Merchants and traders swap currencies in ‘most sophisticated’ ever form of money laundering

The Reuters news agency has highlighted a case of what one US source familiar with the investigation described as “the most sophisticated form of money laundering that’s ever existed”.

The way such operations work involve legitimate merchants and traders, sometimes unknowingly, sending the US proceeds from sales of Colombian and Mexican drugs to China. From there, Chinese businesses would similarly send funds to Colombia or Mexico where the drug cartels could take receipt of the proceeds in their own currency.

Citing cases in the US involving a Mexico-based Chinese businessman, Gan Xianbing, who has been found guilty of laundering just over US$530,000 in Mexican cartel drug money and his accomplice, Lim Seok Pheng, a New York-based Singaporean member of the ring turned cooperating witness in the US after her arrest in 2018 on suspicion of money laundering, Reuters explains how the pair operated.

US to China

Lim would arrive at a US-based Chinese operated merchant with the US dollar cash proceeds of drug sales.

After agreeing an exchange rate, Lim would hand the cash to the merchant who would simultaneously transfer the equivalent in Chinese yuan from their own account in China to a bank account number provided by Gan. This domestic bank transfer in China would be unlikely to raise red flags.

China to Mexico

To move the money from China to Mexico, the money laundering outfit used a similar technique but this this time with the help of Chinese businesses that had access to pesos in Mexico.

US prosecutors told Reuters that the laundered money was delivered to Mexican drug cartel clients of another accomplice based in Mexico.

The Reuters article, Special Report: Burner phones and banking apps – Meet the Chinese ‘brokers’ laundering Mexican drug money, can be found here.

Categories: Trade Based Financial crimes News

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