Step by step – How Chinese ‘money brokers’ launder cash for Mexican drug cartels

Reuters Factbox –

Chinese “money brokers” have emerged as vital partners for Latin American drug cartels, becoming key cogs in their multi-billion-dollar empires and upending the way narcotics cash traditionally has been laundered, according to U.S. authorities.

Based on Reuters reporting and details that U.S. prosecutors presented at the recent trial of a Chinese businessman convicted of laundering cartel drug money, here is a popular method Chinese brokers employ to launder U.S. drug proceeds of Mexican crime groups:

STEP 1 – A Mexican cartel wants to bring proceeds from U.S. drug sales back to Mexico. It contacts Chinese money brokers operating in Mexico to see who offers the cheapest rates.

STEP 2 – The parties agree on a commission and the amount to be laundered, say $150,000.

STEP 3 – The Chinese broker, using encrypted phone messages, would send the cartel three things:

1. a code word

2. the number of a U.S. burner phone

3. the unique serial number of an authentic $1 bill

Step 4 – The Mexican crime group shares those details with a cartel-linked drug dealer in the United States, who calls the burner phone and identifies himself by using the code word. He arranges to meet a U.S.-based money courier working for the Chinese broker.

Step 5 – The drug dealer and the money courier meet in public. The courier hands over a $1 bill with the unique serial number. When that checks out, the dealer hands over the cash, keeping the bill as a “receipt.”

Step 7 – The cartel’s drug cash is now sitting in a Chinese bank, outside the view of U.S. law enforcement. The broker has two options to send it on to Mexico to the drug cartel.

Step 8 – Option 1 is to do another “mirror transaction.” The $150,000 worth of yuan is now transferred from the money broker’s Chinese account to the Chinese bank account of a Mexico-based businessperson. That Mexico-based businessperson then provides $150,000 worth of pesos to the money broker in Mexico, who delivers that cash to the cartel.

Step 9 – Under option 2, the Chinese money broker buys $150,000 worth of consumer products in China, such as clothing, and exports them to Mexico. The goods are then sold, and the proceeds delivered to the cartel.

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National Association of Drug Diversion Investigators Federal Tax ID: 52-1660752 / DUNS Number: 073539913

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