Most Americans recognize fentanyl as a driving force behind the increasing number of opioid deaths in this country, but no one has yet come up with a viable way to stop this attack on public health.
“At some point in time, we have to figure out solutions to the issues, and these are very complicated, very complex issues, and if we truly care about the American people, a way to move our country forward, let’s find something that we can agree on that we can move forward on,” Rep. Lisa McClain (R-MI), chair of the House Subcommittee on Health Care and Financial Services, said during Wednesday’s hearing on how Chinese money laundering enriches the Mexican drug cartels, exacerbating the fentanyl crisis.
To help the panel look for those solutions, three witnesses testified about the role Chinese organized crime (OC) plays and how its money laundering operations (MLO) function.
“Money is the lifeblood of the cartels, and the methods that Chinese OC was using enriched them and enabled them to traffic even more fentanyl and other deadly drugs into the United States,” Christopher Urben, former assistant special agent in charge with the U.S. Drug Enforcement Administration (DEA), said.
Chinese individuals are increasingly involved in laundering money for Mexican cartels, including the main distributors of fentanyl to the U.S.: the Sinaloa Cartel and Cartel Jalisco Nueva Generación, according to Vanda Felbab-Brown, a senior fellow at the Brookings Institution and director of Brookings' Initiative on Nonstate Armed Actors.
Money is laundered between Mexican and Chinese criminal networks through multiple channels, including trade-based laundering, value transfer using wildlife products such as marine products and timber, real estate, cryptocurrencies, casinos and bulk cash, according to Brookings Institution.
Lakshmi Kumar, policy director at Global Financial Integrity (GFI), has estimated that every year, between $294 billion and $736 billion is laundered through the Chinese economy.
Approximately 107,000 U.S. residents died from drug overdoses in 2021, and two-thirds of those deaths involved synthetic opioids, such as fentanyl, the DEA reported on its website. Depending on a person's drug tolerance, as little as 2 milligrams of fentanyl can lead to death.
The Biden administration has pursued a two-year whole-of-government effort focused on an “evidence-based strategy to address untreated addiction, prevent drug deaths, and dismantle drug trafficking production and supply chains,” the White House has said in a press release.
“The administration’s efforts and the April White House press releases are commendable, but they had a glaring omission: not a single mention of China and the role of Chinese individuals, companies and banks in financing the drugs that are killing Americans,” Anthony Ruggiero, senior director and senior fellow at the Foundation for Defense of Democracies, testified. “The administration must not shy away from calling out Beijing’s role.”
The challenge lies in the notion that it is much harder to track today’s money laundering business, much of which is conducted through apps like WeChat.
“The outsourcing of money laundering to professionals means that the arrangement of the transnational criminal organizations (TCO) has continued to expand horizontally, away from the traditional, clearly defined top-down model,” Channing Mavrellis, illicit trade director for GFI, told the representatives. “This horizontal arrangement is more nebulous, with more moving parts and adaptability, and it makes it harder for law enforcement to investigate, build and prosecute cases.”
The witnesses put forth suggestions on what the U.S. should consider, including: targeting the individuals, entities and countries facilitating financial crimes and money laundering; updating the Fentanyl Sanctions Act; and increasing cooperation with Mexico and Canada to create a more unified fight against China’s transit of the precursors used to manufacture fentanyl.
“While the threat posed by Chinese OC is real and growing, much more can be done to combat it,” Urben said. “More investigative resources, such as translators, data scientists and experienced targeting analysts, will enable law enforcement to have the tools needed to detect and investigate these networks where they operate. Additional investigative tools and rules addressing this money laundering scheme also can play an important role.”
The representatives gained insights on how the MLOs operate and the different tools that Congress and the administration can use to cut into the networks.
“Illicit fentanyl presents one of the biggest, if not the biggest, threats to public safety that the United States, in my opinion, has ever seen,” McClain said, adding that fentanyl is now the leading cause of death for Americans ages 18-45, killing more people in that age demographic than suicide, COVID-19 and automobile accidents.
Ranking member Katie Porter (D-CA) said 97 times more Americans died from synthetic opioids in 2021 than in 1999.
“This is a five-alarm fire, but the fire has been burning for years,” Porter said, “but it really started raging during the last decade, and Chinese-based money laundering operations have fueled it.”
China plays multiple roles in the crisis, she said, not just with money laundering, but by supplying the raw materials for making fentanyl.
The challenge, pointed out by Mavrellis after being asked questions by panelists, is that China isn’t inclined to take responsibility for putting a deadly drug that is killing 100,000 Americans a year out there.
