Sunday, December 30, 2018

How Cartels Use Chinese Crypto Brokers to Launder Drug Money

Chivis Martinez Borderland Beat from CCN
bitcoin drugs dark web cryptocurrency crypto
Law enforcement agencies in the United Stateshave expressed worries that Chinese crypto channels are increasingly being used to launder money by Mexican drug cartels and other transnational organized crime groups.

This comes at a time when the size of Chinese exports such as chemicals and other ingredients used in making hard drugs to the U.S. has been growing, per Asia Times. According to a senior official at the U.S. Drug Enforcement Agency (DEA), Paul Knierim, a notable increase in money launderers from Asia has subsequently been observed:

The shift toward Chinese and Asian money launderers is believed to be, in part, due to the natural relationship created by the large volume of both licit and illicit trade goods and chemicals imported from China. The use of an Asian money broker simplifies the money laundering process and streamlines the purchase of precursor chemicals and paraphernalia utilized in manufacturing drugs for street sales.
Growing Sophistication

In a report issued a few weeks ago, the DEA pointed out that in the last eight years, a steady decline in the amount of cash seized throughout the United States had been recorded and this could mean that more discreet techniques of moving illicit cash were being employed.

Specifically, the DEA cited the Chinese Underground Banking Systems (CUBS) as a key laundering channel. The CUBS money brokers, the DEA noted, was turning to bitcoin both to launder money for drug traffickers and to assist Chinese nationals interested in moving amounts exceeding the allowed annual limit of US$50,000 outside the country:

CUBS money brokers sell Bitcoin to drug traffickers for cash earned from drug sales in the US, Australia, and Europe. This drug cash is then sold to Chinese nationals in exchange for Bitcoin the Chinese nationals use to transfer the value of their assets outside of China.

To avoid detection and traceability, these bitcoin trades are conducted over the counter with the Chinese brokers relying on foreign-based exchanges which have lax Know Your Customer and Anti-Money Laundering policies.

Multi-Agency Problem

Besides the Drug Enforcement Agency, the U.S. Department of Homeland Security has also blamed Chinese transnational criminal organizations for the rise in the use of cryptocurrencies to launder money. This was made clear during a U.S. congressional hearing earlier in the month.

But while using cryptocurrencies to launder money may offer some advantages, the extent to which they can be used is limited due to the fact that, with the exception of privacy coins such as Monero and Zcash, transactions are transparent since they can be viewed on the respective blockchains.

Globally, the money laundering turnover is estimated to reach US$2 trillion, and the use of cryptocurrencies in cleaning illicit cash is tiny compared to other channels.

13 comments:

  1. Haha yeah let’s focus on the small fish that is crypto and not try to take down the biggest money laundering industry; luxury real estate investments.

    ReplyDelete
    Replies
    1. Dont forget the banks Wells Fargo, HSBC, Danske etc.
      AND if they get caught give them a slap on the wrist and let them go!

      Delete
    2. Sounds like the DEA and American intelligence will not be having a Merry Christmas after all.
      Crypto currency is becoming a lucrative business and a headache to government agencies. Guess no more money to take away if it's difficult to detect. Moreover, the tax losses in revenues from tax evasion and forfeitures.

      Delete
  2. Most Mexican DTO's use extremely sophisticated methods when it comes to laundering money from illicit means. They have been known to lauder money in ingenious ways. For example, they will create a business in the US to sell goods in Mexico like food, produce, merchandise, etc. DTO's will buy the goods for the business in the US with cash from their illegal means. The business ships the goods south. Goods are delivered to wholesalers in Mexico for distribution. Goods are turned into Mexican money. Wholesalers take their cut of the funds with the majority of the money ending up in the coffers of the DTO's in Mexico.

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    Replies
    1. 3:49; Your quite the expert. You just described one of the most rudimentary laundering techniques that the Colombians used right after anti-money laundering laws were implemented and starting to be used to crack down on South Florida banks in the 1980s.

      Delete
  3. They don't need to do all that, big banks are known for helping drug dealers hide millions of dollars with a little cut.

    ReplyDelete
  4. I have always wondered why none of the Cartels seemed to use cyber currency to both launder and more importantly MOVE money across borders with no governmental interference or regulation.
    Then, take some of that money and invest in bitcoin mining as a plausible excuse as to your source of wealth.
    Instead they are paying the desperate to move small amounts inside balloons secreted inside their bodies.

    ReplyDelete
    Replies
    1. Those whom you speak of are not looking closely. Nevertheless, you are correct.
      Many criminal organizations do have a structure in place.
      Not just your drug dealers but in every sector of criminal enterprises.

      Delete
  5. The point is not the money or how it's being processed. The issue is putting yourself in bed with Chinese. Who by the way want to kill this side of the Atlantic or Pacific which ever way you want to look at it. So you say, oh but I have nothing else to plant or do. You've had freedom for like practically forever to transport and yet your Gov cuts don't help prosper your own back yard. Your raiding your own land and don't see it. Use any excuse your in bed twice right here cause your to dumb to catch the rest of what I've already spilled. I was born in it if your wondering and don't give two cents about what you critcize me on. In fact I'm on my latest come up and have become yep the one and only plaza boss of all bosses and don't even get tossed in the game. You can't find my local cause I'm in and out like a scout. You guys don't even vet any people you cross over you just say "si dame otro dollar porque soy pobre". Purras mamadas I say. Remember you got your biggest inheritance through none other than La Linea or The Pass as it's pronounced in English.Texas is the biggest and the land I live in I'll hunt rabbit or close a deal to suit my meal. Learn some Los Canelos De Durango and do some translating or just not pay attention and keep getting your moneys worth. Puro peso ponle porque aqui si no se fehan no se qweedan. Yeah... say I don't spell and find out.

    ReplyDelete
    Replies
    1. “What you talkin’ Bout Willis?”

      Delete
  6. You're not getting my crytpo!!!

    ReplyDelete
  7. It is so funny what people call "laundering" these days. Just cause you move money it does not make them clean yet the cops call it laundering.
    When it comes to mexican bosses they can launder all they want but still forced to live in hiding like rats. When everybody know your a criminal its already to late.

    ReplyDelete
  8. That’s how hackers launder their money lol. Real estates is the real launderer for cartels

    ReplyDelete

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