alerts from CNW, text CANNABIS to 888-902-4192 (U.S. Mobile Phones Only)
For more information, please visit https://www.CannabisNewsWire.com
Please see full terms of use and disclaimers on the CannabisNewsWire website applicable to all content provided by CNW, wherever published or re-published: https://www.CannabisNewsWire.com/Disclaimer
CannabisNewsWire
Denver, CO
www.CannabisNewsWire.com
303.498.7722 Office
Editor@CannabisNewsWire.com
CannabisNewsWire is powered by IBN
