DEA Administrator Anne Milgram stated that the Sinaloa and Jalisco New Generation drug cartels are using Chinese criminal organizations to launder money from the illicit drug trade. She made this assertion in the DEA’s National Drug Threat Assessment report, released on May 9.
"The cartels utilize Chinese Money Laundering Organizations to move their profits from the United States back to Mexico," said Milgram, according to Drug Enforcement Administration (DEA). "Drug trafficking organizations based in Mexico and South America are increasingly utilizing China based underground banking systems as their primary money laundering mechanism."
According to the National Drug Threat Assessment report, drug cartels employ various methods to launder their money. One significant method involves Chinese underground banking systems (CUBS), which allow Chinese nationals to convert their money into U.S. dollars, circumventing Chinese regulations that limit foreign currency purchases and investments to $50,000. Money processors for CUBS brokers collect cash from drug traffickers in the U.S. and structure it into U.S. accounts under various guises. They then have money processors in Mexico or South America pay drug traffickers directly.
As stated in a previous article from Federal Newswire, Chinese money laundering organizations have been operating in North America for years, offering their services to drug cartels since at least 2016. These organizations have become more popular with Mexican drug cartels due to their lower rates and ability to use U.S. currency.
Another method used by cartels is cryptocurrency. Cryptocurrencies enable value transfer across international borders without banks and leave no paper trail beyond the encrypted blockchain. The process involves cartels giving bulk cash crime proceeds to someone in exchange for cryptocurrency, which can then be immediately transferred to counterparts in Mexico and resold locally. Although cryptocurrency exchange companies are required by law to monitor customers and transactions for evidence of money laundering, cartels continue using these platforms more frequently in recent years.
Millions of dollars from illicit drug sales are consolidated in key cities or smuggled out of the U.S. by cartel-linked couriers, as evidenced by numerous bulk cash seizures near the Southwest Border. In 2023, law enforcement within 150 miles of the U.S.-Mexico border made nearly 600 seizures totaling $18 million, mostly in Arizona, California, Texas, and New Mexico. Law enforcement faces challenges due to varying regulations, transaction volumes, and the use of encrypted technologies by cartels. Despite these obstacles, the involvement of criminal associates in money laundering creates potential vulnerabilities for cartels.
According to the DEA’s website, Milgram was sworn in as Administrator on June 28, 2021 after being confirmed by the U.S. Senate. Before joining the DEA, she served as Attorney General for New Jersey and was a Professor of Practice and Distinguished Scholar in Residence at New York University School of Law.
