Congressman Dan Newhouse, head of the House Select Committee on the Chinese Communist Party’s (CCP) Fentanyl Working Group, stated that the Chinese government is aware that Chinese money launderers collaborate with Mexican cartels to launder proceeds from fentanyl sales. Newhouse shared his statement during a meeting held by the working group on July 24.
"Chinese money launderers have taken the terrorist money laundering playbook and digitized it," said Newhouse. "They use modern technologies—messaging and payment apps, e-commerce sites, digital assets, and the opaque nature of the Chinese banking system—to move large sums of money and facilitate trade-based money laundering with impunity. This system largely evades the formal banking system in the United States, Mexico, and elsewhere, making it particularly difficult to counter with traditional anti-money laundering tools. But make no mistake, the CCP financing system runs right through Chinese banks—and the CCP knows all about it."
According to a press release, the meeting focused on how the U.S. can counter Chinese money laundering and financing of fentanyl. Newhouse led the meeting alongside Congressman Jake Auschincloss (D-MA). The working group heard from experts including Don Im, former assistant special agent in charge with the Drug Enforcement Administration special operations division; John Cassara, former CIA officer and special agent with the U.S. Department of the Treasury; and Alex Zerden, founder of Capitol Peak Strategies.
According to the Foundation for Defense of Democracies (FDD), Chinese money launderers "have emerged as a central element of a financial scheme that takes bulk U.S. dollars received from drug operations in the U.S. and returns the profits to cartels in Mexico." FDD said the "scheme involves the largest banks in China, which are also the largest banks in the world." In 2021, Admiral Craig Fuller, then-commander of U.S. Southern Command, said during testimony before Congress that Chinese money laundering is "the number one underwriter of transnational criminal organizations."
FDD cited an example of money laundering involving an indictment issued in October 2020 in Virginia to six individuals for "participating in a conspiracy to launder millions of dollars of drug proceeds on behalf of foreign cartels." The Department of Justice alleged that these individuals had at least $30 million from drug conspiracies and money laundering activity. Afterward, Xizhi Li, leader of the money laundering scheme and a U.S. citizen residing in Mexico, pleaded guilty to one count of conspiring to commit money laundering and received a 15-year prison sentence.
According to the National Institute on Drug Abuse, total drug overdoses in 2022 were reported to be 107,941. Overdoses involving synthetic opioids such as fentanyl, excluding methadone, continued to rise with 73,838 overdose deaths in 2022.
Newhouse represents Washington’s 4th Congressional District and serves on the Appropriations Committee. He previously served in the Washington State House of Representatives from 2003 to 2009 and as Director of Washington State’s Department of Agriculture from 2009 to 2013.
