US Accuses Chinese Bankers of Laundering Money

( – A years-long investigation by federal law enforcement uncovered a vast money laundering operation between the Sinaloa drug cartel and Chinese underground banking that led to two dozen arrests.

In the conspiracy between the cartel and the Chinese underground bankers, over $50 million in drug money, most of it processed in Southern California, was laundered, according to a June 18 press release from the Justice Department.

Mexican and Chinese law enforcement assisted in the recent capture of the fugitives named in the federal indictment.

The primary defendant, 45-year-old Edgar Joel Martinez-Reyes of Los Angeles, was in charge of managing couriers who collected the cash in the LA area. He partnered with the leader of the Chinese underground bankers who traveled with Martinez-Reyes to meet with the cartels in Mexico to negotiate the partnership, according to prosecutors.

The laundering operation relied on wealthy Chinese nationals who worked, lived, or invested in China and sought to transfer assets to the US but were prevented from transferring more than $50,000 each year by Chinese law. To skirt the Chinese government’s restrictions, these wealthy individuals used a less conventional banking system.

Under the laundering scheme, a Chinese national would contact someone in China who had US dollars available to sell in the United States. The seller would provide banking information in China and instruct the Chinese national to deposit Chinese currency into the account. Once the money was deposited, an equivalent in US dollars was released to the buyer in the United States.

Prosecutors said the laundering operation also used cryptocurrency transactions to move the drug profits with the funds in China going to purchase products like the chemicals used in the manufacturer of methamphetamine and fentanyl that were then shipped to Mexico.

The so-called underground bankers in China charged a much smaller commission fee than typical money launderers which helped keep costs down and profits up for the drug cartels.

US law enforcement began working with Chinese law enforcement in tracking the laundering operation after a November 2023 meeting between President Biden and Chinese President Xi Jinping in California.

Of the 24 defendants indicted in the case, at least 22 have been arrested. They face charges including conspiracy to aid and abet drug distribution, conspiracy to launder money, and conspiracy to operate unlicensed money-transmitting businesses.

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