Chinese brokers launder hundreds of millions for global crime groups | FT Film

Summary

Chinese money launderers have partnered with Mexican drug cartels to efficiently launder proceeds from fentanyl trafficking. This sophisticated network uses mirror transfers to move money invisibly, aiding the international drug trade. Despite efforts by law enforcement, such as Project Sleeping Giant, the scale and speed of these operations pose significant challenges. The involvement of Chinese organized crime in global money laundering is unprecedented, contributing to the fentanyl crisis in the US, which remains the leading cause of death among those under 50. The situation underscores the need for enhanced collaboration and tools to combat this growing threat.

Takeaways

• 💰 Chinese money launderers have partnered with Mexican drug cartels to launder fentanyl trafficking proceeds.
• 🚨 Law enforcement lacks sufficient tools to tackle the rising dominance of these sophisticated money laundering networks.
• 🔄 These money laundering operations function like franchise models, moving large amounts of money quickly and in multiple directions.
• 🌐 The scale and scope of these operations are extraordinary, representing a significant national security issue.
• ⚠️ In 2017-18, Chinese money brokers began controlling the laundering of Mexican cartel proceeds for minimal fees, boosting cartel profits.
• 🏦 Chinese underground banking systems developed to move money invisibly, catering to businesses unable to use formal banking channels.
• 💸 This illicit money finances various activities, from luxury shopping in Europe to the international drug trade.
• 🛑 The fentanyl crisis is the deadliest drug threat in the US, with overdose deaths being the leading cause of death among those under 50.
• 👁️ Chinese nationals increasingly appeared in fentanyl trade surveillance, indicating their growing involvement in money laundering.
• 🔍 DEA investigations revealed Chinese organised crime not only supplies precursor chemicals but also controls international money laundering for cartels.

Q & A

Who have Chinese money launderers partnered with to launder proceeds from fentanyl trafficking?

Chinese money launderers have partnered with Mexican drug cartels.

What is the main challenge law enforcement faces in tackling this money laundering network?

Law enforcement in the country does not have sufficient tools to tackle it.

How are these money laundering networks described?

They are described as franchise models that are highly sophisticated and can be stood up quickly to move a lot of value in different directions simultaneously.

What significant change occurred in 2017 and 2018 regarding money laundering?

In 2017 and 2018, Chinese money brokers began to control the laundering of Mexican cartel proceeds and started charging only 1 to 2 percent fees, which were previously unheard of.

What is the 'mirror transfer' system used by underground Chinese banks?

In the mirror transfer system, a person deposits a sack of money in cash at one branch of an underground bank, and another person picks up the same amount from another branch, making it invisible to authorities.

How does the DEA describe the fentanyl overdose crisis?

The DEA reports that fentanyl overdose is the leading cause of death among those under the age of 50 and is the deadliest drug threat the country has ever faced.

How did the partnership with Chinese money launderers benefit the Mexican cartels?

The Mexican cartels increased their bottom line, their net profits, by 3 to 5 percent by partnering with Chinese money launderers.

What role did Ray Donovan play in tackling the fentanyl crisis?

Ray Donovan was a former chief of operations for the DEA who identified the involvement of Chinese nationals in the fentanyl trade and worked to exploit communications and understand the network.

What is the main method used by Chinese money launderers to transfer funds for the cartels?

Chinese money launderers use a system where they collect drug proceeds in the US, advertise the sale of those dollars on WeChat, and then transfer funds through bank-to-bank transactions to launder the money.

What is the significance of the location Flushing, Queens in the money laundering operations?

Flushing, Queens is identified as a command and control center for Chinese money laundering operations, with multiple businesses within that serve as fronts for laundering illicit drug proceeds.

Outlines

00:00

💸 Chinese Money Laundering and Mexican Cartels

Chinese money launderers have teamed up with Mexican drug cartels to effectively launder proceeds from fentanyl trafficking. Law enforcement in the U.S. lacks the tools to combat this. These sophisticated networks can quickly mobilize large amounts of money across various directions. The scale is extraordinary, making it a national security issue. Since 2017-18, Chinese money brokers began controlling the laundering of cartel proceeds for unprecedentedly low fees, boosting cartel profits. This underground banking system, developed as China liberalized, operates via mirror transfers, making the money movements invisible to authorities. The illicit money finances luxury shopping and the international drug trade, particularly impacting the U.S. fentanyl crisis.

05:03

🏙️ New York and the Fentanyl Crisis

Ray Donovan, a former DEA chief, discusses the rise of fentanyl and its connection to Chinese money laundering. He explains how Chinese nationals began appearing in fentanyl trade surveillance, signaling a shift. Donovan's background in intercepting large cocaine shipments in the '90s helped him develop expertise. His team at the Special Ops Division (SOD) focused on drug cartels, not Chinese crime. However, the Chinese involvement in supplying precursor chemicals and laundering money for drug trafficking became evident. Fentanyl distribution networks in New York are linked to Chinese money launderers who use money service providers in places like Flushing, Queens, to funnel proceeds back to cartels.

10:04

🕵️‍♂️ Fentanyl Distribution and Money Laundering

Chris Urben, a former DEA special agent, describes the sophisticated money laundering methods used by Chinese brokers to launder fentanyl proceeds. He details a system where cartels contact Chinese brokers in Mexico and New York to move drug money. The funds are laundered through WeChat communications, with physical cash handled by Chinese couriers. Investigations revealed large cash stashes in locations like Flushing, Queens. This method, part of a global trend, is seen in other regions like Africa and Europe. Chinese organized crime is professional and efficient, often using complex setups like casinos and front businesses for laundering.

21:13

🏫 Fentanyl's Impact on Communities

The Loudoun County Sheriff's Office addresses the local impact of fentanyl, with students overdosing on laced pills. Deputy Will Sullivan explains the rise of fentanyl, its deadly potency, and its widespread availability. Sheriff Mike Chapman discusses the national scale of the crisis, noting the increase in overdose deaths surpassing Vietnam War casualties. He emphasizes the need for comprehensive efforts to combat this epidemic. The story underscores the greed driving the fentanyl trade and the devastating effects on families. Project Sleeping Giant was initiated to address Chinese organized crime's role in this crisis, though it faced challenges in law enforcement coordination.

26:14

🛡️ Law Enforcement Strategies

Ray Donovan recounts the challenges in integrating various law enforcement arms to combat the evolving threat of Chinese money laundering. Project Sleeping Giant aimed to consolidate intelligence and strategize against these networks. The Zhishi Li investigation exemplifies successful takedowns, revealing sophisticated operations involving casinos and extensive networks. The lack of Mandarin speakers in the DEA posed a significant challenge. Dennis Wilder from the CIA highlights the political and security issues related to China's role in the fentanyl crisis. Efforts to restart U.S.-China cooperation on counter-narcotics have faced obstacles but are crucial for addressing global challenges.

31:15

🌍 Global Scope of Chinese Organized Crime

Vanda Felbab-Brown of The Brookings Institution discusses the historical and global expansion of Chinese organized crime. The illicit side of the underground banking system grew alongside the resurgence of Chinese triads in the 1980s and '90s. These criminal groups expanded from Southeast Asia to the Pacific and beyond. The Chinese government's crackdown on private entrepreneurs has driven many to launder money abroad. The National Crime Agency in the UK recognizes the Informal Value Transfer System (IVTS) as central to moving Chinese illicit money globally. This system is becoming more overt, with services advertised online, underscoring the sophisticated and organized nature of these operations.

36:15

🏦 Exploiting Financial Systems

Sal Melki from the National Economic Crime Centre explains how underground bankers and organized criminals exploit financial systems. Methods include using money mules and creating multiple bank accounts in less regulated institutions. These tactics undermine banking systems, allowing criminals to smurf money into legitimate institutions. Despite ongoing efforts, the flow of illicit money continues, driven by advanced technology and interconnected criminal groups. The battle against these sophisticated networks remains challenging for financial institutions and law enforcement.

Keywords

💡Chinese money launderers

Chinese money launderers refer to individuals or groups in China involved in the illegal process of making large amounts of money generated by a criminal activity appear to be earned legitimately. In the video, these launderers are described as having partnered with Mexican drug cartels to efficiently launder proceeds from fentanyl trafficking, making them a key element in the international drug trade and exacerbating the fentanyl crisis in the U.S.

💡Mexican drug cartels

Mexican drug cartels are criminal organizations involved in drug trafficking and other illegal activities. The video highlights their partnership with Chinese money launderers to increase their profits by efficiently laundering drug proceeds, specifically from the sale of fentanyl, which has become a major public health crisis in the United States.

💡Fentanyl

Fentanyl is a powerful synthetic opioid that is significantly more potent than heroin and morphine. The video underscores its role in the current drug crisis in the U.S., with fentanyl overdoses being the leading cause of death among people under 50. The drug is predominantly trafficked by Mexican cartels, with Chinese money launderers aiding in laundering the proceeds.

💡Money laundering

Money laundering is the illegal process of concealing the origins of money obtained through illicit means, typically by passing it through a complex sequence of banking transfers or commercial transactions. The video discusses how Chinese and Mexican criminal networks have developed sophisticated methods to launder proceeds from the fentanyl trade, making it difficult for law enforcement to track and intercept these funds.

💡Mirror transfer

Mirror transfer is a method used in underground banking where money is deposited in one location and an equivalent amount is withdrawn in another, without the actual money crossing borders. This technique is highlighted in the video as a key method used by Chinese underground banks to launder drug money, making the transactions invisible to authorities.

💡Underground banking

Underground banking refers to informal banking systems that operate outside of official financial institutions, often used to transfer money across borders without detection. The video explains how these systems have been exploited by Chinese money launderers to help Mexican drug cartels move and launder drug proceeds globally.

💡DEA (Drug Enforcement Administration)

The DEA is a United States federal law enforcement agency tasked with combating drug trafficking and distribution. The video features former DEA agents discussing the challenges they face in tackling the sophisticated money laundering operations connected to the fentanyl trade and highlights their efforts to bring various elements of the government together to address this issue.

💡Project Sleeping Giant

Project Sleeping Giant is an initiative mentioned in the video aimed at focusing law enforcement efforts on Chinese organized crime and their collaboration with Mexican cartels. It represents a strategic move to shine a spotlight on these criminal networks and their role in the global drug trade, particularly the laundering of proceeds from fentanyl trafficking.

💡WeChat

WeChat is a Chinese multi-purpose messaging, social media, and mobile payment app. In the context of the video, it is used by Chinese money brokers to communicate and coordinate money laundering activities, highlighting the role of modern technology in facilitating illicit financial transactions.

💡Fentanyl crisis

The fentanyl crisis refers to the widespread abuse and overdose deaths caused by fentanyl, a potent synthetic opioid. The video describes how this crisis has become the leading cause of death among Americans under 50 and emphasizes the role of Chinese money laundering networks in exacerbating the problem by helping Mexican cartels efficiently launder the proceeds from fentanyl sales.

Highlights

Chinese money launderers have partnered with Mexican drug cartels to efficiently launder proceeds from fentanyl trafficking.

Law enforcement in this country lacks sufficient tools to tackle the growing dominance of these sophisticated money laundering networks.

These money laundering operations are highly sophisticated franchise models that can quickly mobilize and move large amounts of value in various directions simultaneously.

In 2017 and '18, Chinese money brokers began to control the laundering of Mexican cartel proceeds for unprecedentedly low fees of 1 to 2 percent.

The partnership between Mexican cartels and Chinese money launderers significantly increased cartel profits by 3 to 5 percent.

A system of Chinese underground banking developed to help businesses move money that could not be transferred through the Chinese banking system, using methods like mirror transfers.

These underground banking systems make money transfers invisible to authorities, facilitating various illegal activities including the international drug trade.

The fentanyl crisis is the leading cause of death among Americans under 50, with Chinese money laundering playing a significant role in fueling this crisis.

Ray Donovan, former DEA chief of operations, identified the rise of Chinese nationals in the fentanyl trade surveillance.

Chinese organised crime has taken over international money laundering aspects of drug trafficking across the United States.

Chinese money launderers use sophisticated networks, such as money service providers and WeChat, to facilitate and conceal illegal money transfers.

DEA's Project Sleeping Giant aimed to spotlight Chinese organised crime and their partnership with Mexican cartels, emphasizing it as a national security issue.

Zhishi Li's investigation revealed a high-level money laundering network with strong triad links and sophisticated operations in the United States and Central America.

The challenge of combating this issue includes a lack of Mandarin speakers and cultural understanding within the DEA.

The Biden administration has been trying to restart cooperation with China on counter-narcotics, which ended in 2019.

Organised crime, including Chinese triads, grew alongside China's economic liberalisation, expanding their reach globally.

Chinese business people, fearing government crackdowns, are increasingly seeking to move their money abroad through illegal schemes.

The UK National Crime Agency has identified the Informal Value Transfer System (IVTS) as central to the movement of Chinese illicit money globally.

Underground bankers use various methods, including money mules and less rigorous bank accounts, to integrate illicit cash into the financial system.

Despite significant efforts, the fight against money laundering and the fentanyl crisis remains an uphill battle, with criminal groups continually adapting and advancing.

Transcripts

Chinese money launderers have partnered with Mexican drug

cartels to efficiently launder the proceeds

of the fentanyl trafficking.

Law enforcement in this country has not got sufficient tools

to tackle it.

They're really on the rise as the dominant money laundering

networks.

These are franchise models, highly sophisticated.

They can be stood up quickly and move

a lot of value in a lot of different directions

simultaneously.

The scale and the scope of this is really quite extraordinary.

We started bringing all the elements of the government

together because it was a national security issue.

It was a matter of life and death.

In 2017 and '18 something significant happened.

We didn't know why.

We couldn't understand why.

Suddenly, Chinese money brokers began

to control the laundering of Mexican cartel proceeds.

And they started to do it for 1 to 2 per cent.

Those were charges or broker fees that were unheard of.

We believe that the Mexican cartels increased

their bottom line, their net profits, by 3 to 5 per cent

by simply partnering with Chinese money launderers.

In the 1990s, as China liberalised economically,

as Chinese business started moving around the world,

a system of Chinese underground banking,

or money exchange system, developed in places where

Chinese businesses were expanding;

catering to businesses often operating with legal commodities

in legal economies, but needing to move money they would not be

able to move through the Chinese banking system.

And what these underground banks do

is they transfer money according to something

that's called mirror transfer.

A person, let's say, on the one end of the network

will arrive with a sack full of money in cash,

deposit it at the underground bank.

And then through this mirror transfer,

another person will pick up the same amount of money

from the other branch of the same underground banking

network.

The crucial thing about this is that no money has actually

been transferred.

It's completely invisible to the authorities that

might wish to crack down on it.

This illicit money finances all kinds of things.

It finances shopping sprees by Chinese consumers who

want to buy luxury in Europe.

It also finances, we have evidence,

the international drugs trade, and is particularly germane when

we think of the big crisis of fentanyl that's currently

affecting the United States.

As we continue our coverage, the DEA reports, fentanyl overdose,

it is the leading cause of death among those under the age of 50.

And they're warning communities that one pill can kill.

The deadliest drug threat our country has ever faced.

Well, I cover law enforcement here

in New York for the Financial Times.

And in the course of meeting with a former DEA

agent in a Manhattan skyscraper, halfway through our meeting,

he said, forget what you're working on now.

I have a far bigger story that's being ignored.

The fentanyl crisis that is probably

the biggest killer of Americans under 50

is being fuelled by Chinese money laundering.

And law enforcement in this country

has not got sufficient tools to tackle it.

For decades the drug cartels operating in the US

had developed a very sophisticated system

for money laundering.

They would put the cash on trucks.

They would drive them across the border.

They would find ways of sending the money to people in the US

who needed cash and would buy products with them, etc.

But the DEA and enforcement agencies across America

had a playbook for how to tackle this.

All of that changed with the fentanyl crisis.

When I first heard about this, a few people told me,

you have to speak to this guy, Ray Donovan.

He would be one of the first to identify this problem.

Suddenly, Chinese nationals were popping up everywhere

in the surveillance of the fentanyl trade to an extent

that they hadn't been before.

And he and his team realised something was going on here.

My name is Raymond Donovan.

I am the former chief of operations for the Drug

Enforcement Administration.

So I grew up in an Irish neighbourhood up in the Bronx.

But then we moved to a neighbourhood where it was all

Puerto Rican.

I saw drugs decimate parts of my family

in the '70s, in particular heroin.

So I became an expert not only in the cartel,

but really being able to exploit comms, or communications.

In the mid '90s, cocaine was just falling from the sky.

My first year we seized, here in New York City,

7,000 kilos of cocaine.

When you're intercepting tens of thousands of kilos

you're really causing a lot of harm to the cartel.

We were focused primarily on tractor trailers

coming from the west coast to the east coast.

In 2012, I was assigned to the special ops division.

SOD is basically the hub for the world

as it relates to narcotics investigations

and criminal networks.

While at SOD I developed a team.

And we collectively pursued Chapo Guzman.

We never really focused in on Chinese organised crime.

Our focus was on the Sinaloa cartel.

Yeah, we're in Brooklyn, near to downtown Brooklyn.

It's a warehouse area.

It's an area that is known for receiving shipments of drugs

coming in from Mexico or from other states

across the United States.

We started realising that the Chinese organised crime was not

only involved with supplying all the precursor chemicals

to the Mexican cartels for production of illicit narcotics.

They were also really taking over the international money

laundering aspects of the entire drug trafficking

as we know it across the United States.

Another fentanyl bust in the Bronx,

just blocks away from the daycare

where a one-year-old boy died.

We would see an organisation, that we identified through

our investigation, that was a fentanyl distribution network

dropping off drug proceeds to a Chinese money launderer here

in New York City.

And then that launderer would then

bring money, through our investigation,

to an MSP, or a money service provider, in Flushing, Queens.

And from there we would launch a different sort of investigation

that became more about following the paper trail of how

the money is leaving through these stores

because they were fronts.

Often you'll see a business that from the outside looking in,

it looks like it's one business.

But once you walk inside there's multiple businesses within.

And that's where you'll see that they'll have a money service

provider set up to launder illicit drug proceeds on behalf

of the criminal organisations.

We had a saying, all roads lead back to Flushing.

And the reason we said that is we

identified command and control leadership.

All these things sort of centred back to Flushing, Queens.

My name is Chris Urben, I'm a managing director

with Nardello and Co, which is a global investigations firm.

Prior to Nardello, I spent 24 years with the DEA

as a special agent.

This is Mexico.

This is the United States.

And this is China.

The currencies do not cross borders, the pesos, the dollars,

the Chinese Rmb.

Think of billion dollar pots of each currency

in those countries.

Let's look at the Mexican cartels.

They produce fentanyl.

They ship a large shipment of fentanyl to New York to a drug

distribution gang in New York.

They then sell that fentanyl.

And say they have $1mn that they need to have laundered back

to the Mexican drug cartel.

They contact the cartel and say, we have $1mn that we want

to move back to you.

They contact the Chinese money broker in Mexico.

That Chinese money broker, via WeChat,

contacts a Chinese broker in New York,

saying $1mn needs to be picked up.

Mexican cartel contacts their drug distribution arm and says:

this Chinese broker is going to pick up the million dollars.

They arrange for that pick-up.

It's brought back to a stash location, where they're

collecting drug proceeds controlled by this Chinese money

broker.

Chinese money broker sees that the money is there, $1mn.

WeChat messages the Chinese money broker and says:

I have the million dollars.

At this point in time, those funds

are released to the Mexican cartel.

They've now been made whole.

Their funds have been laundered for them.

That million dollars now is sitting

in a stash house controlled by Chinese money launderers.

They then get on WeChat or a bulletin board

and advertise the sale of those US dollars

within the United States.

Once those dollars were put on WeChat,

Chinese nationals, whether they be back in mainland China

or within the United States, want to buy dollars.

In this example, he's going to buy $100,000.

This Chinese national has been introduced

by this Chinese broker, in mainland China,

by this Chinese broker.

Before he actually gives them the funds,

the transfer is made bank to bank.

As soon as that's done, he provides the cashier's cheque

with the funds.

He now has the funds.

He's done.

He's made his money.

He's invested in the US.

In the beginning of this we we're trying to understand it.

We were following these individuals.

And they were picking up millions of dollars.

They followed one of these Chinese couriers who

had picked up money back to a block

and lost him on surveillance.

Now, it was later at night.

It was dark.

It was in Flushing, Queens.

And they decided, let's get out.

Let's walk the block and determine

if we can see where he went or where he was.

As they were walking down the street,

they heard what they thought to be money counters.

So when they went closer to this building, on the first floor,

they had had the window open just a little bit.

And there were six to eight money counters being run

and over $10mn in this stash location.

That was the amount of money that they

had to bring in, count.

Showed the flow of money because they were selling that money

the next day to a Chinese buyer that wanted

to invest in the United States.

Now, you can couple that around the world.

You could say that in Africa, we noticed Chinese organised crime

where there was a Chinese diaspora.

And there was a Chinese infrastructure project

and dramatic amounts of money.

Chinese organised crime paralleled those efforts.

The same thing is happening whether it be

in Italy or throughout Europe.

When you have larger narco proceeds that

need to be laundered back to Colombia, Mexico,

or somewhere else around the globe,

Chinese money launderers are relied upon

to do that on a much greater scale

than they were in the past.

They're very sophisticated.

They're very professional.

And they can get the job done quickly.

The Ndrangheta, it was born in the province of Reggio Calabria,

and in particular in the mountains of Aspromonte.

Aspromonte is one of the most geographically challenging areas

of Calabria.

It is a constellation of about 33 villages all

around the same mountain area.

The San Luca base clans are well versed and particularly

important for the cocaine trade, arriving at the port

of Gioia Tauro still today.

But first up tonight, more students

overdosing at a local high school.

This time it's happening in Loudoun County.

All believed to be fentanyl laced pills.

I like talking to the addicts, figuring out their story,

figuring out how it was.

They start telling you about how they were prescribed medicine.

Then they went to the heroin, got addicted to the heroin.

And the heroin, the high wasn't getting...

they were taking more and more of the heroin.

And then the fentanyl came on the market.

And it was so much stronger.

And that's all they wanted.

The cartels, they see the opportunity to make money.

And it's just like the street dealers around here.

They see the opportunity to make the quick money.

And they can make a lot of money real fast.

I'm Deputy Will Sullivan with the Loudoun County Sheriff's

Office.

I'm assigned to the tactical support unit.

I also work with our drug and gang unit.

And I do traffic stops for them too.

Fentanyl, it's blown up in this area.

It's a really horrible, horrible drug, what it's done to people.

We're getting more and more of it on the street now.

You used to get just a little a little bit of it.

Now you're getting a lot of it.

It's taking over people's lives.

They're making lots of money on this stuff.

And the dealers push and push more and more.

And you're getting busts now, where

you're getting thousands of pills at a time, lots

and lots of money in cash.

We're seeing the end result of what is

an international major problem.

My name is Mike Chapman.

I'm the Sheriff here in Loudoun County, Virginia.

I've been the sheriff for just over 12 years, just got

re-elected.

Prior to that I served 23 years with the Drug Enforcement

Administration all over the globe.

This is a photo of me sitting in a field of poppies

up there by the northwest area of Pakistan

near the deer district up there, not too far, I don't believe,

from the Khyber Pass.

If you look back to 2020 or so, you had about 93,000 overdoses

nationally, overdose deaths nationally.

So you jump up a year.

And it goes up to like 103,000 in 2021.

2022, it goes up to 106,000.

And last year it's 112,000.

We're losing more people in a year to drug overdoses than we

lost soldiers in Vietnam over a 10-year period, twice as many.

So this is really significant.

And this is something that we really

have to take head on in every direction

because it's so prevalent.

And we really need to stop this.

The problem with fentanyl is that you can produce so much.

And it takes so little to overdose.

You're talking about a lot of pills

that you can get across the border.

And it doesn't take up much space.

And it's so deadly.

And it's easy to distribute.

This story is about greed.

They don't care about parents losing their kids.

They don't care about kids losing their parents.

They don't care about any of that.

All they care about is this.

And it's something that we've got to do

everything we can to stop.

The select committee will come to order.

At the outset, I want to recognise that we are privileged

to be joined today by families who have been directly impacted

by the fentanyl crisis here in the United States.

This hearing and the information that we are about to provide

is for them and for those that they have lost.

Mr Donovan, you are recognised for your opening remarks.

Good morning, Chairman Gallagher, ranking member

Krishnamoorthi, and distinguished members

of the committee.

My name is Ray Donovan.

I would like to thank you for giving me the opportunity

to testify before you today on the pressing

issue of the fentanyl crisis and China's role in feeding

this emergency, striking Americans in areas

of public health, law enforcement,

and national security.

Being as deadly as fentanyl was, we said, enough's enough.

And we started bringing all the elements of the government

together to really focus our energies

and our efforts towards these groups

because it was a national security issue.

It was a matter of life and death.

Project Sleeping Giant was our intent

to put a big spotlight on Chinese organised crime

and criminal groups that work hand in hand

with Mexican cartels worldwide.

So when Ray Donovan told me about this Operation Sleeping

Giant that he had set into motion around 2016,

I started to research this operation

and could find only a single reference to it

in a budget document, in a federal budget document

anywhere, really, which seems to suggest

that the DEA wasn't taken as seriously as it might have been.

There really wasn't enough of a link-up between the various arms

of law enforcement, between the Treasury,

which is supposed to monitor cash

transactions, between the FBI, between the Department

of Justice.

These were not really as integrated

as you might have hoped in the face of a completely new threat.

I was a special agent in charge for the special ops division.

And Chris was coming in to headquarters.

And so what I did was I asked Chris

to be in charge of what we call the counter-threat team.

So as this threat was evolving, the insight was evolving,

Project Sleeping Giant was created

to gather whatever we could pull in that was judicially acquired

or through our sources.

We did that.

And we started to gather insight.

And then we were able to provide insight to the field.

How was your case in LA, a money launderer

connected to command and control in New York?

How was this seizure that happened in Denver?

How is that connected to command and control in New York?

And it's amazing when you get agents in the room

and we talk about these cases.

And we would have strategy meetings

under the umbrella of Project Sleeping Giant.

And we have great human sources that we've

recruited over decades.

They started to provide information.

We started to understand that there

was this global network that was at scale

that could move money with speed, within a day,

unheard of before.

We want to talk about the Zhishi Li investigation.

And he pled guilty here recently in Eastern District of Virginia.

And he was an amazing money launderer.

He was the first one that we investigated.

And we took down his organisation.

He had a casino in central America that he had established.

He had strong triad links back in mainland China.

He travelled there.

And he had a sophisticated network within the United States

to pick up those funds.

And Li was one of those brokers that was at a very high level.

So what it allowed us to do was gather

that information, that intelligence,

gather that evidence.

We had an opportunity through the investigation

to acquire ledgers and transactions and what

he had been participating in.

So it was what I would call a traditional takedown.

We got the whole network.

And I had the opportunity to sit-in those debriefings.

And I was floored by the scale that this was happening,

the level of discipline, the level of sophistication.

And you can imagine dozens of Zhishi Li's operating

in the United States, Mexico, Central and South America,

establishing casinos, establishing front businesses,

very difficult to do.

Another component of the challenge,

there's not very many Mandarin speakers in DEA.

There's not very many Mandarin data scientists in DEA.

The challenge of getting people with good Mandarin skills

and Chinese cultural background is

that security people are very reluctant when somebody comes in

and they do have good Chinese, but they also

have an extensive network of relationships in China.

My name is Dennis Wilder.

I spent 36 years in the Central Intelligence Agency.

I worked at the White House for George W.

Bush as his special assistant and senior director

for East Asia.

The fentanyl issue has been an enormous domestic issue

in the United States.

And China's role in the sale of precursors to drug dealers

has been a big thorn in the side of US politics.

So the Biden administration for quite a while

now has been trying to get the Chinese to restart

our co-operation, which ended in 2019, on this topic.

We have very quickly moved to a mode where the Ministry

of Public Security in China and other organisations seem to be

co-operating quite closely to begin to try and shut down

the fentanyl flow from China.

The present critical global challenges

we face from climate change, to counter narcotics,

to artificial intelligence, demand our joint efforts.

Both the United States and China were

seeking to put a floor underneath the freefall

of the relationship.

The level of tensions and hostilities

have been the greatest in decades.

I am Vanda Felbab-Brown, senior fellow at The Brookings

Institution, where I direct Brookings work

on transnational threats such as illegal economies,

organised crime, terrorism, civil war.

The anti-money laundering element

is now part of this counter-narcotics operation.

The illicit side of the informal banking system,

of the underground banking system,

grew in tandem with the regrowth of the Chinese triads

in the 1980s, and particularly in the 1990s.

Just as China was liberalising, opening up economically,

criminal groups like the triads were growing and expanding

their reach, first in southeast Asia

then into the Pacific countries of New Zealand and Australia,

subsequently to other parts of the world.

There have been whole books written on organised crime

in China historically.

And this is not a new problem.

The Guomindang, the nationalist party,

used them during the civil war.

The communists used them during the civil war and afterwards.

Places like Hong Kong we have seen

the government using them to go after democracy protesters.

In China today there are many business people, entrepreneurs

with large amounts of money, who are scared

of the Chinese government.

Xi Jinping in recent times has been cracking down

on private entrepreneurs.

People have disappeared in the business community

without any information, not even put

into the legal system in China, simply taken into custody.

And so we see the business class in China

looking to get some of their money

out as an insurance policy.

I'm sure you've heard the stories of Singapore,

where a huge number of these business people

are setting up bank accounts, offices.

And there is a real question of how

they're getting this money out of China,

since there are strict controls on taking money out of China.

And I think the answer is, of course, they're

going through money laundering schemes and illegal activities

to do this.

We hear experts tell us that the movement

of illicit Chinese money, of capital flight from China

these days, is a virtual tidal wave.

And there are very good reasons for that.

The Chinese capital markets are in really bad shape.

Chinese stock indices have been plunging.

Chinese property values have been going down sharply.

So there's all kinds of incentives for Chinese people

to send their money abroad, either

to invest in foreign assets or simply to buy stock.

In the past we've looked at this issue

and several hundred billion US dollars worth of capital flight

has exited China and gone around the world.

At the moment it's quite possible

that the amount of Chinese money leaving China

exceeds even those very high levels.

The National Crime Agency of the UK

has actually given it a formal name.

It's called Informal Value Transfer System, IVTS.

And it really lies at the heart of the movement

of Chinese illicit money all over the world.

This is more overt now as a service.

Some of them are advertised on the internet.

Some of them are advertised on social media.

Crime as a service and laundering as a service

has become a much bigger thing.

I'm Sal Melki.

I'm the head of illicit finance in the National Economic Crime

Centre.

The National Economic Crime Centre

is part of the National Crime Agency.

An underground banker might be sat in the centre of dozens,

maybe even hundreds of transactions.

And that just shows how sophisticated

they need to be in terms of their operations.

So they need to be a professionalised outfit.

They need to be highly organised.

They need to operate almost like a bank,

keep ledgers, understand the scale of the cash pools

in various different jurisdictions,

understand the liquidity available to them.

And that's not easy.

So to do that you need infrastructure.

And you need clever people, sophisticated people.

And you need lots of people.

It's something that we're seeing as a growing threat to the UK

and across the world.

Since capital controls were imposed in China

it's become much harder for Chinese citizens

to get money outside of China, to spend that money abroad.

So, for example, if you want to get a million pounds out

of China, so you're transferring a million pounds

worth of value from one country, in this case China, to the UK.

So by exchanging that value, that pool of cash,

that money needs to exist in a separate jurisdiction.

So what underground bankers are doing

is turning to organised criminals

as a readily available source of cash and liquidity

to be able to settle those remittances.

So they are tied in with organised crime in the United

Kingdom, who generate huge amounts of cash

usually from the drugs trade.

And they're using that liquidity and that trade

to settle the remittances, in this example,

to allow that one million pounds to be transferred out of China

and into the UK.

Underground bankers will use a lot of methodologies

to get that illicit cash into their hands

and into the mainstream financial system.

Money mules are a really common tactic.

And they can often be people that

are unwitting or people that don't fully

understand the criminality that they're involved in.

What they'll do is advertise on social media and say,

would you like some money?

And all you need to do in exchange

is let us use your bank account.

What they'll also do is create more bank accounts outside

of the mainstream financial institutions

and look towards electronic money institutes or challenger

banks, where actually you can set up

bank accounts far more quicker.

And the level of onboarding for those bank accounts

are less rigorous.

So you can do it on a mobile phone app.

You can get 10, 20, 100 people to work for your organisation.

Then you can smurf that money into the legitimate financial

institutions.

And that means breaking it down into smaller chunks that

are hard to detect.

They're undermining the banking system.

And they're exploiting the banking system.

Financial institutions don't have

the benefit of the intelligence that the federal government has.

I do think about it often.

I gave it everything I had.

I left it all out in the field.

It's an uphill battle.

And it continues to be an uphill battle.

The money continues to flow.

The technology continues to advance.

The criminal groups are more and more interconnected.

They're not going to stop.