Jan 11, 2019 20:30 UTC
Jan 14, 2019 at 15:37 UTC
Mexican Drug Cartels Are Laundering Money Through Chinese Crypto Schemes
Mexican drug cartels, also known as “Narcos” have been revealed to have started relying heavily on Chinese cryptocurrency money laundering networks, according to a recent United States Senate Judiciary Subcommittee hearing on Border Security and Immigration.
The criminal relationship has had years in the making and was formed out of the trade between the two parties regarding the procurement of large amounts of outlawed chemicals required to synthesize Methamphetamine, where China was the seller and Mexico was the buyer.
China is a major supplier of controlled substances such as ephedrine and pseudoephedrine which are vital ingredients in the production of Methamphetamine (Meth). The East Asian nation is also a major exporter of Fentanyl, a synthetic opioid that is about 50 to 100 times more powerful than Morphine.
Fentanyl is generally used legally as a painkiller in very select cases, especially to ease the pain in Cancer patients. However, many drug dealers sell Heroin and Cocaine laced with Fentanyl to make them more potent, and also, more deadly.
Mexican Narcos are siding with Chinese suppliers as they have seemingly become experts in going around obstacles when it comes to financial laws. The Chinese Underground Banking System (CUBS) is made up of an intricate network of fiat money and cryptocurrency brokers who move currency in and out of China by exploiting loopholes in existing cryptocurrency laws.
Chinese underground banks are estimated to have over 10,000 clients and believed to launder over $100 billion every year. National law enforcement agencies in the USA have linked Chinese operations to the recent uptick in crypto-money laundering.
The currency of choice seems to be Bitcoin (BTC) due to its high acceptance rates across the market and because of the ease to trade the currency through over-the-counter exchanged and trading platforms that have lax customer identification measures.
The laundering usually happens through Chinese brokers who help interested clients transfer their wealth cash to Bitcoin transaction through China. Cash to Bitcoin transactions are also carried out to convert money procured through illicit means into legitimate currency.
Cryptocurrencies may have become a bigger medium of money laundering than it was before, but it is still not the most preferred means of money laundering, due to its volatile nature which is also what keeps legitimate traders from investing in the industry too much. Fiat money is still arguably the ” best” and most preferred way for financial criminals to “cook their books”.
Criminals have become interested in dealing through cryptocurrencies primarily due to the anonymity that many of the currencies such as Dash, Monero and Zcash provide, making it a “safer” option for them.