Reported by Matthew Ormseth

With millions in cash piling up in the United States, the Sinaloa cartel needed to funnel proceeds from the sale of fentanyl, methamphetamine and cocaine back to Mexico.

Federal prosecutors say a ring of Chinese nationals in the San Gabriel Valley offered a solution: marrying the Sinaloans’ glut of bulk cash in Greater Los Angeles with a demand from wealthy residents of China to transfer their money to the United States.

U.S. Attorney E. Martin Estrada announced Tuesday that a grand jury has charged 24 defendants — drug traffickers, couriers, bagmen and brokers — with conspiring to distribute drugs, money laundering and operating an unlicensed money-transmitting business.

The indictment described a straightforward system to transfer wealth out of China. The Chinese government has restricted the flow of assets out of the country, creating an underground market for U.S. dollars that drug traffickers need to transfer back to Mexico without using conventional banking systems.

Chinese nationals are generally restricted from moving more than $50,000 a year out of the country’s financial system. In the money laundering system, prosecutors say, someone seeking to make a large transfer would contact a broker in California. The broker would then arrange for drug profits to be delivered to the Chinese national’s representative in the United States, usually in bulk cash or a series of “structured” deposits small enough to avoid triggering anti-money-laundering controls.

At the broker’s direction, the Chinese national would transfer money to a manufacturer in China that either produced consumer goods, such as electronics and clothing or chemicals used to make synthetic drugs, Estrada said.

Shipped to Mexico, the consumer goods would be sold and the money turned over to a cartel representative, returning the value of the drug dollars purchased by the Chinese national to the cartel in pesos.

The chemicals, on the other hand, would be used to produce drugs such as fentanyl and methamphetamine in Mexico for sale in the United States, triggering the cycle again, Estrada said.

Read full report: https://www.police1.com/drug-interdiction-narcotics/sinaloa-drug-cartel-laundered-millions-through-chinese-network-in-la-prosecutors-say