[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
CHINA IN OUR BACKYARD:
HOW CHINESE MONEY LAUNDERING
ORGANIZATIONS ENRICH THE CARTELS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH CARE
AND FINANCIAL SERVICES
of the
COMMITTEE ON OVERSIGHT
AND ACCOUNTABILITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
APRIL 26, 2023
__________
Serial No. 118-25
__________
Printed for the use of the Committee on Oversight and Accountability
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov
oversight.house.gov or
docs.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
52-120 PDF WASHINGTON : 2024
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Jamie Raskin, Maryland, Ranking
Mike Turner, Ohio Minority Member
Paul Gosar, Arizona Eleanor Holmes Norton, District of
Virginia Foxx, North Carolina Columbia
Glenn Grothman, Wisconsin Stephen F. Lynch, Massachusetts
Gary Palmer, Alabama Gerald E. Connolly, Virginia
Clay Higgins, Louisiana Raja Krishnamoorthi, Illinois
Pete Sessions, Texas Ro Khanna, California
Andy Biggs, Arizona Kweisi Mfume, Maryland
Nancy Mace, South Carolina Alexandria Ocasio-Cortez, New York
Jake LaTurner, Kansas Katie Porter, California
Pat Fallon, Texas Cori Bush, Missouri
Byron Donalds, Florida Shontel Brown, Ohio
Kelly Armstrong, North Dakota Jimmy Gomez, California
Scott Perry, Pennsylvania Melanie Stansbury, New Mexico
William Timmons, South Carolina Robert Garcia, California
Tim Burchett, Tennessee Maxwell Frost, Florida
Marjorie Taylor Greene, Georgia Becca Balint, Vermont
Lisa McClain, Michigan Summer Lee, Pennsylvania
Lauren Boebert, Colorado Greg Casar, Texas
Russell Fry, South Carolina Jasmine Crockett, Texas
Anna Paulina Luna, Florida Dan Goldman, New York
Chuck Edwards, North Carolina Jared Moskowitz, Florida
Nick Langworthy, New York
Eric Burlison, Missouri
Mark Marin, Staff Director
Jessica Donlon, Deputy Staff Director and General Counsel
Tyler Sanderson, Senior Counsel
Mallory Cogar, Deputy Director of Operations and Chief Clerk
Contact Number: 202-225-5074
Julie Tagen, Minority Staff Director
Contact Number: 202-225-5051
------
Subcommittee on Health Care and Financial Services
Lisa McClain, Michigan, Chairwoman
Paul Gosar, Arizona Katie Porter, California Ranking
Virginia Foxx, North Carolina Minority Member
Glenn Grothman, Wisconsin Alexandria Ocasio-Cortez, New York
Russell Fry, South Carolina Jimmy Gomez, California
Anna Paulina Luna, Florida Greg Casar, Texas
Nick Langworthy, New York Becca Balint, Vermont
Eric Burlison, Missouri Summer Lee, Pennsylvania
Jasmine Crockett, Texas
C O N T E N T S
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Page
Hearing held on April 26, 2023................................... 1
Witnesses
----------
Mr. Anthony Ruggiero, Senior Director and Senior Fellow,
Foundation for Defense of Democracies; and Former Deputy
Assistant to the President, Senior Director for
Counterproliferation and Biodefense, National Security Council
Oral Statement................................................... 5
Mr. Christopher Urben, Former Assistant Special Agent in Charge,
Special Operations Division, U.S. Drug Enforcement
Administration
Oral Statement................................................... 7
Ms. Channing Mavrellis, Illicit Trade Director, Global Financial
Integrity
Oral Statement................................................... 8
Written opening statements and statements for the witnesses are
available on the U.S. House of Representatives Document
Repository at: docs.house.gov.
Index of Documents
----------
* Questions for the Record: to Mr. Ruggiero; submitted by Rep. Gosar.
* Questions for the Record: to Mr. Urben; submitted by Rep. Gosar.
CHINA IN OUR BACKYARD:
HOW CHINESE MONEY LAUNDERING
ORGANIZATIONS ENRICH THE CARTELS
----------
Wednesday, April 26, 2023
House of Representatives
Committee on Oversight and Accountability
Subcommittee on Health Care And Financial Services
Washington, D.C.
The Subcommittee met, pursuant to notice, at 2:30 p.m., in
room 2247, Rayburn House Office Building, Hon. Lisa C. McClain
[Chairwoman of the Subcommittee] presiding.
Present: Representatives McClain, Gosar, Grothman, Fry,
Luna, Langworthy, Burlison, Porter, Casar, Balint, Lee, and
Crockett.
Mrs. McClain. The Subcommittee on Health Care and Financial
Services will come to order.
Welcome. Thank you for coming. Appreciate it.
Without objection, the Chair declares a recess at any time.
I recognize myself for the purpose of making an opening
statement.
Welcome to the Subcommittee on Health Care and Financial
Services. Today's oversight hearing focuses on the role that
Chinese money laundering organizations are playing to enrich
the cartels. We will hear from former Federal law enforcement
and foreign policy experts to better understand how these
criminal organizations came to dominate the money laundering
industry. We will also learn about the different tools Congress
and the Administration can use to cutoff these networks, which
is critical.
Illicit fentanyl presents one of the biggest, if not the
biggest, threat to public safety that the United States, in my
opinion, has ever seen. Fentanyl is now the leading cause of
death for Americans aged 18 to 45, unfortunately claiming more
American lives in that group than suicide, COVID-19, and
automobile accidents. In 2020 alone, 2,759 Michiganders lost
their life to drug overdose poisoning, with approximately 75
percent of those drug overdose deaths involving synthetic
opioids like fentanyl.
President Biden's open border policies have exacerbated the
fentanyl crisis. Cartels have taken advantage of the open
border and overwhelmed officials, smuggling deadly narcotics
across our borders and into American communities all over our
great country. And it only takes a tiny amount to kill.
Looking into the profits from this dangerous enterprise,
criminal organizations based in the People's Republic of China
have captured the money laundering business of the cartels and
for the cartels. These Chinese money laundering organizations
have developed an incredibly efficient system that is
increasingly difficult for our law enforcement to detect. Quite
frankly, they are really smart on how they do it.
Prior to the rise of Chinese money laundering
organizations, cartels laundered their own profits on the
Black-Market Peso Exchange and had to wait at least 6 weeks
before they received their ``clean'' funds. Disturbingly, now
Chinese money laundering organizations have a system that
ensures that cartels receive their profits within hours of
handing over illicit drugs to a courier.
Not only are these Chinese money laundering organizations
able to do this quickly and with incredible efficiency, they do
it at a fraction of the cost that the cartels were previously
forced to pay.
Altogether, the efficiency and cost effectiveness of the
Chinese money laundering organization has significantly
increased the cartels' bottom line and allowed their illicit
business to grow and expand. And it is kind of like that common
phrase ``follow the money,'' right?
As a result, more and more Americans are losing their lives
to synthetic opioid addiction and fentanyl poisoning, and
Chinese money laundering organizations have a nearly foolproof
system in place that does not require placing illicit funds
into the United States banking system. And I think that is a
really key point for us to understand.
Using Chinese banking apps and other popular Chinese
encrypted communications technologies, like WeChat, Chinese
money laundering organizations are able to launder cartel drug
money all while evading detection by U.S. law enforcement.
It is no secret that China has become a global hub of money
laundering activity. The State Department estimated that $154
billion in illicit funds pass through China each and every
year. It is imperative that Congress work to understand the
extent of the Chinese Communist Party's complicity in these
money laundering schemes. Wealthy Chinese Party elites are
turning a blind eye to these laundering networks and China's
role in this illicit drug manufacturing.
Americans are tired of seeing their friends and loved ones
fall prey to fentanyl and opioid addiction. And as a Members of
Congress, we owe it to our constituents to do everything that
we can to eradicate this dangerous drug from our communities.
We must hold these bad actors accountable.
I want to thank the witnesses, and we look forward to your
testimony.
I now yield to Ranking Member Porter for her opening
statement. With that, the floor is yours, ma'am.
Ms. Porter. Thank you very much, Madam Chairwoman.
If there is one number that I want us to remember today, it
is 97. That is how many times more Americans died from
synthetic opioids in 2021 than 1999. This is a five-alarm fire,
but the fire has been burning for years. And it really started
raging during the last decade, and China-based money laundering
organizations have fueled it.
Plain and simple, these organizations are making it easier
for drug cartels to do business. They are processing illegal
money flows quicker and cheaper for the cartels, and the
cartels are getting richer and richer selling deadly synthetic
opioids.
And let us not forget, it is not just money launderers.
China-based suppliers have been providing the raw materials for
synthetic opioids for years.
Republican or Democrat, there should be no question that
China-based suppliers and money launderers are a big part of
the opioid crisis and that more must be done to stop them. But
if there is one thing I have learned about tackling the issues
that matter here in Congress, you rarely get to boil it down to
one problem, one attack line, or one easy fix, and that is
especially true when it comes to issues involving multiple
countries.
You think it is hard to get Democrats and Republicans to
agree on regulations? Try getting the Chinese Communist Party
to come to the table with the U.S. to regulate China-based
fentanyl suppliers and money laundering organizations.
It is especially hard when we are still resetting the
relationship with China after the last Administration. This
Administration has the task of undoing the tension with China
just enough to get China to work jointly on this problem.
However difficult, this task could not be more important.
At the end of the day, the Chinese Communist Party needs to
recognize and own its role in failing to stop a crisis that is
claiming too many lives.
The best tools the United States and China have to address
these issues are the ones that we unlock cooperatively, but we
also need to be prepared to act alone, especially if the
Chinese Communist Party does not or will not do its part. And
that means sanctions.
On April 14, the Treasury Department imposed sanctions on
two entities and five individuals based in China who are
responsible for supplying chemicals to produce fentanyl for
U.S. markets. I am all about holding powerful people
accountable, and penalizing big fentanyl suppliers is certainly
a step in the right direction. But just like any problem that
builds over the course of decades, one set of sanctions is not
going to fix the problem. Not even one type of solution is
going to fix the problem.
To end the opioid epidemic, we have to be just as serious
about expanding access to drug treatment resources as we are
about cracking down on drug traffickers. The opioid crisis is a
complex, multifaceted problem, and it is going to require
collaboration across Government agencies and across party
lines.
With that challenging road ahead, we simply cannot afford
distractions. Unfortunately, at the same time that Republicans
announced this very important hearing, they also tossed in a
big distraction that they like to call the ``Biden border
crisis.''
As badly as we need immigration reform and have for years,
this issue is not about immigration. At the end of the day,
cracking down on an illegal drug market is primarily an
economic issue. That is why we are talking about it in the
Health Care and Financial Services Subcommittee.
Believe me, I will be at the front of the line anytime we
need to tell our government to do more on an issue, but let us
not misidentify the problem. This issue has been decades in the
making, and the buck does not stop with any one person for
years and years of increasing fentanyl deaths.
We all have to commit to doing more. If we avoid political
finger pointing--and I am proud that the Chairwoman and I have
a history of doing exactly that--I am hopeful that this hearing
will be a step toward finding solutions.
I yield back.
Mrs. McClain. Thank you. And I could not agree more. This
issue is not a Democrat-Republican issue, socioeconomic. This
issue affects each and every American, and we have to work
together to find solutions to fight against the CCP. So, I am
pleased to work with my colleague.
I am also pleased to introduce our witnesses today, who are
here to discuss the rise of Chinese money laundering
organizations and their work for the cartels.
Mr. Chris Urben is the managing director at Nardello and
Company. And prior to joining Nardello and Company, Mr. Urben
was responsible for developing and leading sensitive global
undercover DEA operations that dismantled several of the most
significant transnational criminal organizations.
Mr. Urben has spent several decades with the DEA, where he
has developed an extensive global network in various fields of
law, finance, and international investigations. Welcome.
Next, Mr. Anthony Ruggiero. Did I say that correctly?
Mr. Ruggiero. Ruggiero.
Mrs. McClain. Ruggiero? OK. Is a Senior Fellow at the
Foundation for Defense of Democracies and the Senior Director
of FDD's Nonproliferation and Biodefense Program. Mr.
Ruggiero's broad experience in the field of
counterproliferation, nonproliferation, and sanctions spans
more than 20 years, including more than 19 years in the U.S.
Government in both Republican and Democrat Administrations.
Most recently, Mr. Ruggiero--OK, say it again.
Mr. Ruggiero. Ruggiero.
Mrs. McClain. Ruggiero?
Mr. Ruggiero. Yes.
Mrs. McClain. Ruggiero. Am I saying that right? Mr.
Ruggiero served as Deputy Assistant to the President for
National Security Affairs and National Security Council's
Senior Director for Counterproliferation and Biodefense.
Ms. Channing--OK, you got to help me--Morales?
Ms. Mavrellis. Mavrellis.
Mrs. McClain. Mavrellis?
Ms. Mavrellis. Mm-hmm.
Mrs. McClain. Mavrellis, thank you. Is the Illicit Trade
Director for Global Financial Integrity, a Washington, DC,
based think tank, and Ms. Mavrellis has over a decade of
experience working on issues related to anti-money laundering
and countering terrorism financing.
Thank you all for coming to testify on this very important
issue today.
And pursuant to the Committee Rule 9, the witnesses will
please stand and raise their right hand.
Do you solemnly swear or affirm that the testimony that you
are about to give is the truth, the whole truth, and nothing
but the truth, so help you God?
[A chorus of ayes.]
Mrs. McClain. Let the record show that the witnesses all
answered in the affirmative.
We appreciate all of you being here today and look forward
to your testimony. Let me remind the witnesses that we have
read your written statements, and they will appear in full in
the hearing record.
Please limit your oral arguments to 5 minutes. And as a
reminder, please press the button on the microphone in front of
you so that you--so that we know it is on and Members can hear
you.
When you begin to speak, the light in front of you will
turn green. After 4 minutes, it will turn yellow. When the red
light comes on, your 5 minutes has expired, and we would ask
you to wrap up as soon as possible.
So, with that, I recognize the first witness. Please begin
with your testimony, and our first witness is Mr. Ruggiero.
Thank you.
STATEMENT OF ANTHONY RUGGIERO
SENIOR DIRECTOR AND SENIOR FELLOW
FOUNDATION FOR DEFENSE OF DEMOCRACIES
FORMER DEPUTY ASSISTANT TO THE PRESIDENT
SENIOR DIRECTOR FOR COUNTERPROLIFERATION AND BIODEFENSE
NATIONAL SECURITY COUNCIL
Mr. Ruggiero. Thank you. Chairwoman McClain, Ranking Member
Porter, and distinguished Members of the Subcommittee, thank
you for the opportunity to address you today on this important
issue.
More than 100,000 Americans died from drug overdoses in a
12-month period ending in November 2022. This is both a
national security and a public health crisis that requires
bipartisanship to meet the challenge.
Narcotraffickers have a problem. They run a cash business
inside the United States without an easy way to repatriate
profits back to Mexico. At some level, the financial measures
to combat money laundering have worked and made it more
difficult for the cartels to simply drive bulk U.S. dollars
over the border. That is where Chinese money launderers come
in. They see an opportunity for profit and have exploited it.
The scheme, as we know it, involves some of the largest
banks in China, which are also the largest banks in the world.
While the Biden administration has focused on combatting U.S.
demand for drugs and the export of fentanyl precursors from
China, it has not tackled the problem of the Chinese financial
sector's role in laundering the proceeds from drug sales.
While Chinese banks fear losing access to the U.S.
financial system, the current Administration and its successors
may avoid strong actions against Chinese banks because they
fear the impact on the global economy. In my written testimony,
I provided examples of how governments in the United States and
Europe have and can target these banks without causing broader
disruptions.
I also provided four recommendations for Congress and four
recommendations for the Biden Administration. Specifically,
Congress should revise and update the Fentanyl Sanctions Act,
including increasing sanctions on foreign persons that engage
in or facilitate opioid trafficking, and revise it to target
individuals or entities that are grossly negligent with respect
to financial transactions, precursor exports, or other such
actions that facilitate narcotics traffickers.
Congress can also develop persistent oversight measures,
including require a Presidential certification prior to lifting
any fentanyl-related sanctions and also borrow from the Global
Magnitsky sanctions regime and insert an authority that
requires the Administration to review and respond to any
congressional nominations for sanctions imposition.
This Committee can also task Government Accountability
Office with examining whether narcotics-related anti-money
laundering sanctions and export control measures are being
effectively enforced by the interagency.
For the Administration, I recommend issuing a new advisory
to financial institutions on illicit financial schemes and
methods related to the trafficking of fentanyl and other
synthetic opioids, and I recommend that they surge capacity to
Treasury, Justice, and other departments to address the
narcotrafficking issue.
When we see things like yesterday, with regard to North
Korea, which is a separate subject, fines and large fines,
those usually take years in the making. So, surging capacity
hopefully can shorten that.
The Administration also should not shy away from
specifically naming China's role in money laundering. Every
public statement on the issue should remind the American public
that China is essential to the operations of the drug cartels.
In private, the message to Chinese banks should be even more
blunt. Chinese banks are processing tens of millions of dollars
in transactions for narcotraffickers, and the U.S. Government
is prepared to use all available tools to stop it.
The Administration should increase cooperation with Mexico
and Canada, using the senior-level Trilateral Fentanyl
Committee as a launching point for actions on illicit finance
and identifying the transfer of illicit cargo across all three
countries.
The Chinese financial sector must be incentivized to
cooperate on the fight against narco money laundering. While
the Chinese Communist Party and Chinese President Xi Jinping
restrict U.S.-China diplomatic engagement, the Chinese
financial sector values its access to the U.S. financial
system. But that access should come with conditions. Chinese
banks, individuals, and companies cannot finance the drug trade
that is killing Americans.
Thank you for inviting me to testify, and I look forward to
addressing your questions.
Mrs. McClain. Thank you.
And now, Mr. Urben, for your opening testimony or your
statement?
STATEMENT OF CHRISTOPHER URBEN
FORMER ASSISTANT SPECIAL AGENT IN CHARGE
SPECIAL OPERATIONS DIVISION
U.S. DRUG ENFORCEMENT ADMINISTRATION
Mr. Urben. Good afternoon, Chairwoman McClain, Ranking
Member Porter, and distinguished Members of this Subcommittee.
Thank you for this opportunity to address you today on this
important issue.
I saw Chinese organized crime increased involvement in
money laundering firsthand as I served as a group supervisor
with the Drug Enforcement Administration. I spent 24 years
working for DEA, where I helped dismantle significant
international and drug trafficking money laundering
organizations around the world.
In 2018, I was assigned to DEA's Special Operations
Divisions, where I supervised a team that focused on this new
and evolving threat. We were receiving reports from the field
that drug cartels were using Chinese organized crime networks
to launder the cash. This was a dramatic change from business
operations that have been going in the past.
Chinese organized crime would charge only 1 to 2 percent to
launder the funds that they were laundering, and they could
deliver the funds to the traffickers in their home countries
immediately and could guarantee payment of the laundered funds.
I knew from my prior experience that the most predominant
laundering method that had been employed by the cartels was
known as the Black-Market Peso Exchange. It was complex and
dangerous, resulting in transaction costs of between 7 and 10
percent and delays of at least a week or more.
Because the Black-Market Peso was connected to the cartels,
laundering involved a constant risk of violence, theft, and law
enforcement intervention. My team focused on understanding and
combatting this new threat. Money is the lifeblood of the
cartels, and the methods that Chinese organized crime was using
enriched and enabled them to traffic even more fentanyl and
other deadly drugs into the United States.
This was also adversely affecting the integrity of our
Nation's financial system. The DEA seized hundreds of millions
of dollars in criminal proceeds that Chinese organized crime
was generating, arrested and debriefed participants, and
persuaded some of them to cooperate. We also seized and
searched numerous phones and other records reflecting how
Chinese organized crime was transforming money laundering.
These enforcement actions provided the insight that allows
me to explain how the network operates. As reflected by the
graphic in Exhibit 1 in my testimony, the current Chinese money
laundering model involves at least three participant
countries--the United States, China, and Mexico.
Here is how it works. Every day in the United States,
Chinese money brokers pick up narcotic proceeds from the sales
of fentanyl, methamphetamine, heroin, cocaine in the form of
bulk U.S. cash. A drug distribution, for example, gang in New
York that owes payment to the Mexican cartel delivers to the
Chinese broker, proceeds.
That Chinese broker then sells the U.S. dollars to Chinese
customers who want to spend the money in the U.S. acquiring
real estate, paying for college tuition, gambling, or making
other investments.
The Chinese customers pay in China for the cash they
received in the U.S. The proceeds in China are used to buy
goods for export to Mexico or South America, where the goods
are sold by the Chinese brokers in Mexico to recoup their
funds. The Chinese brokers accomplish all of this with a
trusted electronic encrypted communications network that allows
this to happen instantly.
What makes this so effective and hard to detect? First, it
minimizes the movement of funds. Dollars stay in the U.S.,
pesos stay in Mexico, and RMB stays in China.
Second, it takes advantage of the huge and increasing
volume of trade with China and the existence of capital flight
controls, ensuring a constant stream of customers for this
cash.
Third, it uses technology to its advantage. Advertising the
sale of the dollars on Internet chat rooms and then
communicating, again, primarily via WeChat, which is an
encrypted network that is resistant to surveillance by U.S. law
enforcement and that facilitates speed and trust within the
Chinese organized crime network. It is a key component to that.
While the threat of Chinese organized crime is real and
growing, much more can be done to combat it. More investigative
resources, such as translators, data scientists, and
experienced targeting analysts, would enable law enforcement to
have the tools needed to detect and investigate these networks
where they operate.
In the private sector, where I work now for Nardello and
Company, the global investigative firm, I am also seeing
greater awareness by the business community that it needs to
understand this emerging threat and develop the tools to
address it. More investments in training and detection will
facilitate private sector organizations' compliance with anti-
money laundering laws and help protect the integrity of our
financial system.
Congress also can play a vital role in providing resources,
incentives, and the authority for the Government and the
private sector to work together to combat this threat.
Thank you again for this opportunity to be here today.
Mrs. McClain. Thank you very much.
Next, Ms. Mavrellis, for your opening statement.
STATEMENT OF CHANNING MAVRELLIS
ILLICIT TRADE DIRECTOR
GLOBAL FINANCIAL INTEGRITY
Ms. Mavrellis. Thank you. Chairwoman McClain, Ranking
Member Porter, and distinguished Members of the Subcommittee,
it is an honor and a privilege to testify before you today
about Chinese money laundering organizations, or CMLOs.
In the last few years, reporting has increased on the
involvement of CMLOs with the laundering of narcotics proceeds
in the Western Hemisphere. However, this is not a new
phenomenon, having been documented by the Drug Enforcement
Administration since at least 2016. More importantly, the
drivers behind the involvement of CMLOs are solidly linked to
other countries' domestic policies, not U.S. immigration or
border policies.
Specifically, China's economic policy in regard to foreign
exchange controls prevents money from freely moving into or out
of the country unless it abides by strict rules. Those Chinese
citizens seeking to exchange or transfer in excess of $50,000
frequently turn to informal means.
Additionally, Mexico adopted a stricter AML/CFT policy in
2010 by placing stringent restrictions on the deposit of U.S.
dollars into Mexican bank accounts, combatting narcotics-
related bulk cash, and pushing cartels to search for new money
laundering strategies such as the use of CMLOs. At the same
time, Colombia has taken steps to develop one of Latin
America's most rigorous AML regimes, causing some cartels to
look outwards for help in laundering or moving narcotics
proceeds.
CMLOs and transnational criminal organizations, TCOs,
operating in the U.S. have a symbiotic relationship. TCOs face
the age-old problem of laundering and repatriating the proceeds
of crime from one jurisdiction to another and from one currency
to another. This is particularly difficult with large volumes
of cash proceeds, which is a common thing for drug trafficking
organizations, or DTOs.
On the other hand, CMLOs are looking to access large
volumes of U.S. currency by informal means. They each have what
the other wants.
While other professional money laundering organizations
profit from the purchase of criminal proceeds, CMLOs' primary
objective is to gain access to U.S. dollars outside of formal
channels in order to evade China's currency controls.
Therefore, while other professional money laundering
organizations and brokers may charge a 10 to 15 percent
commission, CMLO brokers can undercut the competition by only
charging up to 6 percent or nothing at all. They make their
profit by reselling the U.S. currency to Chinese nationals.
Once a commission is agreed upon and the cash collected in
the U.S., CMLO brokers are able to provide DTOs with near
instant access to a corresponding amount of funds. For example,
Mexican pesos in Mexico.
CMLOs have several options on how to handle the U.S.
currency. They frequently use money laundering mechanisms that
are unique to the Chinese context. They can make the funds
available to the Chinese citizens via an informal value
transfer system, specifically through flying money--also known
as fei ch'ien--or through a mirror exchange via the Chinese
underground banking system.
According to a former DEA senior supervisory agent, the
CMLO will typically use WeChat, a Chinese instant messaging
system, to offer the currency on message boards. A CMLO
associate and the Chinese buyer will meet in person to exchange
the cash, and then the buyer transfers an agreed-upon amount of
renminbi from their Chinese bank account to the CMLO's Chinese
bank account.
Another tried and true method that has been frequently used
by CMLOs and narcotics traffickers is the Black-Market Peso
Exchange, BMPE, a type of trade-based money laundering scheme
that is particularly difficult to detect since the value of
commodities, rather than the money itself, is shifted.
BMPE schemes have often been conducted as a two-country
transaction involving the destination and source countries, for
example, the U.S. and Colombia. With the involvement of CMLOs,
the schemes have now become three-country transactions with
renminbi made available in China that can be used to purchase
Chinese goods, which are exported to the TCO's country of
choice and then sold, with the profits going to the TCO.
As long as CMLOs can provide low commission rates, near
real-time mirror exchanges, and handle large volumes of cash,
they will remain a preferred money laundering service for DTOs.
Correspondingly, and looking to the future, the drivers behind
CMLO success are unlikely to abate. With the government's
authoritarian nature and crackdowns a constant, an ever-
expanding middle class, and President Xi publicly vowing to
adjust excessive incomes of China's super rich, the demand for
U.S. dollars will be sustained, if not grow.
The U.S., as well as the international community, need to
take the threat presented by CMLOs very seriously. My
recommendations include the following.
Study the role of Chinese professional money laundering
networks to gain greater insight on how they operate.
Target the individuals, entities, and countries
facilitating financial crimes and money laundering by applying
economic and other targeted financial sanctions, as well as
exploring policies to hold accountable countries that fail to
sufficiently investigate financial crimes.
Continue to make combatting corruption a high priority in
the U.S. national security strategy.
And finally, provide sufficient resources to FinCEN to
ensure that it can appropriately take on existing as well as
emerging challenges from financial crime risks.
Thank you, and I look forward to your questions.
Mrs. McClain. Thank you all for your testimony.
It is very enlightening, and I think if I have it in a
nutshell--and please correct me if I am wrong--but the Chinese
money laundering plan/scheme does it more efficiently, right,
in hours instead of weeks, charges less of an interest rate--
two percent as opposed to seven or eight.
The money actually does not hit our banking systems at all.
And with the money laundering, they never touch the drugs. It
is literally just the money changing hands. Do I have it in a
nutshell?
Mr. Urben. In a general sense, yes. I mean, it eventually
hits our banking system because once it is sold to Chinese
nationals here----
Mrs. McClain. Can you talk a little bit more about that,
please?
Mr. Urben. Sure, sure. So, I think the easiest way to do it
is once--let us stay within the United States. Once a Chinese
broker picks up those narco dollars, which were the day before
they were the proceeds of fentanyl, heroin, cocaine, and all
that.
Mrs. McClain. They have a bag of cash.
Mr. Urben. They have a bag of cash. So, the Chinese broker
receives that from the distribution gang. Let us say, let us
just keep it with New York, right?
Mrs. McClain. OK.
Mr. Urben. They then go out on the Internet chat room or
WeChat and advertise those dollars. Chinese nationals, whether
back in Mainland China or here in the United States, buy those
dollars. So, you would have a transaction similar in nature
where a bag of cash would be delivered in this example or maybe
a cashier's check, depending on what that----
Mrs. McClain. Is your mic on, sir? OK. Can you just speak
into the mic a little closer?
Mr. Urben. Sure, sure. Once that cash is received by the
Chinese national, right, back in China there is a bank-to-bank
transaction that happens with RMB for the equivalent amount.
Mrs. McClain. So, stop right there for a second. That is
happening in China?
Mr. Urben. That bank-to-bank transaction for the equivalent
amount is in Mainland China, correct.
Mrs. McClain. OK.
Mr. Urben. It does not--the cash does not--the RMB does not
exit China. It stays within China. That Chinese national
receives the $100,000 in cash and then uses it to acquire real
estate, pay college tuition, gamble, buy other investments.
Mrs. McClain. And they do that with cash here in the United
States, or do they use our banking system?
Mr. Urben. So, eventually, it will go into the banking
system most likely, to purchase----
Mrs. McClain. But not necessarily by the Chinese national.
I am the Chinese national. I have purchased $100,000 just of
cash, right? I paid a premium for it. I have $100,000 of cash.
I now, as the Chinese national, can use that. Either I
deposit that in my bank account here in the United States?
Mr. Urben. Yes, you would deposit it in your bank account
or pay for whatever services or asset you were buying.
Mrs. McClain. But talk to me how we can do that in the
banking system? Because I have to have a trail of where that
money came from, unless I do it several deposits under, I think
it is $10,000, right?
Mr. Urben. Yes. I mean, they would file the correct CTR or
suspicious activity report with it. But the Chinese national
depositing has a story or can legitimately say, at least to the
banking official, why they are depositing, let us say a
cashier's check that they have gotten as part of that money
laundering process, what appears to be maybe a relative or some
way they were involved with the renminbi.
Mrs. McClain. And how are we tracking that? Probably no
different than we track any other funds that come?
Mr. Urben. It is very difficult to track because it is
disconnected from the actual events of the drug money
laundering, right? So, it is difficult for the bank to detect
that under the current selectors that they are looking at.
So, they need to be trained. There need to be additional
guidance, and there needs to be----
Mrs. McClain. And that is what you are recommending is
perhaps additional training, resources for additional training
on that. Because unless we choke their money supply off, we are
not fixing this problem.
Mr. Urben. No.
Mrs. McClain. Maybe it is sanctions. I mean, maybe there is
not just one lever that we pull.
Mr. Urben. I think all the levers need to be pulled to
impose costs on the Chinese money laundering organizations,
right, to make it more difficult for them. So, the financial
institutions can certainly do this with enhanced due diligence,
but it is going to take an increased effort and cooperation
with the Government to share intelligence, and then additional
enhanced reporting and compliance.
Ms. Mavrellis. I will add that one of the challenges is
that so much of the current anti-money laundering countering
the financing of terrorism or AML/CFT system is very much
focused on the financial system in terms of instilling
safeguards in formal financial institutions' formal channels.
The challenge is that either the Chinese money laundering
organizations are using informal channels, so they do not touch
the system, or a lot of times, these Chinese nationals that are
purchasing the cash are, as Mr. Urben said, they are using
those cash in making deposits in, for example, real estate,
which----
Mrs. McClain. But it would be a cash deposit, right?
Ms. Mavrellis. It would be, but it is still an exempted,
you know, sector, as well as college tuition, making a cash
payment for college tuition.
Mrs. McClain. Thank you. And I am all out of time. Do you
want--OK, all right.
The Chair now recognizes Ms. Lee.
Ms. Lee. Thank you so much, Madam Chair.
Thank you so much to the panel. I appreciate the
seriousness and the urgency of this topic, but I do question
sometimes the way that we use our time and our resources in
this Committee.
We spent all morning talking about waste and fraud and
abuse in our Government programs, yet this hearing feels like
we are not always getting to the heart of the matter. And it
feels like sometimes we spend more time looking to create a
bogeyman or for a bogeyman than we do looking for humane and
proven solutions, and this is not a laughing matter.
The opioid crisis facing this country is a real, legitimate
threat. Since 1999, drug overdoses have killed over 1 million
Americans. That is far higher than the 58,220 American troops
killed during the Vietnam War.
In my home city of Pittsburgh, more than 1,590 people have
died from drug overdoses since January 2021, and we are in this
Subcommittee chasing our tails and listening to another hearing
on China. What are we really going to do about this?
Former President Trump had discussed sending special forces
to target cartel leaders and was apparently seeking battle
plans to strike Mexico. Republican Congressmen have introduced
a bill to authorize the use of military force to put us at war
with cartels, and Senators have indicated that they are open to
sending U.S. troops to Mexico even without that nation's
permission.
Republicans would rather invade sovereign nations and line
the pockets of war-profiteering friends than spend a single
penny actually helping Americans suffering from addiction. The
only other effort we seem willing to do are trying to lock up
more Black and Brown folks for possession and shutting down all
immigration from the Southern border. We can do better, and we
can do more.
Our neighborhoods and cities need help to expand treatment
programs, especially in rural and low-income communities.
People need to know about the risk of fentanyl being laced into
other substances. And first responders need to understand
things like synthetic opioids decreasing the effectiveness of
Narcan in helping people who are overdosing.
I have seen firsthand how communities can come together to
tackle this problem head on. Pennsylvania recently
decriminalized fentanyl testing strips, and a study by the
University of Pittsburgh found that the overdose rate fell by
30 percent in Pennsylvania in counties that implemented a
community-focused strategy.
We have got to look outside the box that is our failed
prison system and fund the programs that work. I have been here
in Congress just over 100 days, and I am already sick and tired
of kangaroo court hearings. And I imagine the regular folks
whose hard-working tax dollars are wasted here are sick of it,
too.
We have a duty to our constituents and the American people.
I ask the Committee to stop putting our politics over people's
lives.
I have no questions, and I yield back.
Mrs. McClain. The Chair now recognizes the gentlelady from
Florida, Mrs. Luna.
Mrs. Luna. Thank you so much for being here.
To just correct my colleague from across the aisle, China
is a bogeyman. And as we see moving forwards toward 2023, they
are not here to be our friend. They are coming to eat our
lunch. But furthermore, the reason why we focus on China is if
you have read any of the materials presented before this
Committee, you will see that China is, indeed, working with
cartels and the government of Mexico in order to bring fentanyl
into this country.
As someone who has had many of my family members impacted
by that, it is not just a Black and Brown issue, and I say that
as a Hispanic American woman. This is an issue affecting all
communities, regardless of socioeconomic status or race.
And, so, to say that we are sitting here wasting people's
time because we are addressing the very real threat of China is
actually something that is a slap in the face to every single
American that has actually ever had a family member that
struggled with drug addiction. So, save me the pearl-clutching.
To ask some questions of you, Ms. Mavrellis, do you know if
any BRICS countries are currently aiding in some of these CMLOs
that are currently engaged with this illegal black-market
exchange?
Ms. Mavrellis. I am unaware of any BRICS countries. There
are definitely issues--you have issues in terms of Brazil and
synthetics being produced there. It also serves as an exit
country for narcotics going to Europe.
India has similar issues with currency control. So, there
can be challenges there in terms of accessing U.S. capital or
other capital. But another issue is definitely Russia in terms
of not necessarily involving narcotics money laundering here,
but accessing the U.S. financial system or trying to evade
sanctions.
But by far, it is definitely China that is responsible
for--and I say China, I am kind of using it as both the
government as well as illicit state and non-state actors. They
are responsible for a lot of the transnational crime as well as
illicit financial flows that are occurring.
Mrs. Luna. Thank you. Mr. Urben, can you tell me what the
policy is in China for if you are caught selling drugs?
Mr. Urben. It is severe, you know, criminal penalties and a
prison sentence if you are caught selling drugs. I do not know
the exact----
Mrs. Luna. To my understanding, it is execution.
Mr. Urben. OK.
Mrs. Luna. So, the reason I bring that up is because there
seems to be this notion and idea that if you want border
security because you want to protect people from actually
consuming and bringing drugs into this country, that somehow it
is considered inhumane. But I would ask anyone on this panel if
they have ever had a family member that has been strung out, to
see the long-term impacts of that.
In my opinion, if you are selling drugs to someone, if you
are responsible for their death, you do deserve the death
penalty because you are ruining a life, and you are ruining a
family.
Mr. Ruggiero, could you tell me what can we do as part of
Congress to ensure that we are obviously functioning in a
nonpartisan fashion in an effort to really protect the United
States from this continued issue with China?
Mr. Ruggiero. Well, thank you.
You know, in my written testimony, I talk about different
ways to improve the Fentanyl Sanctions Act, which was a
bipartisan effort several years ago. I think there is ways to
increase oversight measures to make sure that the
administration is actually tackling the role of Chinese banks.
As I noted in my opening and in my written testimony, there is
this fear of going after Chinese banks.
And as Mr. Urben showed, you know, the other thing, if I
could use his graphic, the dark lines there, the black lines
ensure that there are sort of three separate financial systems
having those transactions. And so, what we really need, as I
said in my written and my oral testimony, is we need the
Chinese banks. We need them incentivized to look for these
types of transactions.
And part of that comes from us not being afraid to use the
tools--the United States, that is--that we have. And if the
Administration does not have those tools, to come to Congress
and ask them for it.
Mrs. Luna. Thank you so much for your time. Obviously, we
are here to get answers.
Chairwoman, I yield my time.
Mrs. McClain. Thank you. The Chair now recognizes Ranking
Member Porter.
Ms. Porter. Thank you very much.
Republicans and Democrats both should, and I believe do,
want to address the devastating fentanyl problem. But to do
that, we have to correctly define the problem, and I appreciate
your educational approach from across the panel to this
hearing.
I want to take a minute, though, to just kind of press on
this statement that Republicans made when they announced this
hearing. ``President Biden's border crisis is enriching China
and the cartels as they partner together to traffic deadly
fentanyl to the United States.''
So, I want to evaluate this theory a little bit. Do you
think this sums up the problem? Raise your hand.
[No response.]
Ms. Porter. OK. So, if this a Biden border crisis, we
should see it in the data. So, I brought a chart, and I hope it
is big enough that you can read.
This shows CDC data on drug-related overdose deaths from
1999 to 2021, and the gray line here shows the trend in
overdose deaths from synthetic opioids like fentanyl.
So, Mr. Ruggiero, the worse fentanyl trafficking gets, we
are going to see the impact in the fatality data. If the Biden
border crisis was the driver of all of this, when would it have
started on this graph?
Mr. Ruggiero. January 2021.
Ms. Porter. Correct. Because that is when President Biden
was sworn into office. But the problem pre-dates that, as you
can see. The gray line started spiking in 2013, but it really
took off in 2017.
So, fentanyl----
Mrs. Luna. Will the gentlewoman yield for a question real
quick?
Ms. Porter. No, I want to finish----
Mrs. Luna. I just want to point out that Biden was the Vice
President under the Obama----
Ms. Porter. I did not yield yet.
Mrs. Luna. Sorry. I just wanted to point that out.
Thank you.
Ms. Porter. OK. I did not yield. So, you cannot talk. And
now we have a little issue here.
So, President Trump restricted immigration starting back in
2020 with the onset of the pandemic. So, did fentanyl deaths go
down in 2020, Mr. Ruggiero?
Mr. Ruggiero. No.
Ms. Porter. No. They actually went up. So, if pandemic
migration restrictions did not cutoff the fentanyl supply that
is killing Americans, I think we can safely stop blaming
immigration for what is a cartel problem.
So, let us focus on the other part of Republicans'
statement. China-based suppliers and money launderers and the
cartels are to blame for this issue.
Ms. Mavrellis, what policy solutions are available to
Congress and the President to address this specific policy
issue?
Ms. Mavrellis. Well, I definitely support Mr. Ruggiero's
statement in terms of targeting the Chinese financial system.
If you look at China as an actor in itself and its response to
different challenges, it moves swiftly toward internal threat,
so things like internal narcotics trafficking.
If you look at issues in terms of like the wildlife
trafficking within the country, how it impacted or was related
to COVID-19, they swiftly moved to close down wet markets.
However, if you look at overall wildlife trafficking, they are
the number-one illegal consumer of wildlife goods. You have
issues with ivory trafficking.
So, they are only going to make strong movements if it
impacts them internally. So, it is trying to hold them--or
trying to find a way for them to see how this relates to them
or makes an impact.
They have been cracking down on Chinese underground banking
systems. Every time they do, they seize tens of billions of
dollars' worth of funds. The challenges there, they are doing
it because of potential losses they are facing internally from
evasion, things like that. It is not just because of-- it is
related to illicit proceeds or illicit financial flows, things
like that.
So, definitely putting pressure on the financial system. I
would say also looking at ways to have better ways to address
informal mechanisms. So, the flying money, the Chinese
underground banking systems, the trade-based money laundering,
those are all very difficult to address because so much of the
current AML/CFT policy and system--and not just the U.S., but
globally--is faced toward the formal financial system.
So, we are kind of leaving our backdoor open.
Ms. Porter. Yes. I thought that was really interesting in
your testimony the quote you gave from somebody who said we
have done a pretty good job of closing the front door, which is
the financial system, but we left the backdoor of international
trade wide open.
In my remaining time, I just wanted to ask you about, in
your written testimony, you talk about trade transparency
units, and I was intrigued and wanted to hear why can't we get
that? These are voluntary, right, agreements to exchange trade
data. Why can't we have the data flow more frequently?
Because getting it a month after the transaction means
that, essentially, you are losing sight of the flows of those
trade-based transactions.
Ms. Mavrellis. I think part of it was just it was not
designed for the idea of catching things in real time. It is
more kind of an auditing system. The way that things like SARs
and CTRs, they are used kind of to look at what has happened
versus being able to stop something necessarily in real time.
So that is why GFI, Global Financial Integrity, really
pushes for the free and public exchange of trade data and also
pushes for greater exchange of trade data between TTUs, which
are heavily located within Latin America.
Ms. Porter. Thank you.
Mrs. McClain. Thank you. The Chair now recognizes the
gentleman from South Carolina, Mr. Fry.
Mr. Fry. Thank you, Madam Chair. I really appreciate you
having this hearing. I was just in district yesterday visiting
a recovery center, actually, and talking to them about some of
their plans to expand access to people in the Pee Dee region of
South Carolina and what they were doing.
And when I was in the state legislature just last year, and
even before, I led an effort, it was a bipartisan effort to
address some of the challenges related to the opioid epidemic
in the state. We passed 18 bills, had a record investment.
And I look at the numbers, and they just frustrate me,
quite frankly, because you see the numbers of overdose deaths
continually climb. And of course, we know that it is fentanyl.
It is fentanyl that is coming across, predominantly, our
Southern border, that is coming into this country, that is
laced into multiple drugs and is killing everybody, really,
quite frankly. It does not matter what demographic you are,
what race, what gender or sex, age brackets. You name it, it is
killing everybody in this country.
And there is a lot of, I think, things that we can do in
Congress to address it. There are a lot of things that states
and local governments can do to address it. But this is really
interesting to me because I look at this, and of course,
fentanyl--you know, you look at the headlines every single day.
``Three found dead in downtown L.A. after possible fentanyl
overdoses.''
Headline, ``Texas School District on third fentanyl
overdose as police make fourth arrest connected with drug
deals.'' Headline, ``35 fentanyl-related overdose deaths in
King County in less than 1 month.'' Headline, ``Fentanyl deaths
in young children on the rise in accidental deaths.''
We cannot continue to allow this to happen. I am actually
really intrigued by all of your testimony on things that we can
do and the problem, as you see it, as it pertains to the cash-
flow.
So, Mr. Urben, in an article from August 2022, you stated
that, ``One reason Chinese MLOs were successful is because they
are trusted.'' Can you explain this further, and what can
Congress do to break up that trust between China and the
cartels?
Mr. Urben. Yes, and thank you. Thank you, sir.
In regard to trusted, right, it is a trusted network. So,
there are a couple of components to that. One is historically
going back decades, the Chinese underground banking system,
right? So, where they facilitated payment of workers that were
abroad back to China.
So, this network had already existed in the Chinese
diaspora around the globe, right? So, you could have whether it
be Mexico or the U.S. So, that is the initial trust within the
culture of China when it comes to finances.
The encrypted app, WhatsApp, allows them a trusted network
to communicate across that network, right? So, the person that
they are communicating with, they are essentially ensured that
they know to some degree who that person is because they have
WeChat handles that stay consistent over time.
Now if you compare that to, as I described, the old Black-
Market Peso Exchange, which cost the Mexican cartels and the
Colombian cartels dramatically more in terms of cost and
manpower, right, because it was not a trusted network, right,
and that is why violence was imposed if moneys went missing or
they were seized by law enforcement.
So, that is how I describe trust in that it allows the
Chinese network to move the cash quickly, right, and then I
think it has not been detailed yet. They absorb all the risk,
right? So, I think that is a tremendous point that the Chinese
money launderers offer to the Mexican cartel, which was not
there before. So, they are absorbing the risk.
So, if it gets seized by law enforcement or it goes
missing, there is--violence is not part of the equation because
they have taken the loss, essentially. So----
Mr. Fry. Thank you. And we have heard from the other two
witnesses, but for you specifically, what policy suggestions
would you recommend to make money coming in from China clearer
and to prevent that criminality?
Mr. Urben. So, whether it was money coming in from China or
funds that I detailed in that diagram, you know, it is enhanced
due diligence, right? There has to be enhanced due diligence so
there is a track record of where those funds came from so
investigations can followup on that in the future.
I think there is a couple components that I think that
would help with this. One is scaling up, like I mentioned
before, specific subject matter experts and expertise that can
leverage data, whether it is in the financial system or it is
judicially acquired data by law enforcement.
So, there is vast amount of data that exist that we can
leverage now. It is difficult to do that because we need
specific data scientists. I want to say data targeters,
analysts that can take that data and give snapshots of insights
to provide that to law enforcement for action.
So, I think that is the first component. The other one is
dedicating resources to sufficient authority to deal with these
encrypted apps. That has been going on in terms of law
enforcement and dealing with the encrypted apps for a number of
years. But specifically, with this one, we need to negate the
ability of Chinese money laundering organizations to leverage
WeChat, as I have described before.
Mr. Fry. Thank you, Madam Chair. I yield my time.
Mrs. McClain. Thank you. The Chair now recognizes the
gentleman from Arizona, Mr. Gosar.
Mr. Gosar. Thank you, first to the witnesses, for coming
here. This is very, very important.
So, the capturing by the Chinese of the illegal drug trade
is self-inflicted to a large degree, thanks to the U.S.'s fiat
money system. Because the dollar dominates all other currencies
currently, foreign nationals cannot afford expensive U.S. goods
priced in dollars.
Conversely, U.S. consumers have access to cheap foreign
goods priced in a comparatively weak currency like the yuan,
currently. This leaves Chinese nationals flush with U.S.
dollars, but unable to use the money in the U.S. due to
protectionist Chinese laws, giving the U.S.-based Chinese
criminals an opening to work with the cartels.
Chinese criminals agree to take U.S. dollars from the
cartels earned from the drug and trafficking trade and exchange
them for a Latin American currency. That leaves the U.S.-based
Chinese criminals with ready-to-invest cash in the United
States, exactly what these rich Mainland Chinese need in order
to circumvent Chinese protectionist law that prevents them from
directly investing in the United States without a middleman.
The U.S.-based Chinese criminals then take the cash and invest
in United States securities, stocks, real estate on behalf of
Mainland China.
So, status quo U.S. monetary policy enriches Chinese
nationals, who utilize U.S.-based Chinese criminal middlemen to
divert--to invest dirty money obtained from the cartels whose
drug trafficking is killing our young folks.
A return to the gold standard would be a great step to halt
the enrichment of the Chinese by ending the flow of cheap goods
to the United States, a one-way dumping that has destroyed the
U.S. manufacturing base there over the past 40 years. Jobs will
flow back, and there might be even more--there would be no more
rich Chinese who would need to have help from criminals to
invest their money in the United States.
Mr. Ruggiero and Mr. Urben, is the Chinese Communist Party
complicit in the trafficking of illegal drugs like fentanyl in
the United States?
Mr. Ruggiero. Well, I am not--thank you. I am not sure if
they are complicit, but I think the Chinese Communist Party and
the Chinese financial system, as was mentioned by another
panelist earlier, when they want to crack down within the
financial sector, they have the tools to do that. And so----
Mr. Gosar. But where are the chemicals coming from?
Mr. Ruggiero. Currently, in China. Many instances, China.
Mr. Gosar. Yes. Thank you.
Mr. Ruggiero. If you are talking about the precursors.
Mr. Gosar. Yes, yep. How about you, Mr. Urben? Do you
agree?
Mr. Urben. Well, I mean, in terms of the investigative
efforts that I was behind when I was with DEA, I did not have
visibility on these things within Mainland China.
Mr. Gosar. OK. But we definitely know the chemicals are a
plethora on China, right?
Mr. Urben. Absolutely. They are the primary source of
precursor chemicals for the manufacture of fentanyl.
Mr. Gosar. What evidence in the public record exists to
back up the assertion that the Chinese Communist Party is
involved in money laundering and drug trafficking from
narcotics flowing across our Southern border in the United
States?
Mr. Urben. I am not aware of it being in the public record
in terms of that specifically, sir.
Mr. Gosar. OK. Mr. Urben, in your experience investigating
money laundering from China, would you consider another
situation where the rapid creation of several corporations or
LLCs, for example, with no discernible legitimate business
indicative of a potential money laundering scheme?
Mr. Urben. To answer your question based on the details
that you told me, a number of LLCs created with--with no
background to it that would legitimize why it was created is
customarily used to launder funds, especially if there are
numerous ones created, and you do not know who the beneficial
owners are.
Mr. Gosar. So, what does it signal to you when there are
multiple LLCs layered on top of each other with no unique or
distinguishable services attributed to them?
Mr. Urben. The end of your question, what should be? I
would view it as a potential money laundering set-up to----
Mr. Gosar. That is where I am going. So now either witness,
have you seen instances where Chinese nationals use different
companies to hide money originating from China or the fact that
there is Chinese ownership involved?
Yes, ma'am?
Ms. Mavrellis. So, there was a very infamous case that came
out a couple of years ago of Xizhi Li, and he was laundering
tens of millions of narcotics proceeds. He is--correct me if I
am wrong--either a U.S. citizen--or sorry, U.S. national or a
permanent resident. But he is a Chinese national, and he was in
the U.S.
And he used several different methods. He used a U.S.
seafood company. He used a Guatemalan casino. And he used U.S.
and Chinese banking accounts to conduct these transactions.
Mr. Gosar. Thank you very much. You have been very
enlightening. We need to spend a little more time understanding
this.
So, thank you, and I yield back.
Mrs. McClain. Thank you. The Chair now recognizes Ms.
Balint.
Ms. Balint. Thank you so much.
Excuse me. Thank you all for being here. I really
appreciate it.
Windham County, Vermont, where I live, has the highest rate
of opioid deaths in my state. And according to the Vermont
Department of Health, most opioid-related accidental and
undetermined deaths right now among Vermonters involve
fentanyl.
And combatting the opioid epidemic and ensuring that
Americans have access to recovery and treatment is extremely
important to me. I literally am here representing families who
have lost children to fentanyl.
I am grateful, I am grateful for President Biden's
leadership on this issue. In 2021, President Biden imposed
sanctions on foreign nationals involved in the illicit drug
trade. The Departments of State and Treasury have sanctioned
roughly 40 individuals and entities involved in the illicit
drug trade since 2021, including individuals who traffic and
cartels that traffic mostly in fentanyl in the United States.
Ms. Mavrellis, can you explain how imposing sanctions like
these help to tackle drug trafficking in the United States? I
think Vermonters would like to understand this better.
Ms. Mavrellis. Sure. Well, as a fellow Vermonter or,
rather, a flatlander, I should say, it is definitely--imposing
sanctions makes it harder or raises the cost of doing business
for cartels or for any other individual that is involved. And
when it comes down to it, they are focused on the bottom line,
and that is why we always talk about following the money and
being able to not just detect, but seize narcotics proceeds.
When it comes to our success, I think the global estimate
is less than 1 percent of illicit proceeds are detected. As
GFI's founding president, Raymond Baker, says, we are a decimal
point away from failure.
And, so, no matter how much you stop in terms of the actual
products going over the border, if you are not stopping the
flows of money coming back, that is just going to keep getting
reinvested more and more into the scheme. So, it is incredibly
important to shut down the financial flows and raise the cost
of doing business.
Ms. Balint. Thank you. I appreciate that.
The other thing I wanted to ask you about is the Biden-
Harris Administration has been working closely with global
partners to eliminate the North American-wide threat of
fentanyl. We have got Mexican President Obrador and Prime
Minister Trudeau of Canada working together on a Trilateral
Fentanyl Committee.
And again, I think Vermonters would be very much--
obviously, Canada is our neighbor to the north. We would be
very interested to know how this multinational committee can
combat the fentanyl problem that we are seeing in Vermont.
Ms. Mavrellis. I am not aware of this committee, but I
would say being able to have the three countries align their
policies is extremely important. When it comes to how TCOs
operate or they are going to look for jurisdictional arbitrage.
So, they are going to try to use jurisdictions that have weaker
controls, that have weaker policies and regulations, and
exploit those in order to conduct business more easily.
Ms. Balint. It feels like working with global partners is
really the only way that we are going to be able to attack this
problem. It is massive. Is that fair to say?
Ms. Mavrellis. Yes. I mean, it is not an easy solution,
particularly when it comes to how do you solve a problem like
China? A lot of other times, like I have said before, many
countries will generally actively try to combat transnational
crime, even if it is maybe not having a huge impact on them.
China is one of those countries that really does not always
participate. It is looking very inward to its inward impact.
So, for example, we talk about, you know, the production of
precursors and other chemicals. They have thousands of
pharmaceutical companies. They have tens of thousands of
chemical companies. This is a large part or at least a good
contributor to their economy, and they are not going to
necessarily crack down on these industries and sectors if it is
going to have an important repercussion.
The same way China is responsible for about 80 percent of
counterfeit items globally. That means it has probably a very
significant amount of citizens employed in that. So, they are
not necessarily going to cut down or crack down on
counterfeiting maybe as directly as necessary because it is
going to have serious repercussions internally in terms of
unemployment and impacts to the country as GDP.
Ms. Balint. Thank you.
In closing, I just want to say we cannot do this alone. We
have to be working in partnership with any willing partners
that will help us to deal with this, and this is what
Vermonters, the people I represent, need from us. We have to do
whatever it takes to save lives.
So, thank you.
Mrs. McClain. Thank you. The Chair now recognizes Mr.
Burlison.
Mr. Burlison. This is new territory for me. This is wild.
It is like watching the show Ozark, right?
So, what is remarkable is how they are laundering the
money. So can you elaborate what kind of--are they--what is the
pattern where they purchase goods from China, and how is that
able to--then they sell them in Mexico. Is that what is
happening?
Mr. Urben. Yes. So that is--that is the third component to
complete the money laundering cycle, right? So just going back,
the Mexican cartel has already been made whole. They have
already moved the funds within the United States. And once that
bank-to-bank transaction happens in China, right, it goes from
the Chinese broker to a Chinese manufacturer.
The Chinese manufacturer manufactures goods and ships those
to a Mexican business that sells those goods. The funds from
the sale of those goods may complete the Chinese broker who
initially provided the funds to make the Mexican drug cartel
whole. So that happens on an ongoing basis.
And this was a very simplistic chart up there, obviously.
You have to think of when I said the dollars stay in the U.S.,
pesos in Mexico, and RMB in China. There are giant pots of
funds there, right? There is billions of dollars that are
flowing through this whole process over the course of the year.
So, it is not a one-for-one transaction in terms of that
$100,000, for example, that was a bank-to-bank transaction in
RMB or $100,000 worth of goods were produced and sent to
Mexico. It is vast components of this that are put together to
ship the goods and then sell them in Mexico.
So that is happening on an ongoing basis, and it
undermines, you know, the integrity of their markets as well
because those businesses most likely are trying to avoid taxes
and regulation related to those goods. They do not have to
spend money or wire money to China for the purchase of those
goods. They are providing funds in Mexico for the goods they
are going to receive and sell.
So, there is a multitude of players in this, and that is,
again, a very simplistic detailed mapping of how the money
moves. But those goods are being produced on an ongoing basis
and sent and sold, whether it be in Mexico, Central America, or
South America.
Mr. Burlison. To what extent has China acknowledged--do
they acknowledge any of this? Have they helped or aided the
United States in any of the previous transactions or events
that occurred that were known criminal activities?
Mr. Urben. I mean, again, my visibility with Chinese
assistance on the investigations that I was involved in, again,
I coordinated with our office in Beijing and the embassy. We
provided the information.
My visibility was limited, at best, of what was happening
in China or the assistance that we were given in terms of the
investigative efforts. We mostly focused our investigative
efforts outside of China to deliver judicial endgames.
Ms. Mavrellis. I will add that they have not--they do not
have the reputation of responding quickly or being a
collaborative player when it comes to providing information,
investigative information. And that is why we suggest that the
U.S. Government looks for opportunities to have policies to
hold accountable countries that are failing to sufficiently
investigate financial crimes or share information. There is
definitely challenges in cooperation with China and receiving
that information in terms of financial intelligence.
Mr. Burlison. So, within this, there has got to be someone
who is keeping ledgers or some books, right? Someone, one of
these brokers has got to somehow in their communications be
keeping track of a ledger. Would that not be true?
Mr. Urben. In a general sense, it is true, right? So, for
the visibility that we did have, whether it be on a Chinese
broker in Mexico or a Chinese broker within the U.S., the law
enforcement actions that we were able to participate in, there
was data there. And that is when I was describing earlier,
there is the data to leverage.
I do not want to get into the specifics of what there is to
leverage because it might affect an ongoing operation. But in
each place, there are very sophisticated detailed records and
ongoing transactions that they have to keep track of. So, it
all balances out in the end.
And again, just our visibility in China was very, very
limited.
Mr. Burlison. There has got to be--so because the money
moved, because everything was received, they have built up a
trust factor, right, and then that machine continues?
Ms. Mavrellis. I mean, the systems that are being used, so
the flying money. When we talk about flying money or fei
ch'ien, that is just basically the Chinese system of hawala.
So, you have that, you have the underground banking that is
conducting these mirror exchanges where funds in one location
are made available or they are received, and then they are made
available in another location.
These transactions have been around, or these types of
methods have been around for hundreds of years. They have
traced it back to like Tang Dynasty. So, they are very, very
long--very, very well-established. They are often used for
legitimate reasons like sending remittances. That is how they
historically have been. But they also are perverted to engage
in this type of illicit activity.
But as Mr. Urben said, because these systems are so much
based on trust, because you are going back and forth with these
shipments, with the movement of value, and you are kind of
expecting them to balance each other out, it is based on trust.
So that when a Mexican cartel engages with a Chinese money
laundering organization, they know that the systems are in
place and that they have been there for a very long time.
These systems are also very much reliant on family
connections. A lot of times, they are inside the Chinese--they
are, No. 1, definitely inside the Chinese community, and there
is largely between family connections.
Mrs. McClain. Thank you. The Chair now recognizes the
gentleman from Wisconsin, Mr. Grothman.
Mr. Grothman. Thank you.
Just in general for you folks, do we have a fentanyl
problem in China? Do you know how many people die every year of
fentanyl overdose in China?
Ms. Mavrellis. I can tell you there is not a fentanyl
problem in terms of what we are seeing here. I have no figures
about how many people die from it. It is difficult. The numbers
that are released by the Chinese government are not necessarily
absolutely realistic or reflect the current situation, but I
would say not at the same level.
Mr. Grothman. Why is that? Why is that?
Ms. Mavrellis. They have very draconian measures in terms
of cracking down on those individuals who use or traffic the
goods or traffic narcotics. You know, they were successfully
able to get rid of opium within a few--short period after the
country opened up because they did not want to have that kind
of activity within their country.
Mr. Grothman. OK. Well, you said draconian. Give me an
example of draconian.
Ms. Mavrellis. So, technically, they do not exist anymore,
but they are putting individuals like drug users, they go
around and actually try to count the number of drug users
within society, and those that are considered drug users are
put into kind of rehabilitation programs, which involves forced
labor. And, as noted earlier, there can be extreme cases such
as the death penalty.
Mr. Grothman. OK. I will ask you, Mr. Urben, would you
describe China as being complicit in America's drug overdose
epidemic?
Mr. Urben. China, in terms of the government or the
country?
Mr. Grothman. Yes.
Mr. Urben. Again, the insight in terms of the investigative
efforts we had, was not in Mainland China. It was outside of
China. So, those efforts----
Mr. Grothman. OK.
Mr. Urben [continuing]. Clearly indicated----
Mr. Grothman. Well, the money in winding up back in China.
Correct?
Mr. Urben. Absolutely.
Mr. Grothman. And the ingredients in the fentanyl is
produced in China, isn't it?
Mr. Urben. Precursors are the ones--precursor suppliers
supply the Mexican cartel; they are in China.
Mr. Grothman. Right. Do you think China would be capable
of--given that they have seen that they have a fentanyl problem
in their own country, do you think China would be capable of
stopping the flow of fentanyl to this country?
Mr. Urben. I think they should be, yes.
Mr. Grothman. OK. Do you think they could be?
Mr. Urben. Yes. I think--I think we talked about draconian
measures----
Mr. Grothman. So, it is the will. It is the will. Does
China know that over 100,000 Americans are dying every year of
illegal drug overdoses?
Mr. Urben. Yes.
Mr. Grothman. OK. Does this bother them? Does anybody--has
the Administration brought this up?
Ms. Mavrellis. I mean, I do not know if they have brought
it up with them, but like with any country, their priority,
first and foremost, is domestic. So, they are going to focus
on----
Mr. Grothman. I would think that if we had an illegal drug
and it was being shipped across the border, and every year,
20,000 Canadians were dying, I think we would feel we had an
obligation to do something about that.
Ms. Mavrellis. That is correct. It is what makes China
relatively unique in how they handle issues like this.
Mr. Grothman. Then, in other words, they do not handle
issues like this, right?
Ms. Mavrellis. Correct.
Mr. Grothman. That is what is unique. And I would think,
given the relationship that we have with China, being a major
trading partner, I would think that China over time likes to
become more and more part of the developed world. I would think
the Biden Administration should be doing the things or
encouraging China to do the things that are necessary to save
100,000 American lives a year.
Now I know, you know, I have been down on the border. I
know people are streaming across the border. I know if you just
look at the border you feel the Biden Administration does not
care that 100,000 people are dying. But I just wondered, what
specific actions is the Biden Administration taking, if any, to
make it clear to the Chinese how upset we are that 100,000 of
our citizens are dying every year?
Mr. Ruggiero, we will start with you.
Mr. Ruggiero. Well, I think it has been mentioned before
that the Biden Administration is using their sanctions
authorities against----
Mr. Grothman. Individual people. But I am saying with the
government, with the government.
Mr. Ruggiero. Sure. Yes, I think they have to incentivize
the Chinese----
Mr. Grothman. And they are not doing that right now,
though, right?
Mr. Ruggiero. They are not doing that. There--it is not a
priority. I mean, your question about----
Mr. Grothman. Only a 100,000 lives. Not a priority.
Mr. Ruggiero. Right. Your question about whether China is
complicit, I would just say they are clearly making a choice to
not stop the precursors coming here and on the money.
Mr. Grothman. OK. We will give you another quick question
here. Does the Chinese Communist Party perceive a benefit from
helping Americans become dependent on potentially fatal and
addictive drugs like fentanyl? I mean, when they report this to
the Chinese government, 107,000 Americans died last year, most
from a drug the ingredients produced in China, do they do
anything, or does the Biden Administration ask them to do
anything?
Mr. Ruggiero. Well, I would say that if there are no
consequences for that action, I think for them, for the Chinese
government, they would probably say that they have changed the
rules----
Mr. Grothman. Why do we care? It is just 100,000 American
lives. They are kind of like why they do not enforce the
border.
OK, thank you.
Mrs. McClain. Thank you. The Chair now recognizes Ms.
Crockett.
Ms. Crockett. Thank you so much, Madam Chair.
And good afternoon to each of you. Thank you so much for
being here.
The issue of today's hearing is not simply a domestic
problem. It is a global one. We need international cooperation
with countries like China and Mexico to combat drugs and
fentanyl coming into our country.
Unfortunately, testimony provided at the House Financial
Services Subcommittee hearing late last month showed that
China's willingness to cooperate on drug enforcement efforts
sharply declined following a period of short-lived
collaboration with the last Administration, bringing bilateral
relations to a standstill.
It is no surprise then that China has tried every which way
to get out of working with our country to address the fentanyl
drug crisis that we are experiencing. Just last August, Speaker
Pelosi visited Taiwan to applaud the island's governmental
democracy. Yet following the visit, China retaliated by
formally suspending its agreement with the United States that
bans the export of fentanyl.
But as Dr. Gupta, Director of the Office of National Drug
Control Policy, explained, China used this visit to ``as a
pretext to step back from its cooperation in an effort to
counter crime and narcotics.''
Ms. M--because I am not going to slaughter your name today.
No, no, no. I do not want to do that to you, and yes, so I am
not going to do that to you.
How has China leveraged its geopolitical interests,
including its interest in Taiwan, to no longer work in good
faith to combat cross-border drug trafficking?
Ms. Mavrellis. I cannot speak specifically to Taiwan, but I
think it gives them a reason to say that they will pull back.
They know that the U.S. does care about this issue of fentanyl
trafficking, illicit financial flows, as evidenced by this
hearing and other hearings that have been held. So, you know,
if they want to have the U.S. take notice, that is one way to
do so.
Ms. Crockett. All right. Let me ask you then, in your
opinion, what could the U.S. do to secure greater cooperation
from China, if anything? I put the ``if'' for you.
Ms. Mavrellis. I know. It is a big question. I am not
saying that this cannot be achieved, but as I think a lot of us
have said, China, first and foremost, focuses on the impact
internally. Most other countries obviously do the same. They
are going to put their internal domestic policy priorities
first, but they are also going to try and if there is something
internally that is happening that is impacting another country,
they do make those efforts to address it. That is not happening
as much from China.
The collaboration, it can be hit or miss. Sometimes you get
lucky. I will point to ivory trafficking. For a very, very long
time, there was no advancement on getting China to stop ivory
trafficking. And it was not until President Xi actually himself
came in and kind of said this is ending, was the trade kind of
shut down to a relatively good degree.
Ms. Crockett. So, in short, we need a willingness on the
part of China, obviously, right?
Ms. Mavrellis. Yes.
Ms. Crockett. And typically, we cannot necessarily make
people wake up 1 day and decide to be willing. And, so, I know
that there has been some conversations as it relates to
sanctions, but there literally has to be a will. And sometimes
that will come with force, and sometimes it comes with just
because you happen to actually care.
And unfortunately, we are not really seeing either one
right now. But we are seeing good signs of cooperation from
other international partners. About 2 weeks ago, members of the
Mexican Security Cabinet visited D.C. and renewed Mexico's
commitment under the U.S.-Mexico Bicentennial Framework to
counter fentanyl trafficking.
But we need to also fight these drugs here at home. You
talked about kind of usually most people focus on the domestic
side of things. And, so, President Biden's 2022 National Drug
Control Strategy has bolstered international and domestic law
enforcement operations to disrupt the international fentanyl
supply chain and provided $275 million to dismantle illicit
financial operations in high-intensity drug trafficking areas.
The administration is also building cooperative frameworks
between Federal and local law enforcement agencies and public
health departments to ensure that people have access to
treatment for opioid disorders, which obviously would hopefully
decrease some of the demand.
And you know, once again, I do want to thank all of you for
being here. I am about out of time, but I want to be clear that
right now I want to point out that rather than investing,
helping to invest in these efforts such as the ones that I have
mentioned, my colleagues on the right, through the debt ceiling
fight that we are about to endure in 2 seconds, they have
decided that they want to cut DEA funding by 22 percent.
This would effectively undermine border management and drug
interdiction efforts, and that would be a travesty. So, I hope
that we can get somewhere on the debt ceiling and make sure
that we do a good budget that funds everything to make sure
that we can fight all the wars that we need to, domestically
and internationally, especially when it comes to drugs.
Thank you so much.
Mrs. McClain. Thank you. The Chair now recognizes Mr.
Langworthy.
Mr. Langworthy. Thank you, Madam Chair.
The opioid crisis is the leading cause of death of
Americans age 18 to 45. Now just last Thursday, in my district,
in my hometown of Jamestown, New York, law enforcement made an
arrest and seized 40 grams of fentanyl. This has been something
that has happened in this community time after time.
But that is enough to kill 40,000 people. A single fentanyl
overdose is absolutely one too many, and I have sat with the
families and the victims of this terrible drug and have seen
its impact firsthand. And it is a real scourge throughout
upstate New York.
But that seizure alone could have killed the entire
population of two of the counties of the seven in my district.
It is just unthinkable.
And now extrapolate that across the context of the
estimated 11,000 pounds of fentanyl that has come across the
border since January of this year. We cannot afford to delay
action in addressing this crisis. We have to get real about it.
And as we continue to hear today, it is clear that the Chinese
are a huge part of this crisis and contributing to the deaths
in our country every single day, and we must find a solution to
stop the spread of this scourge and the addiction and the death
that it has brought our country.
Mr. Urben, is China complicit in America's drug overdose
epidemic?
Mr. Urben. Again, you are talking about the country and the
CCP? I did not have insight during the investigative efforts
that I supervised up to a year and half ago.
Mr. Langworthy. OK. So, there is not--is there evidence of
the Chinese Communist Party being involved in money laundering
operations around that?
Mr. Urben. I did not have insight into that specific
question in terms of the CCP or Mainland China.
Mr. Langworthy. OK. Is there evidence that China is
weaponizing or capitalizing the fentanyl crisis by supplying
necessary precursor chemicals to produce the drugs?
Mr. Urben. Again, insight within Mainland China we did not
have. We have already discussed precursors come from China into
Mexico for the cartels, and the moneys are laundered back.
Mr. Langworthy. OK. Well, switching gears then.
Mr. Urben. Yes, sir.
Mr. Langworthy. Is there evidence that China is carrying
out operations like this all over the world, or is this really
targeting the United States?
Mr. Urben. That is a very broad question. In terms of the
investigative efforts that I was involved in, the Chinese money
laundering model is around the world.
Now, it is much different here in the United States because
essentially the Mexican cartel funds, as we were discussing
earlier, essentially put on steroids the funds and the moneys
that were being laundered here. But in terms of the Chinese
diaspora, the Chinese underground banking system, WeChat,
whether it be in Africa or in other parts of the world--the Far
East, obviously--that Chinese money laundering model exists
there, too.
Mr. Langworthy. OK. Is the United States currently working
with any of these other affected countries to tackle China's
threat in this same regard?
Mr. Urben. So, again, this was an evolving threat, right?
It was new intelligence that you had to fuse in terms of
insight to action, but we are always working with our partners
overseas and in countries that we could align with, whether it,
again, be Africa, the Far East.
You could take the Five Eyes. You could take Australia, for
example, Canada, the UK, certainly partners that we have
established relationships with in Europe. Always trying to
synchronize their intelligence with ours and in investigative
enforcement efforts.
So, yes, that was happening while I was at DEA in terms of
what we were trying to achieve.
Mr. Langworthy. OK. And last, have we seen--you have talked
a lot about the money laundering. Have we seen cryptocurrencies
or other digital assets used in these Chinese operations?
Mr. Urben. So that is a very good question. During my time
at DEA, the crypto was a very limited component of the money
laundering cycle or scheme that I described there. It was more
used on an individual basis for whether it be a trafficker or a
criminal network of some nature where they would use that as an
asset that they can move from point A to point B.
However, over the last year, there is new intelligence that
crypto and digital money laundering is a greater component of,
let us say, that it is offered as--whether it be cash, a
cashier's check, or crypto.
So that it is a greater involvement over the last 18
months, whereas previous to 18 months, it really had a limited
component of the money laundering cycle.
Mr. Langworthy. Very good. Thank you very much for your
testimony.
And I yield back.
Mrs. McClain. Thank you. I now recognize Ranking Member
Porter for her closing statement.
Ms. Porter. Thank you very much, Madam Chairwoman.
Earlier, I showed everyone a graph with the trend line of
deaths from synthetic opioids over the last couple of decades.
But it is important to remember that that line represents
people, real lives, too many people whose lives were lost too
soon.
We owe them and their families not only a careful
examination of the true causes of the opioid crisis, but the
action that addresses the roots of the problem. The United
States needs to continue to address the opioid crisis from
every possible angle. We need to cutoff the supply of fentanyl,
including by sanctioning China-based suppliers and money
launderers.
To do that, though, we have to be able to engage with China
and impose sanctions. I am confident that the Administration
will continue to do that.
At the same time, we also need to help those harmed by
fentanyl by expanding drug treatment resources. There are
Republicans and Democrats on record willing to work across the
aisle to do those things, and count me as one of them.
In fact, Madam Chairwoman, a few weeks ago, I sat down with
my copy of the Director of National Intelligence 2023 Annual
Threat Assessment. You know, just a little joyful reading. I
later called my staff into my office to tell them which of the
issues in that report most concerned me. And Madam Chairwoman,
the topic of this hearing was one of them.
So, I want to thank you for continuing to tackle issues of
pressing importance to our country in this Subcommittee. I
could not have picked a better topic myself.
Now we are not going to agree on everything, but I think we
have done a good job today of avoiding making this topic
unnecessarily partisan, and I hope that this hearing is the
beginning of some incredible progress.
Thank you again to our witnesses for sharing your
expertise. I know you are all technical experts on an
incredibly complicated area of finance. I appreciate your
patience as you explained, sometimes again and again, the flow
of funds and the process for this harmful activity.
Thank you again, and I yield back.
Mrs. McClain. Thank you, Ranking Member Porter.
And I, too, appreciate working with you on these issues. At
some point in time, we have to figure out solutions to the
issues, and these are very complicated, very complex issues,
and if we truly care about the American people and a way to
move our country forward is let us find something that we can
agree on that we can move forward on.
So, I appreciate you all being here, again, and taking the
time out of your busy schedules to talk about this important
issue. And really, starting with me, give me a better
understanding of what the issue is because we have to
understand, and we have to spend some time on problem
identification before we can jump right to solutions.
Republicans and Democrats both agree that our communities
should be free from fentanyl and other illegal narcotics. As
Members of Congress, we have an obligation, an obligation to do
everything we can to ensure that our communities are safe.
We know that Mexican cartels are responsible for smuggling
fentanyl across our Southern border in record numbers. In 2020
alone, over 107,000 Americans lost their lives to a drug
overdose, and 67 percent of those Americans' drug overdoses
were a result of fentanyl.
The cartels cannot operate efficiently without the money
laundering networks that they set up by these Chinese criminal
organizations. The efficiencies and cost effectiveness of
Chinese money laundering organizations have enriched the
cartels and allowed their dangerous businesses to thrive.
The Biden Administration and Congress must take action to
cutoff these financial networks that these Chinese criminal
organizations rely on to launder their money. Follow the money
and choke the money off. I think we will get their attention.
Today, we have heard from experts on the current obstacles
to detecting these money laundering networks and possible
policy actions that Congress and the Administration can take to
crack down on the illicit businesses, and I look forward to
talking to you more in depth about what some of those ideas and
policies and actions, what we can do to correct this problem.
We cannot continue to stay idle while more and more
Americans are killed by fentanyl. I look forward to working
with Ranking Member Porter as we search for bipartisan
solutions to this issue.
And without objection, the Members will have five
legislative days to submit materials and to submit additional
written questions for the witnesses, which will be forwarded to
the witnesses for their response.
If there is no further business, without objection, I want
to thank you, again, for your time.
The Subcommittee stands adjourned.
[Whereupon, at 4 p.m., the Subcommittee was adjourned.]
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