“At no time in the history of organized crime is there an example where a revenue stream has been taken over like this, and without a shot being fired,” said retired DEA agent Thomas Cindric, a veteran of the elite Special Operations Division. “This has enriched the Mexican cartels beyond their wildest dreams.”
“Adm. Craig Faller, a senior U.S. military leader, told Congress last year that Chinese launderers had emerged as the “No. 1 underwriter” of drug trafficking in the Western Hemisphere. The Chinese government is “at least tacitly supporting” the laundering activity, testified Faller, who led the U.S. Southern Command, which oversees military activity in Latin America.
In an interview with ProPublica, the now-retired Faller elaborated on his little-noticed testimony. He said China has “the world’s largest and most sophisticated state security apparatus. So there’s no doubt that they have the ability to stop things if they want to. They don’t have any desire to stop this. There’s a lot of theories as to why they don’t. But it is certainly aided and abetted by the attitude and way that the People’s Republic of China views the globe.”
Some U.S. officials go further, arguing that Chinese authorities have decided as a matter of policy to foster the drug trade in the Americas in order to destabilize the region and spread corruption, addiction and death here.
“We suspected a Chinese ideological and strategic motivation behind the drug and money activity,” said former senior FBI official Frank Montoya Jr., who served as a top counterintelligence official at the Office of the Director of National Intelligence. “To fan the flames of hate and division. The Chinese have seen the advantages of the drug trade. If fentanyl helps them and hurts this country, why not?”
Europol has warned that Chinese money laundering groups “present a growing threat to Europe.” The U.S. State Department estimates that $154 billion in illicit funds a year passes through China, calling it “of great concern.”
“We used to have a regular dialogue with the Chinese specifically on things like money laundering, counternarcotics policies,” Assistant Secretary Todd Robinson, who leads the Bureau of International Narcotics and Law Enforcement Affairs, said in an interview. “And since that has stopped, it has not been clear, we’ve not really been able to get a handle on how much of this is criminal organizations and how much of it is criminal organizations connected to or suborning Chinese government officials.”
Xi has led a well-publicized crusade against corruption, but it has been mainly a purge of rivals, according to U.S. national security officials and Chinese dissidents. In fact, they said, Chinese intelligence services have quietly expanded their ties with Chinese mafias, known as triads, for mutual benefit.
“There is no question there is interconnectivity between Chinese organized crime and the Chinese state,” said Montoya. “The party operates in organized crime-type fashion. There are parallels to Russia, where organized crime has been co-opted by the Russian government and Putin’s security services.”
The Li case led federal agents in an unexpected direction: an investigation of a possible Chinese covert operation to penetrate American politics. The DEA agents stumbled across Li’s enigmatic associate, an expatriate Chinese businessman named Tao Liu. After moving from Mexico to New York, he launched a high-rolling quest for political influence that included at least two meetings with President Donald Trump.
In testimony to a Canadian commission of inquiry in 2020, Cassara, the former investigator at the U.S. Treasury Department, described the frequency of laundering in the U.S. real estate sector.
“Almost 60% of purchases by international clients are made in cash,” Cassara said, citing a report by the National Association of Realtors. “Chinese buyers have been the top foreign buyers in the United States both in units and dollar volume of residential housing for six years straight. ... In the United States, there is little if any customer due diligence by real estate agents.”
Looking at Chen’s smartphones, the agents were able for the first time to read the suspects’ most sensitive conversations on WeChat, an application for messaging and commerce. WeChat is ubiquitous in China and the Chinese diaspora and impenetrable to U.S. law enforcement. Because it uses a form of partial encryption allowing the company access to content, WeChat is closely monitored by the Chinese state, according to U.S. national security veterans.
U.S. officials view the brazen use of WeChat for money laundering as another suggestive piece of evidence that authorities in Beijing know what is going on.
“It is all happening on WeChat,” Cindric said. “The Chinese government is clearly aware of it. The launderers are not concealing themselves on WeChat.”
The alleged state-underworld alliance surfaces elsewhere. In Hong Kong and Taiwan, triads attack political rivals of Beijing. Canadian national security chiefs have warned for years about an alliance of Chinese spies, triads and oligarchs. U.S. gangsters assist the Communist Party’s overseas intelligence and influence arm, the United Front, according to national security experts.
The party “uses organized crime-linked money laundering networks to get money to United Front actors and to help them fund their activities,” said Matthew Pottinger, who served as U.S. deputy national security adviser from 2019 to 2021. In return, triads gain “a sense of political security,” he said.
In the Li case, agents learned that clients for his money-moving services included powerful figures in the party, the Chinese government and the diaspora, according to Ciesliga and other former law enforcement officials and people familiar with the case. But it was hard to gather evidence because, as prosecutors said in a court filing, “United States law enforcement rarely, if ever, obtains assistance from Chinese officials in criminal investigations.”
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