Sunday, December 6, 2020

Chinese money brokers laundering cartel cash

Chinese “money brokers” have emerged as partners for Latin American drug cartels. The recent trial of a Chinese businessman convicted of laundering cartel drug money shows how it's done. A cartel wants it's drug cash. It contacts a local Chinese money broker. Terms and an amount are agreed upon. The broker then sends, 1) a code word, 2) the number of a U.S. burner phone, and 3) the unique serial number of an authentic $1 bill. The crime group shares those details with a drug dealer in the US, who calls the burner phone and identifies himself with the code word. He arranges to meet a U.S.-based money courier working for the Chinese broker. The courier hands over the $1 bill with the unique serial number. When it's verified, the dealer hands over the cash, keeping the bill as a receipt.
The courier takes the cash to a U.S. based Chinese merchant who has a bank account in China. The merchant performs a currency swap known as a “mirror transaction.” Chinese yuan flows from his Chinese bank account to the money broker’s Chinese account. The drug cash is now sitting in a Chinese bank, outside the view of the US.
The broker has two options to send it on. Option 1 is to do another “mirror transaction.” The yuan is transferred from the money broker’s Chinese account to the Chinese bank account of a cartel business. Pesos go to the money broker and that cash goes to the cartel. The second option is to buy consumer goods in China and export them. The goods are sold, and the proceeds flow to the cartel.