Financial Crime World

Capital Flight Controls: The Battle Against China’s Cash Cartel

A Global Threat: Chinese Organized Crime Networks Evade Detection and Siphon Billions

Experts have uncovered a shocking truth: Chinese organized crime networks are using cutting-edge technology to evade detection and siphon billions of dollars out of the country, fueling a global illicit trade. These criminal organizations, known as CMLOs (Chinese Money Laundering Organizations), use encrypted networks like WeChat to advertise the sale of US dollars on internet chat rooms.

The CMLOs’ Business Model

  • Advertise the sale of US dollars on encrypted networks
  • Communicate with buyers through these same networks to facilitate transactions that bypass traditional financial channels
  • Primary objective: Gain access to US currency outside of formal channels to evade China’s strict foreign exchange controls
  • Make a handsome profit by reselling the dollars to Chinese nationals, undercutting competition by as much as 40%

The Consequences

This illegal activity not only fuels the global drug trade but also threatens the integrity of our financial system. Experts warn that more resources are needed to combat these criminal networks, including:

  • Translators
  • Data scientists
  • Experienced targeting analysts

A Call to Action

The private sector must take action by investing in training and detection to comply with anti-money laundering laws. Congress can play a vital role by providing resources, incentives, and authority for government agencies and the private sector to work together to combat this threat.

The Global Impact

  • Mexico’s stricter AML/CTF policy in 2010 led cartels to seek out new money laundering strategies
  • Colombia’s rigorous anti-money laundering regime has pushed some cartels to look abroad for help
  • CMLOs operate a symbiotic relationship with transnational criminal organizations (TCOs), providing each other with what they need

The Stakes Are High

As one expert warned, “More investigative resources… would enable law enforcement to have the tools needed to detect and investigate these networks where they operate.” In this battle against China’s cash cartel, cooperation between government agencies, the private sector, and international partners is crucial. Will we rise to the challenge?