Communist China is an ideological, military, economic, commercial, technological, intelligence and diplomatic rival, and companies in China produce nearly all illicit fentanyl precursors, the key ingredients that drive the global illicit fentanyl trade. These threats are known. However, the CCP’s involvement with transnational crime and money laundering is not recognized. This must change.
I examined China’s involvement in the 12 largest categories of transnational crime. These include counterfeit goods, intellectual property rights violations, human trafficking, trade fraud, illegal logging, illicit tobacco, illegal fishing, human trafficking, wildlife trafficking, corruption, and others. They are all offenses related to money laundering.
According to the IMF, the total amount of money laundered every year totals two to five percent of the world’s gross domestic product, or roughly $4 trillion. What I call “CCP Inc.” is responsible for approximately one-half of the money laundering in the world.
CCP Inc. has employed China-centric money laundering methods and enablers. This includes underground banking systems, “flying money,” a proliferation of China-controlled or influenced ports and free trade zones around the world, trade-based value transfer techniques, mobile payments and “mirror swaps,” Chinese organized crime, and many others.
For example, some of the largest and most influential banks in the world are Chinese-owned. Unfortunately, there is a weak culture of anti-money laundering compliance within Chinese financial institutions. Also, Chinese cooperation with the United States and other countries on most law enforcement matters is horrendous. On numerous occasions, China has actively worked to thwart international money laundering investigations that involve Chinese interests.
China also leads the world in capital flight. Much of that money is tainted by other offenses–including corruption by government officials. A former Canadian ambassador to China called China, “the number one exporter of hot money in the world.” Despite this, the United States and other countries willingly accept the influx of funds, no questions asked. Some of that money is used to purchase real estate and strategic U.S. assets.
The United States has almost totally ignored Chinese illicit money and value trails. The U.S. and the international community as represented by the Financial Action Task Force give China a pass regarding its involvement with transnational crime and money laundering. Why?
Perhaps it is because integrated into all of this is the CCP’s worldwide influence operations. These include massive and intrusive Chinese intelligence operations, sophisticated social monitoring, the United Front propaganda machine, the Belt and Road Initiative, the creation of debt traps in developing countries, and the effective purchase of politicians, commercial interests, educational institutions, and opinion makers.
Congress is making an error by focusing only on single China-related issues, such as fentanyl, Tik-Tok, intellectual property, and purchases of U.S. farmland. Instead, we must look at the totality of CCP Inc. criminality and malfeasance, and at its illegal proceeds. These issues are all intertwined.
According to FBI Director Christopher Wray, China poses the biggest threat to the U.S. Yet confronting CCP Inc. should not be via the usual default to the FBI, which focuses primarily on counterespionage and intellectual property theft. Little emphasis is given to the CCP’s other criminal actions in the United States and around the world. There is also a general lack of understanding within the FBI of China-centric money laundering methodologies and enablers.
Using a broader law enforcement perspective, it is apparent that the People’s Republic of China should be classified as an ongoing criminal enterprise. I urge the establishment of regional law enforcement task forces that encompass a whole-of-government approach. They should research, investigate, expose and prosecute the interwoven strands of CCP Inc.’s criminal enterprise.
John Cassara is a former U.S. intelligence officer and Treasury Special Agent. He is author of “China-Specified Unlawful Activities: CCP Inc., Transnational Crime and Money Laundering.”