Press Releases

Yesterday, the House Financial Services Subcommittee on Oversight and Investigations, led by Chairman Dan Meuser (PA-09), examined the growing partnership between Chinese money laundering networks (CMLNs) and drug cartels and the threat they pose to the U.S. financial system.

On How CMLNs Operate to Avoid Detection and How We Can Counter Them:

Subcommittee Chairman Meuser said, “What's happening is that from China, the so-called precursors of fentanyl are being shipped to cartels. Cartels are developing fentanyl, shipping it to the U.S., and making the sales take place. Within the U.S., the various players and actors there, both for the cartels and for some Chinese foreign nationals that are here, are laundering the money, taking the U.S. dollars they receive and converting them into pesos, for the most part, shipping those pesos back to Mexico, where Mexico then converts them again from pesos to Chinese currency, which goes back to China.”

Rep. Barry Loudermilk (GA-11) questioned Specialist in International Sanctions and Financial Crimes in the Foreign Affairs, Defense, and Trade Division, Congressional Research Service, Ms. Liana Rosen, on how cash incentive businesses, real estate, and money service businesses are being exploited by CMLNs, to which she answered, “Yes, all of the above have been involved in Chinese money laundering networks. What's really interesting about these Chinese money laundering networks is the variety of ways in which they launder these illicit funds. … The most recent Treasury Department report on money laundering risk assessments did identify that Chinese money laundering networks continue to adapt and evolve to avoid law enforcement detection.”

Rep. Zach Nunn (IA-03) said, “Chinese money laundering networks have become the bankers' cartel for poisoning our communities, including over 40,000 shell companies that are operating right here in the United States today. Every dollar that is laundered buys more fentanyl, more guns, more product, and it's moving directly into our country. In my home state of Iowa, Mr. Chair, fentanyl now kills more people my daughter's age than my age, a direct threat to the health and future of our country. The CCP bank networks don't just bank the cartels; they launder money for North Korean hackers, for what's happening in Iran, for terrorism, and certainly for Russian crime rings.”

Rep. Mike Haridopolos (FL-08) questioned Retired Special Agent, U.S. Department of the Treasury, Mr. John Cassara, on how we can counter CMLNs, to which he replied, “The one thing would be that I would mandate that the U.S. government, law enforcement, whole-of-government approach come up with a comprehensive strategy to go after Chinese transnational crime... It's not a single agency. It's not a single bureau. Responsibility has to be shared by all of the government agencies. And in conjunction with that, I would seriously consider establishing task forces that are specifically focused on the Chinese transnational crime threat, regional task forces, combining federal, state, and local resources.”

Witnesses Echoed the Work of the Committee:

Ms. Rosen said, “Like many other money laundering organizations, CMLNs reportedly provide money-laundering services to a range of criminal actors engaged in drug trafficking, human trafficking, and other fraud schemes. … Beyond the laundering of drug profits, Treasury has reported that CMLNs ‘also launder illicit proceeds from otherwise unrelated criminal networks involved in a range of illicit activities, including fraud schemes; human trafficking and smuggling; marijuana grow house operations; and tax evasion.’ According to the U.S. Drug Enforcement Administration (DEA) and others, CMLNs also have supported what U.S. law enforcement agencies refer to as ‘Chinese TCO’ activity linked to the cultivation and distribution of illicit marijuana in the United States, as well as other crimes.”

Mr. Leland Lazarus, Founder and Chief Executive Officer, Lazarus Consulting, said, “This Committee can help ensure that Treasury, FinCEN, law enforcement, intelligence agencies, banks, customs authorities, and our international partners are no longer fighting isolated pieces of the same network. It can demand regular threat reporting, restore and strengthen beneficial ownership transparency, tighten scrutiny of high-risk trade and financial corridors, expand sanctions and enforcement tools, and support the data-driven capabilities needed to map and dismantle these networks at scale.”

Mr. Cassara said, “Over the past five years, Chinese money laundering rings have been increasingly moving the drug proceeds of the Mexican cartels. Since China’s financial regulators limit private individuals from handling more than $50,000 in foreign currency, there is massive Chinese demand for U.S. dollars. This pent-up demand for dollars from China and the cartels’ need to unload U.S. dollar proceeds creates this unholy alliance between Chinese money launderers and the Mexican cartels.”

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