Drug Cartels' New Weapon: Chinese Money Launderers
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What illicit activities are linked to Chinese money launderers?
One morning in Los Angeles County, a white Range Rover was cruising around, about to make several stops at local banks. The vehicle was being tracked by law enforcement agents.
They set out to find the white Range Rover, which they see from the GPS trackers parked at this bank branch in Artesia, in the city of Artesia.
That's our colleague Dylan Tokar.
Shortly after they get there, they see a man named Jia Yong Yu get out of the vehicle. He's carrying a black backpack. And his first stop is at the ATM machine outside the bank. They can't really tell, but it seems like he deposits maybe a check there. He then walks into the bank, and one of the task force officers is following, you know, behind, trying to look discreet.
The agents were following the driver, Jia Yong Yu, because they suspected he might be laundering money.
They see Yu approach a teller, and he just starts taking stacks of cash bound with rubber bands out of his backpack and putting it on the counter.
Then Yu left, but the agent stayed behind. They asked the bank teller if Yu deposited more than $10,000, anything above that amount is supposed to get flagged by the bank.
And she looks at them and she says, more like $100,000.
By then, Yu was already on his way to another bank, Investigators allege that Yu is part of a new wave of sophisticated money launderers, all with ties to China, who are laundering money for powerful Mexican drug cartels and operating at such a scale and efficiency that it blows traditional money launderers out of the water. Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudson. It's Monday, December 22nd. Coming up on the show, the story of Operation Fortune Runner, a years-long push to bring down a Chinese money laundering ring.
Do you ever watch The Wire?
I have watched The Wire. It's a little hard for me to watch because it's kind of, it's too close to home, you know?
Julie Shemit spent more than 30 years working for the Department of Justice. Over the decades, she developed an expertise on money laundering. She's seen it all, from corrupt Mexican banks to dirty money in Afghanistan. And Julie abides by an age-old mantra, follow the money.
The money laundering side is a window into the larger organization. You know, if you want to pursue drug traffickers, you could be on the street following people around, watching them do deals, watching them pass drugs to people and picking up money. But it doesn't have any meaning until you actually... start to see how the money that they are handling is getting to the people who actually own those drugs.
You can swat bees, but you really want to find the hive. Exactly. For years, Mexican drug cartels have relied on money launderers from Latin America. But in recent years, there's been an explosion of new money laundering groups with ties to China. So many of these Chinese laundering groups have popped up that authorities have started referring to them by their acronym, CMLOs, Chinese Money Laundering Organizations. And they are cleaning up and taking tons of market share from their competitors. There's a few reasons why. The first has to do with a law in China. There's a rule that limits how much money Chinese citizens can transfer out of the country. The cap is equivalent to about $50,000. The goal is to keep money in the Chinese financial system.
The Chinese government really began to enforce this rule in 2016. Still, there's a lot of people who want to get money out of China.
There are many, many, many Chinese nationals in the United States who need dollars. They need dollars to function. They need dollars to go to school. They need dollars to buy real estate. They need dollars to live. And... They may have resources in China, financial resources, but those resources aren't really available to them. And so it suddenly became imperative for people to find another way to move their money into the United States.
A Wall Street Journal analysis last year estimated that more than $250 billion had left China in a 12-month period.
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Chapters
4 chapters
1
What illicit activities are linked to Chinese money launderers?
0:03–8:33
2
How are Chinese money launderers connected to Mexican drug cartels?
8:33–17:49
3
What role does the Chinese financial system play in money laundering?
17:49–23:34
4
How do Chinese money brokers operate in the U.S.?
23:34–23:41