Three Chinese nationals collected $29 million of bulk cash in Oregon, Texas and other U.S. states from Mexican drug traffickers, then funneled the funds back to Mexico using dollars, renminbis and pesos, federal prosecutors said.
Shefeng Su, Xinhua Li Yan and Xiancong Su face federal money-laundering charges for their roles in coordinating and executing at least 300 pickups of drug money from October 2015 to March 2018 and helping shift roughly $19 million in proceeds between at least 251 Chinese bank accounts, prosecutors in Oregon said Friday.
In an 8-page indictment, prosecutors claimed the three individuals worked as unlicensed brokers in the “Chinese underground banking system,” helping associates of Mexican cartels and affluent Chinese move large sums of money out of the U.S. and China, respectively, under authorities’ radar.
Mexican drug traffickers allegedly delivered U.S. banknotes to Shefeng Su, Li Yan and Xiancong Su, who would arrange for associates to repay the cartels in Mexico with pesos.
The three suspected brokers and other alleged participants in the scheme used messaging apps like WeChat and other online platforms to sell U.S. currency to Chinese buyers in exchange for bank-to-bank transfers in renminbis, thereby ensuring the funds would never cross international borders.
“With the Chinese currency that it has received, the money laundering organization may then purchase goods for export to Mexico,” prosecutors wrote in the indictment. “Those goods are then sold at retail in Mexico for pesos and the broker in Mexico receives the funds to complete the money laundering cycle.”
China’s foreign exchange controls, which cap the total amount each citizen can transfer outside the country in a single year at the equivalent of $50,000, have created a market for informal financial channels, according to prosecutors.
State police in Clay County, Texas, stopped Shefeng Su and Xiancong Su on Feb. 4, 2016, as they carried $1.2 million in bundles and vacuum-sealed bags allegedly received from Mexican drug traffickers in Houston two days earlier.
“On or about Feb. 3, 2016, defendants Shefeng Su and Xiancong Su, received confirmation of multiple funds transfers between Chinese bank accounts totaling approximately $358,400,” prosecutors alleged in the indictment.
The suspects are believed to have picked up millions of dollars more from associates of Mexican drug cartels in Michigan, Georgia and New York in the two years that followed.
Federal investigators finally disrupted the brokers’ alleged network in March 2018 after seizing $500,000 that Shefeng Su, Li Yan and Xiancong Su held in safe deposit boxes.
Ledger- and trade-based money laundering schemes have grown increasingly prevalent over the past two years, according to Raul Aguilar, who heads the transnational organized crime division for Homeland Security Investigations.
“We could do a whole session about the Chinese and how they’re actively working with the cartels in Mexico and undercutting some of the money pickups to do it cheaper,” Aguilar said at the ACAMS AML & Financial Crime Conference in Las Vegas last month. “Then while you’re in China, [brokers] can bring you cell phones at a discounted rate, so it’s a one-stop shop.”
The three alleged conspirators reside outside of the U.S. and have not been arrested, according to the Justice Department.
Contact Daniel Bethencourt at email@example.com
|Topics :||Anti-money laundering|
|Document Date:||October 18, 2019|