The United States Department of Justice announced on Tuesday (June 18) that associates of the Sinaloa Cartel in Los Angeles conspired with a money laundering organization connected to Chinese underground banks to launder over $50 million in drug proceeds. A total of 24 individuals have been indicted by the US authorities.
According to a supplemental indictment unveiled in California, the 24 defendants face charges including conspiracy to distribute cocaine and methamphetamine, conspiracy to launder financial instruments, and conspiracy to operate an unlicensed money transmitting business.
The US Department of Justice stated that following close coordination with China and Mexico, law enforcement authorities in both countries notified US officials and recently apprehended fugitives named in the supplemental indictment who fled the United States after being charged last year.
The Sinaloa Cartel is one of Mexico’s most powerful criminal organizations and a target of US sanctions.
The United States has been seeking to strengthen cooperation with China and Mexico to stem the flow of illegal drugs. In the US, a significant number of deaths occur annually due to drug overdoses.
The Department of Justice announced 10 additional charges against associates of the Sinaloa Cartel in Los Angeles following “years-long investigations.”
According to the charges, a money laundering network linked to the Sinaloa Cartel, with the assistance of a Chinese money laundering group connected to underground banks in China, collected and processed a substantial amount of drug proceeds denominated in US dollars in the Los Angeles area.
Many wealthy Chinese citizens living, working, or investing in China seek to transfer assets to the United States for various reasons. However, due to capital outflow restrictions imposed by the Chinese authorities, they are limited to transferring up to $50,000 in assets annually. As a result, these individuals seek informal alternative methods to move funds.
To transfer funds to the US, these wealthy Chinese citizens contact a seller who can provide US dollars in the United States. The US dollar seller sets up a Chinese bank account for them and instructs them to deposit Chinese yuan into that account. Upon verification of the deposit, the equivalent amount in US dollars is then disbursed.
US dollar sellers in the United States may acquire US dollars through various means, including accepting cash from drug trafficking organizations. These currency brokers may charge a certain percentage of commission to conceal the nature and source of the funds.
“The collaboration between drug traffickers and Chinese underground banks is increasing to exploit the high demand for US dollars among Chinese citizens,” stated the US Department of Justice.
Funds obtained from China may be used to pay for goods purchased by businesses in Mexico or elsewhere, such as consumer products, but also assist drug trafficking organizations in acquiring necessary substances for drug production, such as fentanyl precursors.
“This investigation by the DEA found that associates of the Sinaloa Cartel partnered with a Chinese criminal organization operating in Los Angeles and China to launder drug proceeds,” said Central California federal prosecutor Martin Estrada in a statement. “Money laundering provided the Sinaloa Cartel with the means to produce lethal drugs and import them into the United States.”
The Department of Justice stated that they subsequently concealed the drug proceeds, enabling members of drug trafficking organizations from Mexico and other regions to access the proceeds generated in the United States.
In this investigation, US law enforcement agencies confiscated $5 million in drug proceeds, 302 pounds of cocaine, 92 pounds of methamphetamine, 3,000 ecstasy pills, 44 pounds of hallucinogenic mushrooms, 3 semi-automatic rifles with large capacity magazines, and 8 semi-automatic handguns.
It is expected that within the next few weeks, the US District Court in Los Angeles will summon 20 individuals named in the supplemental indictment. One individual has already been summoned on Monday.