A Chinese national and naturalised US citizen has pleaded guilty to his involvement in a conspiracy to launder at least US$30 million in drug proceeds on behalf of global drug trafficking organisations.
Trade-based money laundering (TBML) was used extensively by Xizhi Li, who along with co-conspirators dealt directly with members of drug trafficking organisations or their representatives to obtain and service “contracts” to move their drug proceeds.
Once they obtained a “contract” to launder drug proceeds, they would engage in financial transactions that were designed to conceal the illicit source of the original funds, in return for the payment of commissions.
Li, who used a multitude of aliases and resided mainly in California and Mexico, used a seafood import and export business known as Shuoyu USA amongst several other vehicles to disguise the criminal origins of some of the proceeds of drug sales.
At least US$3.8 million of Shuoyo-related business to laundered drug money was identified by investigators. The company bought goods that were subsequently shipped to China and Hong Kong where they were sold.
Li “occupied a leadership and management” role in a global money laundering network according to a statement of facts agreed to by the Chinese national.
The statement says the network also used encrypted communications platforms, arranged transfers of drug proceeds to places remote from the locations where the initial drug transactions took place and used businesses in the US and Mexico associated with the name Lucky City to conceal illicit funds.
Banks’ TBML concerns
Investigators have already named several European, American and Chinese banks as having provided account services for individuals involved in the network, though none of the financial institutions are accused of any wrongdoing.
But the case highlights growing concern amongst bankers and regulators around the use of TBML schemes, and the difficulty banks have detecting illicit activity concealed within seemingly legitimate trade transactions.
Categories: Trade Based Financial crimes News