    [Senate Hearing 118-264]
    [From the U.S. Government Publishing Office]

                                                     S. Hrg. 118-264

                    STRENGTHENING INTERNATIONAL COOPERATION
                    TO STOP THE FLOW OF FENTANYL INTO THE
                                  UNITED STATES

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                    EMERGING THREATS AND SPENDING OVERSIGHT

                                     OF THE

                                  COMMITTEE ON
                   HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 20, 2024

                                   __________

            Available via the World Wide Web: http://www.govinfo.gov

                           Printed for the use of the
            Committee on Homeland Security and Governmental Affairs

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                       U.S. GOVERNMENT PUBLISHING OFFICE
    55-396 PDF                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                       GARY C. PETERS, Michigan, Chairman
    THOMAS R. CARPER, Delaware           RAND PAUL, Kentucky
    MAGGIE HASSAN, New Hampshire         RON JOHNSON, Wisconsin
    KYRSTEN SINEMA, Arizona              JAMES LANKFORD, Oklahoma
    JACKY ROSEN, Nevada                  MITT ROMNEY, Utah
    JON OSSOFF, Georgia                  RICK SCOTT, Florida
    RICHARD BLUMENTHAL, Connecticut      JOSH HAWLEY, Missouri
    LAPHONZA BUTLER, California          ROGER MARSHALL, Kansas

                   David M. Weinberg, Majority Staff Director
               William E. Henderson III, Minority Staff Director
                         Laura W. Kilbride, Chief Clerk
                       Ashley A. Gonzalez, Hearing Clerk

            SUBCOMMITTEE ON EMERGING THREATS AND SPENDING OVERSIGHT

                     MAGGIE HASSAN, New Hampshire, Chairman
    KYRSTEN SINEMA, Arizona              MITT ROMNEY, Utah
    JACKY ROSEN, Nevada                  JAMES LANKFORD, Oklahoma
    JON OSSOFF, Georgia                  RICK SCOTT, Florida

                   Jason M. Yanussi, Majority Staff Director
                    Allison Tinsey, Majority Senior Counsel
               Scott Maclean Richardson, Minority Staff Director
                John Poulson, Minority Professional Staff Member
                    Paul H.J. Hurton III, Subcommittee Clerk

                               C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Hassan...............................................     1
        Senator Romney...............................................     3
        Senator Rosen................................................    13
        Senator Lankford.............................................    16
        Senator Ossoff...............................................    18
    Prepared statements:
        Senator Hassan...............................................    29

                                   WITNESSES
                           WEDNESDAY, MARCH 20, 2024

    Vanda Felbab-Brown, Director, Initiative on Nonstate Armed
      Actors, The Brookings Institute................................     4
    Celina Realuyo, Professor of Practice, William J. Perry Center
      for Hemispheric Defense Studies, National Defense University...     6
    Christopher Urben, Managing Director, Nardello & Co..............     8

                         Alphabetical List of Witnesses

    Felbab-Brown, Vanda:
        Testimony....................................................     4
        Prepared statement...........................................    31
    Realuyo, Celina:
        Testimony....................................................     6
        Prepared statement...........................................    65
    Urben, Christopher:
        Testimony....................................................     8
        Prepared statement...........................................    81

                          STRENGTHENING INTERNATIONAL COOPERATION
                    TO STOP THE FLOW OF FENTANYL INTO THE UNITED STATES

                                  ----------

                           WEDNESDAY, MARCH 20, 2024

                                         U.S. Senate,
                           Subcommittee on Emerging Threats and
                                            Spending Oversight,
                        of the Committee on Homeland Security
                                      and Governmental Affairs,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:30 p.m., in
    room SD-342, Dirksen Senate Office Building, Hon. Margaret
    Hassan, presiding.
        Present: Senators Hassan [presiding], Rosen, Ossoff,
    Romney, Lankford, and Scott.

                 OPENING STATEMENT OF SENATOR HASSAN\1\

        Senator Hassan. This hearing will now come to order. Good
    afternoon. Today's hearing will focus on the steps that United
    States agencies and foreign countries need to take to stop the
    flow of fentanyl into the United States.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Senator Hassan appears in the
    Appendix on page 29.
    ---------------------------------------------------------------------------
        The vast majority of fentanyl and now other powerful
    synthetic opioids are not being produced in the United States.
    These drugs come from international drug cartels, and we know
    that these cartels have international supply chains. Mexican
    drug cartels, for instance, order precursor chemicals used to
    make fentanyl or other synthetic opioids from chemical
    manufacturers in China. Then the cartels synthesized the
    opioids in Mexico and smuggle the drugs across the Southwest
    border.
        United States and international authorities must work
    together to dismantle these transnational criminal
    organizations (TCO) and cutoff their supplies, their money, and
    illegal weapons. Today's hearing is an opportunity to look at
    the specific steps that Congress needs to take to disrupt the
    fentanyl supply chain and dismantle the deadly and violent
    criminal organizations that dominate this trade.
        We need to develop these strategies with the understanding
    that the cartels are nimble, constantly shifting their methods
    to circumvent the law. We also need to recognize that these
    cartels take advantage of our current crisis at the Southern
    Border, so we need, urgently, to strengthen our defenses there.
    We should provide more resources to border agencies, hire more
    personnel, and deploy more equipment that can detect drugs in
    all kinds of vehicles.
        However, as I noted, to have a lasting impact on the flow
    of fentanyl into our country, we need to work with our
    international partners to fully dismantle the drug cartels
    producing and supplying the drugs. When I participated in a
    bipartisan congressional delegation to China last fall, I
    pressed President Xi to do more to stop the manufacturing and
    exportation of fentanyl precursor chemicals.
        President Biden held a summit with President Xi a month
    later, and since then, the Chinese government has said that it
    would do more to crack down on drug trafficking and target the
    profits of illegal drug and precursor chemical exports.
        We have to hold China accountable and push them to
    implement reasonable common-sense controls to limit illegal
    chemical exports. Yet China continues to resist calls to
    implement. Know Your Customer (KYC) protocols for its chemical
    sector. These protocols would require that companies verify
    that their customers have a legitimate purpose for dual-use
    chemicals, and would make it much more difficult for drug
    cartels to purchase the chemicals that they need to make
    fentanyl.
        We must exert more diplomatic pressure to get this done,
    including working with other major Chinese trading partners to
    force changes. U.S. agencies should also take steps to improve
    coordination and information sharing with Mexican authorities.
    The drug cartels operating in Mexico are extremely powerful.
    Their dangerous influence has corrupted officials at all levels
    of government. In the face of these challenges, we have to find
    reliable partners to dismantle the drug cartels.
        One of the ways to dismantle and defeat the cartels is by
    depriving them of the money and illegal weapons that they
    smuggle across the Southern Border from the United States,
    something that Mexican officials have stressed to me in my two
    congressional trips there. Cartels use these weapons and money
    to seize control of Mexican communities, and bribe or kill
    officials.
        That is why I have worked with Senator Lankford to
    introduce the Enhancing Southbound Inspections to Combat
    Cartels Act. This bill requires that the Department of Homeland
    Security (DHS) increase its inspections of vehicles and
    pedestrians traveling into Mexico. These inspections will help
    us prevent the flow of illicit money and weapons. The bill also
    authorizes additional resources for the border and law
    enforcement agencies that are responsible for inspections and
    investigations. I hope that the Senate Homeland Security and
    Governmental Affairs Committee (HSGAC) will consider this
    legislation soon.
        No one law will address the fentanyl crisis alone. Fentanyl
    is inexpensive to make and transport, and it is in high demand.
    It will continue to take an all-hands-on deck approach to
    dismantle the cartels, crack down on the spread of illicit
    fentanyl, and protect our communities. That is why while we
    work to combat the cartels, we should also take steps to
    strengthen resources for people dealing with addiction to make
    sure that anyone who needs treatment and recovery services can
    access them.
        Today though, I look forward to discussing how we can
    disrupt fentanyl supplies and dismantle drug cartels with our
    three insightful witnesses. People in every corner of the
    country, including my home State of New Hampshire, have had
    their families and communities destroyed by the fentanyl
    crisis. We must do everything that we can to dismantle and
    defeat the cartels. We cannot relent in these efforts. We need
    to build a safer future for our country and for our children.
        Thank you, and I now recognize Ranking Member Romney for
    his opening remarks.

                  OPENING STATEMENT OF SENATOR ROMNEY

        Senator Romney. Thank you, Chair Hassan, for holding this
    hearing. I appreciate those of you who are here today to
    educate us and inform us as to what steps might be taken to
    reduce the tragedy of fentanyl in our country, and frankly
    globally. I do not have to recount to you the statistics. Even
    in my State of Utah, the numbers between 2019 and 2020 showed
    fentanyl-linked deaths increased by 128 percent. It continues
    to be a human tragedy across our country and across the world.
        The question is, what can we do? Is there any one place,
    any choke point we can focus on and say if we can just get this
    group here or this country here to take the following steps
    while then we are going to be able to dramatically reduce the
    tragedy of fentanyl?
        China has made commitments, as the chair indicated, and I
    do not believe they fully lived up to those commitments. Had
    there been the same kind of concern about fentanyl in China as
    there is here in the United States, my expectation is that
    there had been a much tougher approach taken there that has not
    happened, and I am interested in your perspective on whether
    there's prospect for that occurring in the future.
        Likewise, with regards to Mexico, we have not had as much
    support in fighting organized crime and the cartels in Mexico,
    as we might have hoped. A new administration suggests that we
    will have a better relationship and perhaps more ability to
    make a difference there, but I guess we are all recognizing
    what the problem is. We just do not know how to solve it.
        You have experience in this regard that we would consider
    highly valuable. That is why we decided to hold this hearing.
    We want to hear your perspectives and potentially see what you
    think as well about the legislation which Senator Lankford and
    Senator Hassan have proposed, and see if there are other steps
    that you think we might take to make it more likely that we
    will be able to restrict the scourge of fentanyl.
        With that Madam Chair.
        Senator Hassan. Thank you, Senator Romney. It is the
    practice of the Homeland Security and Governmental Affairs
    Committee to swear in witnesses. If you will all please stand
    and raise your right hand.
        Do you swear that the testimony you give before this
    Subcommittee will be the truth, the whole truth, and nothing
    but the truth, so help you, God?
        Dr. Felbab-Brown. I do.
        Mr. Urben. I do.
        Ms. Realuyo. I do.
        Senator Hassan. Thank you-all. Please be seated.
        Our first witness today is Dr. Vanda Felbab-Brown. Dr.
    Felbab-Brown is the Director of the Initiative on Nonstate
    Armed Actors at The Brookings Institute.
        She is an expert on international and internal conflicts,
    and non-traditional security threats, including insurgency,
    organized crime, urban violence, and illicit economies. Dr.
    Felbab-Brown has conducted extensive field work and research
    around the world, including throughout Latin America and South
    Asia.
        Welcome, Dr. Felbab-Brown. You are recognized for your
    opening statement.

      TESTIMONY OF VANDA FELBAB-BROWN,\1\ DIRECTOR, INITIATIVE ON
             NONSTATE ARMED ACTORS, THE BROOKINGS INSTITUTE

        Dr. Felbab-Brown. Thank you very much, Chair Hassan,
    Ranking Member Romney, distinguished Members of the
    Subcommittee. Thank you very much for this opportunity to
    testify today. My testimony represents solely my views.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Dr. Felbab-Brown appears in the
    Appendix on page 31.
    ---------------------------------------------------------------------------
        As you have said in your opening statements, the fentanyl
    crisis is a massive crisis. It is the most lethal drug epidemic
    ever in history. Even while it is confined to North America, it
    has significant potential to spread beyond North America. U.S.
    domestic evidence-based prevention, treatment, harm reduction,
    and law enforcement remain crucial and indispensable for
    addressing it. But supply measures also matter. They can save
    lives.
        Mexico and China are key actors whose collaboration is
    necessary for controlling supply. Yet, the United States has
    found it challenging and difficult to have meaningful
    cooperation with either country. China is the principal source
    of precursor chemicals today from which Mexican cartels are
    sensitizing fentanyl in Mexico, and then smuggling it to the
    United States.
        China subordinates its counter narcotics cooperation to its
    strategic calculus and to its bilateral relationships. Between
    August 2022 and November 2023, we had no meaningful cooperation
    from China. Thank you, Senator Hassan, for your role in
    engaging Beijing as well as Beijing's own calculus, that it
    wanted to stabilize the bilateral relationship, but the
    critical reasons why China agreed to resurrect cooperation.
        China has already taken some steps. It has sent out notices
    to Chinese pharmaceutical companies that it will start
    monitoring and likely enforcing the sales of precursors. We had
    the meetings in Beijing of the bilateral U.S.-China Working
    Group on Counter-Narcotics, in which China agreed to two
    important issues, collaboration on anti-money laundering (AML).
    This is the first time that China has agreed to do so in the
    bilateral relationship, and also acting against the sales of
    pill presses.
        But as you have said, there are many issues that are
    outstanding and the robustness of the cooperation is yet to be
    seen. China is already indicating that it might not be able to
    move to prosecutions and arrests because many of the precursors
    are dual-used and not scheduled yet. Certainly, when companies
    sell to Mexican criminal actors giving them recipes how to
    synthesize the opioids, there are opportunities to charge on
    fraud or conspiracy charges.
        Also, the extent of the anti-money laundering cooperation
    remains to be seen, but it is crucial as Chinese money
    launderers (CMLOs) have become the to-go-to actors for Mexican
    cartels and some of the world's leading ones, and use methods
    that are difficult for law enforcement to deal with.
        Know Your Customer laws, as you have also said, is
    absolutely crucial. We need to continue encouraging China to
    adopt and enforce them, and developing subgroup within the
    Global Coalition against the threat of synthetic drugs that the
    United States launched last summer is an opportunity to do so.
        The relationship with Mexico also remains deeply
    challenged. Mexico essentially acts sporadically, and often
    inconsistently, against Mexican cartels broadly and against the
    flows of fentanyl. Its cooperation is centered on occasional
    high value targeting, and as a result of U.S. prodding, and
    brave journalistic investigative work. The Mexican government
    did shut down some of the pharmacies in Mexico that sell
    fentanyl and meth-laced drugs, a very significant and dangerous
    vector of addiction and death.
        However, more broadly robust investigations and network
    dismantling are not taking place in Mexico. Investigative work
    by Reuters has repeatedly shown that the Mexican government
    systematically and grossly exaggerate the extent to which it
    bust labs.
        There is often little support from the Mexican government
    for journalists, honest Mexican government officials, brave
    civil society actors who are willing to stand up to the
    cartels. In fact, in a very troubling recent development, we
    have seen President Lopez Obrador releasing the personal
    information of New York Times bureau chief in Mexico City, with
    very dangerous consequences. The U.S. Government should take
    actions to make sure that such behavior is not repeated.
        Violence in Mexico remains high and brazen, and is
    spreading geographically affecting every life of people in
    Mexico. The current election season is likely the most violent
    one. Mexican criminal groups are taking over legal economies
    and public services. They are governing and expanding scope of
    territories, economies, and institutions, and people in Mexico,
    even as the Mexican government remains unwilling to tackle them
    in any systematic manner and take law enforcement action
    against them. These pernicious developments raise significant
    questions about nearshoring to Mexico as a strategy of the risk
    from China.
        In my written statement, I offer a detailed set of
    recommendation that I am glad to discuss with you subsequently.
    Let me just say at the end, that since Mexican cartels have
    greatly diversified their portfolio, they are involved in many
    illegal economies, they are increasingly paying for precursor
    chemicals in wildlife products, it is important to tackle all
    the economic activity of those actors, not simply fentanyl
    flows. It is imperative to also tackle all their connections to
    criminal actors elsewhere in China and their political patrons
    around the world. Thank you.
        Senator Hassan. Thank you very much for your testimony. Our
    next witness is Celina Realuyo. Ms. Realuyo is the Professor of
    Practice at the William J. Perry Center for Hemispheric Defense
    Studies at the National Defense University.
        She previously served in the State Department, including as
    a director of State's Counter-Terrorism Finance Program. Ms.
    Realuyo has over two decades of international experience in the
    public, private, and academic sectors.
        Welcome, you are recognized for your opening statement.

       TESTIMONY OF CELINA B. REALUYO,\1\ PROFESSOR OF PRACTICE,
       WILLIAM J. PERRY CENTER FOR HEMISPHERIC DEFENSE STUDIES,
                      NATIONAL DEFENSE UNIVERSITY

        Ms. Realuyo. Thank you, Chair Hassan, Ranking Member
    Romney, and Members of the Subcommittee on Emerging Threats and
    Spending Oversight (ETSO) of the Senate Committee on Homeland
    Security and Governmental Affairs, for this opportunity to
    testify on Strengthening International Cooperation to Stop the
    Flow of Fentanyl into The United States.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Realuyo appears in the Appendix
    on page 65.
    ---------------------------------------------------------------------------
        One year ago, I testified before the House Financial
    Services Committee on how China and the Mexican cartels are
    waging an asymmetrical war against the United States through
    the international illicit fentanyl trade. Unfortunately, the
    fentanyl crisis has just gotten worse since then.
        Over 112,000 U.S. overdose deaths in 2023 are mostly
    attributed to illicit fentanyl from the Mexican cartels that
    source the fentanyl precursor chemicals and pill presses from
    China. The cartels and the Chinese suppliers are exploiting
    America's weaknesses, namely, our appetite for illicit drugs
    and porous borders.
        In the last year, we have actually seen increased efforts
    to curb international fentanyl flows with this cooperation with
    China and Mexico. But we must trust but verify to see how deep
    that commitment is in order to tackle this deadly epidemic in
    the long run.
        On the Chinese front, we actually saw after a long period
    of suspended cooperation, Presidents Biden and Xi decided to
    resume bilateral narcotics enforcement when they met in San
    Francisco in November. Just before that meeting, the People's
    Republic of China (PRC) submitted 145 drug-related incidents to
    the International Narcotics Control Board database, and this is
    the first time that China had done so since 2017.
        Beijing has also warned domestic precursor producers of
    potential legal action if their chemicals are sent abroad.
    While these are positive development, it remains to be seen how
    the PRC can crack down on illicit fentanyl suppliers and the
    money launderers to have a true impact on the global supply
    chain.
        On the Mexican front, after a long period of strained
    relations since Andres Manuel Lopez Obrador (AMLO) AMLO took
    power in 2018, the United States and Mexico renewed cooperation
    through the Bicentennial Framework for Security, Public Health,
    and Safe Communities in October, 2021. It addresses the
    production, trafficking, consumption, and financing of illicit
    drugs and firearms. In January, 2023, at the North America
    Leaders' Summit, Mexican President, AMLO, acknowledged fentanyl
    production in Mexico and pledged to interdict precursor
    chemicals and destroy fentanyl labs.
        As fentanyl-related deaths due to domestic consumption in
    Mexico and cartel-related homicides are on the increase, we
    could expect the Mexican government to be more inclined to
    cooperate with the United States on the fentanyl issue.
        When we look forward, we have to think about how the United
    States, China, and Mexico must intensify domestic and
    international efforts against the illicit fentanyl trade by
    reducing drug demand and supply, increased narcotics detection
    and interdiction, and anti-money laundering measures. Here on
    the domestic front, we should assign more human, financial
    technology resources to disrupt fentanyl flows, and this would
    include more inspection scanners, forward operating labs, and
    the use of artificial intelligence (AI) on our borders.
        We also need to encourage U.S. law enforcement intelligence
    agencies to leverage signals, financial and digital
    intelligence to better understand how these traffickers are
    operating in what we call the cyber-physical realm,
    particularly on online markets.
        On the international front, we should set up specialized
    units that share specific law enforcement information with the
    PRC and Mexico to take down the Chinese and Mexican criminal
    networks engaged in the drug trade. The United States should
    hold the PRC accountable for the export illicit fentanyl
    precursor chemicals, and demand verifiable reports of actions
    that they have taken against these traffickers.
        If the PRC should decide not to demonstrate good faith, the
    United States should consider punitive measures like
    threatening the withdrawal of most favored nation status,
    imposing actual tariffs, and applying diplomatic pressure
    through the Global Coalition to Address Synthetic Drug Threats.
        On the financial front, which is an area that I have been
    studying for 20 years, we should really press the PRC to go
    after the money runners and ensure that they apply Know Your
    Customer to the suppliers, but also those who finance them.
        On the Mexican front, we need to deepen true cooperation in
    terms of the production, trafficking, and money laundering
    elements of the entire business cycle of the illicit fentanyl
    trade. If Mexico does not cooperate and show credible action,
    we should consider designating the Sinaloa and Jalisco Cartels
    as foreign terrorist organizations (FTOs). This would provide
    U.S. agencies with expanded powers to pursue and freeze assets
    of the cartels and their collaborators under the Material
    Support of Terrorism Statute.
        In conclusion, illicit fentanyl producers, traffickers, in
    their financiers are exploiting increased demand, porous
    borders, and cyberspace to further expand their operations
    around the world, well beyond just Canada and the United
    States. Therefore, with China and Mexico, we need to double
    down on cooperative measures to stem the flow of illicit
    fentanyl that is literally killing tens of thousands of
    Americans. Thank you for your attention.
        Senator Hassan. Thank you very much.
        Our third witness is Christopher Urben. Mr. Urben is
    managing director in Nardello & Company's Washington, DC
    office. Before his current role, Mr. Urben served for 25 years
    with the U.S. Drug Enforcement Administration (DEA), leading
    sophisticated international money laundering and threat finance
    investigations. This included overseas tours in Brussels and
    Copenhagen, and also time with the Special Operations Division
    (SOD) in the United States where he focused on international
    threats.
        Welcome, Mr. Urben. You are recognized for your opening
    statement.

       TESTIMONY OF CHRISTOPHER J. URBEN,\1\ MANAGING DIRECTOR,
                             NARDELLO & CO

        Mr. Urben. Chair Hassan, and Ranking Member Romney, and
    distinguished Members of the Subcommittee. Thank you for the
    opportunity to address you today on the importance of
    international cooperation in combating the international trade
    of fentanyl.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Urben appears in the Appendix on
    page 81.
    ---------------------------------------------------------------------------
        This growing trade has killed hundreds of thousands of
    Americans, destabilized Mexico, and adversely the affected our
    nation's communities and its financial integrity. International
    cooperation, particularly with Mexico and China, can help stop
    the flow of fentanyl into the United States and the flow of
    narcotics proceeds through our financial system.
        I saw firsthand the damage done by the international trade
    of narcotics, including fentanyl during my 24-year career as an
    agent executive with the DEA. I started off on the front lines
    targeting leaders of transnational organized criminal
    organizations who were trafficking drugs into the United States
    and laundering crime proceeds to our institutions. I also spent
    time abroad at U.S. embassies in Brussels and Copenhagen,
    working with our partners to increase collaboration against
    transnational organized crime.
        In 2018, I was assigned to DEA Special Operations Division
    where I supervised a team that focused on a new and evolving
    threat, Chinese money launderers, and other elements of Chinese
    organized crime globally. Over the course of my career with
    DEA, I observed the transformative potential of international
    cooperation in achieving our mission and increasing global
    stability. One example of this potential is Plan Colombia, the
    United States and Colombian initiative launched in 2000.
        At the time Plan Colombia was started, the country was
    struggling with cartel-initiated violence, and battling
    insurgencies from the Autodefensas Unidas de Colombia (AUC) and
    the Fuerzas Armadas Revolucionarias de Colombia (FARC). As a
    result of decades of hand-in-hand partnership with the United
    States and Colombian authorities, which included extensive work
    with the DEA and entrusted Colombian counterparts, and
    intensive investigative techniques by both, and the extradition
    of high-level narcotics traffickers to the United States to
    face justice, a very important component to that, the country
    has been transformed into a solid long-term partner of the
    United States in combating the global narcotics trade.
        During my work in Brussels and Copenhagen, I collaborated
    extensively with European counterparts, some of which were
    young democracies that had been under the control of the Soviet
    Union, and I collaborated on significant criminal and national
    security issues. When I returned to the United States and SOD
    after my time abroad, I saw the profound negative effect and
    the of the lack of effective international cooperation, and the
    dramatic increase of fentanyl into the country, and also the
    increased moneys being laundered by CMLOs.
        Lack of international cooperation with China on counter-
    narcotics issues has enabled fentanyl precursor chemicals
    manufactured in that country to be transported to Mexico, where
    they have been transformed into drugs that are killing hundreds
    of thousands of Americans. Lack of collaboration with China on
    anti-money laundering issues has contributed to the rise of
    CMLOs as the primary vehicle for which Mexican drug cartels are
    laundering their money.
        The CMLO model is a dramatic improvement for the Mexican
    cartels. Several aspects of the CMLO threat could be addressed
    much more effectively if United States and Chinese law
    enforcement and financial regulators were able to work
    together. For example, CMLO utilize technology to their
    advantage. WeChat transmissions are resistant to surveillance
    by U.S. law enforcement. They cannot be used to disrupt the
    CMLOs or bring their organized crime leadership to justice.
        However, Chinese authorities who have access to WeChat and
    other Chinese communication tools could share information on
    the CMLO activity with U.S. law enforcement if the two
    countries were collaborating effectively.
        Our relationship with Mexico and these issues is stronger,
    but there is a tremendous need for improvement and a reset. In
    2021, the governments of Mexico and United States announced the
    new framework and cooperation plan, the Bicentennial Framework.
    This agreement seeks to reopen and improve bilateral channels
    to address drug trafficking, organized crime, facilitate
    extraditions, and stem the flow of fentanyl into the United
    States.
        But the key is a dramatic improvement in joint operations
    between Mexican and U.S. law enforcement, and that Mexican
    honor all U.S. extradition requests in a timely manner. That
    would be a game changer.
        The private sector can also help. At Nardello & Co., the
    global investigative firm that I joined in 2022, we are working
    on ways to help financial institutions to identify and address
    the CMLO activity by shutting down accounts and reporting
    suspicious activity to the authorities. If done on a global
    scale, CMLOs and other money launderers, it would be much more
    difficult for them to move the money.
        Finally, the United States we could do more to combat the
    flow of fentanyl into this country through new laws and
    additional resources.
        Thank you to the Subcommittee for calling attention to this
    important issue. I look forward to answering your questions.
        Senator Hassan. Thank you very much for your testimony. I
    am going to go ahead with my set of questions, then I will turn
    it over to the Ranking Member, and other Members, I think, are
    going to come in and out as they can.
        Mr. Urben, I want to start with a question to you. Last
    year, when I traveled to China and met with President Xi, I
    pushed him to crack down on the export of fentanyl precursor
    chemicals that drug cartels order from Chinese businesses.
    Following up on that meeting, President Biden and President Xi
    agreed to more extensive cooperation to stop the tracking
    trafficking of fentanyl and fentanyl precursor chemicals from
    China to Mexico.
        Now we need to ensure that China keeps its commitment to
    work with us. What tangible steps should the United States
    require from China in, let's say, the next six months and in
    the next two years?
        Mr. Urben. When the government as China has acted in the
    past, we have seen results that have been favorable in terms of
    the traffic patterns of actual fentanyl that was coming in in
    2018 and 1919. In terms of the precursors coming from Chinese
    multinational companies and supplying the cartels, I would
    ensure through meetings with U.S. law enforcement, U.S.
    officials, and Chinese officials with those chemical companies,
    that they are enhancing their KYC to western standards. We
    should ensure that these meetings take place to see that it is
    actually happening.
        The other components to that is we attack the precursor
    network and the flow of those chemicals. We should see
    obviously a decrease. The other aspect of this is the Mexican
    cartels, if the Chinese are stopping the precursors coming from
    China, will have to seek other sources of supply. They will
    have to go elsewhere. That is what would be a dramatic step.
    That would be a hopeful step.
        The other part of this that I want to see within the United
    States is our capability to act ourselves. It is an opportunity
    to work with the Chinese to see this happen, but if they do
    not, we should place these chemical companies on what I call
    the pre-sanction list, and have a discussion with these Chinese
    authorities, and give them the opportunity to act. If they do
    not, then sanction the chemical company and do it ourselves.
        Senator Hassan. Thank you. Dr. Felbab-Brown. In the last
    few years, Chinese criminal organizations have taken over the
    vast majority of money laundering for drug cartels. This
    criminal activity is driven by huge demand in China to
    illegally convert Chinese currency into U.S. dollars due to
    strict capital controls put in place by the Chinese government.
    How can the United States best combat the money laundering by
    Chinese organizations that enable the drug cartels?
        Dr. Felbab-Brown. There is no simple answer. The
    underground banking system that you are referring to is only
    one of the methods that Chinese money launderers are using.
    They are also using trade-based methods, increasingly even in
    the United States, real estate, and cashier's check.
        Detection sting operations are all important elements of
    identifying the tools they are resorting to. Obviously, Know
    Your Customer laws also have benefits in providing intelligence
    on dismantling the money laundering networks. Insisting on
    better monitoring within the Chinese banking sector is another
    important step. One of the positive things that happened in
    Beijing at the U.S. China Counter Narcotics Working Group
    meeting was that for the first time, representatives from
    Chinese banks, including the Bank of China, were part of side
    meetings.
        There are many opportunities to act, many challenges in the
    way that the Chinese money launderers are laundering money.
    Many of those are merit transactions in the three countries,
    China, Mexico, United States, where the money never crosses no
    international wires. That limits the opportunities. But the
    less cooperation we have from China, the less we are able to
    act. But I agree that we can continue strengthening on our own
    money laundering efforts.
        A lot of the focus has been on bulk cash moving across the
    U.S.-Mexico border. Frankly, that's an outdated method of money
    laundering. Other channels are far more potent and carrying far
    greater flows today.
        Senator Hassan. Thank you. Another question for you,
    Doctor. In negotiations with the United States, China has
    frequently claimed that they cannot disrupt the trade of
    fentanyl precursors since they cannot distinguish illegal
    shipments from normal commerce.
        Know Your Customer laws where sellers are required to
    confirm the legitimacy of their buyers would help identify
    illegal trade, but China has so far refused to adopt these
    protocols. How can the United States further pressure China to
    implement these requirements?
        Dr. Felbab-Brown. I think there are multiple steps that the
    United States could take. Know Your Customer laws are common
    practice around the world, way outside of simply the
    pharmaceutical industry. If China continues to insist that they
    are too expensive to adopt, China should feel the economic
    consequences of not adopting them.
        This would include preventing market access by Chinese
    companies, sanctioning some Chinese companies, placing them on
    either sanctions or pre-sanctions list, as my fellow witness
    stated, or taking other measures, developing portfolios of
    leverage, visa denial on key industry operatives, key industry
    officials, for example.
        Shaming China. China is responsive to shaming. It is a
    country that prides itself as being the world's toughest drug
    cop. The coalition against the threat of synthetic drugs that
    the United States launched, and that's China abstained from was
    a powerful tool that are opportunities to build more leverage
    more effects within the coalition so China becomes responsive.
        Senator Hassan. OK. I am going to follow-up on that just a
    second. Then turn to Senator Romney. How would the United
    States benefit from creating a more global approach to
    disrupting the fentanyl supply chain, more specifically, with
    the cooperation of Australian authorities and other Southeast
    Asian nations force China to take more concrete actions?
        Dr. Felbab-Brown. I think it is important to expand the
    work of the coalition on synthetic threats broadly, and this is
    indeed how the coalition has been constructed because in Asia
    and the Asia Pacific region, so far, we are not seeing
    significant fentanyl threat, but there is an immense
    methamphetamine threat that is linked to China.
        Chinese criminal networks are the principal vectors,
    traffickers of methamphetamine. China is very responsive to
    countries in Southeast Asia including in terms of law
    enforcement cooperation. It also uses law enforcement
    cooperation for its influence. Enhancing specifically that sub-
    coalition that you refer to, Southeast Asian countries,
    Australia, New Zealand, is in my view, a very effective tool to
    motivate further action and consistent action from China.
        Senator Hassan. Thank you very much, Senator Romney.
        Senator Romney. Thank you. I am going to step back because
    I am not an expert in this topic at all, and I have not spoken
    with Chairman Xi about it, nor even Mexican authorities about
    it. So, I am going to ask very simply, and I am going to ask
    each of you where you think our focus ought to be most directed
    or whether we can have a focus.
        It strikes me that there are various elements where we have
    pressure or capacity to constrain. There's the demand side,
    which is trying to influence demand for narcotics and fentanyl
    in the United States. That strikes me as a very difficult task
    to take on, finding a way to reduce demand in the United
    States. But that's one possibility.
        The next is the border, which is to make a very aggressive
    effort to secure the border electronically, with monitoring
    systems, to evaluate what's coming across the border. The
    reason I think it's difficult is because it can come, of
    course, by people carrying the product over. It is not a very
    heavy product. It is small. It can come in a through the mail,
    it can come by aircraft, it could come by ships. The border
    strikes me as a very difficult one to substantially restrict
    the flow.
        Then there are the cartels. Going after the cartels. Ending
    organized crime is something we have been trying to do since
    the 1930s or probably before that, and so I wonder whether we
    are going to be able to stop organized crime in Mexico.
        The next one is precursors. Going after the precursors that
    are coming from China. I do not know how easy it is to make the
    precursor, how effective China might be in cutting off the
    development of precursor.
        Then we go on to money laundering and the financial systems
    to try and cutoff financial systems. It would seem to me, as a
    novice in this area, that if someone's willing to pay you money
    and someone's willing to get paid that money, they are going to
    find a way to launder it. We can try and stop all sort of
    vehicles to make it easy, but ultimately, buyers and sellers
    are going to be able to complete a transaction.
        As I look at those, I wonder which are the ones we should
    focus on? What's the one or two that is going to be most
    effective in being able to reduce the scourge of fentanyl in
    our country? I will start in the center here with Ms. Realuyo--
    all right. I got close to that. What is the origin of that
    name?
        Ms. Realuyo. Filipino.
        Senator Romney. Filipino. All right. Excellent. Please, do
    you have a thought on that?
        Ms. Realuyo. Sure. You have actually taken a look at the
    entire business cycle as we were taught at Harvard Business
    School. We got to figure out how your efficiencies are. One of
    the greatest challenges is the actual effectiveness in terms of
    addiction of the pill, as well as the profit margin.
        One of the estimates now is that it costs $0.30 in a
    Mexican lab to produce a fentanyl-laced pill that is being sold
    in Navy Yard, right in front of the Nats Stadium at $10 to $15,
    $15 to $20 here in the DC area. That is a reason to now switch
    to synthetic drugs if you are a trafficker, and then also, it
    is harder to detect, and our DEA colleagues know this as
    opposed to other plant-based drugs that have scents like
    heroin, marijuana, or cocaine.
        But I still think we need to come back to, which is not
    really the topic of, it is the demand. We are about to enter in
    prom season here in the United States, and there are tremendous
    campaigns like One Pill Can Kill, which is done by the DEA.
    Every one of us as members of our community need to impress
    upon our youth, and then more importantly, how deadly these
    things that you are ordering online.
        I have been looking at the digitalization of illicit
    networks and more importantly, in the cyber/physical domain.
    All these things that we talk about that are criminal networks,
    they now have a parallel market on the Internet. A lot of it
    has to do with these social media platforms where they
    literally have--young people exchange with a trafficker.
    There's no words, it's just the use of emojis, and amounts, and
    numbers. It is their own language.
        But more importantly, we as parents and as educators are
    not watching what our kids are doing online. Then, the drug
    gets sent or gets actually physically exchanged at the parking
    lot or the McDonald's next to the high school.
        We still need to go to the demand piece. I think raising
    awareness, and looking at the prevention part, and treatment
    part are very important. Obviously, our hearing today is
    looking at the supply piece where I also think, having been a
    former banker at Goldman Sachs, plucked out by General Powell
    to come and fight the war on terror financially, we can use the
    exact same toolkit to actually constrain.
        My colleagues have talked about the developments of the
    Chinese money laundering organizations. They really rely on
    this technology platform like WeChat, just as we all transfer
    money on Zelle, PayPal, or Venmo. They have Venmo for all these
    types of illicit activity.
        The other thing we did not talk about was the use of
    cryptocurrencies. We are starting to see the Jalisco cartel
    very sophisticated out of the Guadalajara area, starting to use
    what are called virtual wallets. They will pay young people to
    set up a wallet to load dollars here in the United States in
    Bitcoin, or Ethereum, or some form of--and then they take the
    pesos out in automated teller machines (ATMs) in Mexico. This
    is an area where we can impart on our foreign counterparts,
    methods and means of imposing more controls and what I call the
    cyber-physical world of how these groups are circumventing,
    what I call, traditional law enforcement and regulatory kind of
    policies in order to go after the money, but also the demand.
        Senator Romney. Thank you. Madam Chair.
        Senator Hassan. Thank you. Senator Rosen.

                   OPENING STATEMENT OF SENATOR ROSEN

        Senator Rosen. Thank you Chair Hassan, Ranking Member
    Romney. This is a really important hearing, and thank you for
    graciously allowing me to ask the first set of questions. This
    is a critically important topic, and the fentanyl crisis, like
    you all say, we all know this, it is devastating.
        In my home State of Nevada, communities all across Nevada,
    the Southern Nevada Health District reported in February of
    this year, that between 2020 and 2023, the number of fentanyl
    overdoses among residents of Clark County, our largest county
    in Nevada, is increased by 97 percent.
        It is one of the reasons why earlier this year, I returned
    to the Southern Border to meet with Border Patrol and U.S.
    Customs and Border Protection (CBP) to find out really what
    those law enforcement officers need to help stop the flow of
    fentanyl into the United States. Since returning, I am really
    proud to have passed bipartisan legislation to address the
    fentanyl crisis, voting for increased investments in
    technologies that help and intercept drugs. But as to what you
    have alluded to, much more work needs to be done.
        I am going to talk a little bit about sea. We know we have
    the border, but we have the sea. Last week at an Armed Services
    Committee hearing, U.S. Southern Command (SOUTHCOM) Commander
    Richardson, the general, he discussed our armed services
    ability to detect and seize maritime drug shipments. They are
    coming in that way too. She said that even with intelligence
    cooperation with partner nations, they are only able to seize
    about 10 percent of drug shipments coming in by sea.
        Ms. Realuyo, what steps can we use or to better equip our
    service members and DHS personnel to stop the flow of fentanyl,
    and also, how can we leverage our international partners to
    prevent that from coming here like we need to do with defense?
        Ms. Realuyo. Particularly in terms of maritime routes, we
    can use a lot of what we call actionable intelligence. My
    colleague, Christopher Urben, talked about Plan Colombia. We
    have developed over 20 years of real knowledge on how to
    interdict and more importantly, intercept through international
    trafficking routes. That really is dependent on international
    cooperation, which is the topic of today's piece.
        How do we build those trusted networks is a bigger
    challenge. I think, it is not a secret that we have had a lot
    of challenges working with Mexico on counter-narcotics due to
    corruption to the extent that we actually arrested the top
    general who was implicated for just a couple weeks.
        The bigger question is how do we educate also our own law
    enforcement, military, and intelligence officers to understand
    those patterns very well. With Homeland Security, there are
    trade transparency units that work against trade-based money
    laundering. The question is how can we create--we have a system
    out of SOUTHCOM that General Richardson oversees, which is the
    Joint Interagency Task Force South, looking at now all illicit
    trafficking, not just cocaine, which had traditionally been
    looking at it. It is also looking at all types of things,
    contraband, people, money.
        The question then is how do we build that to be a broader
    kind of model to go after all the ports of entry (POE), whether
    they be by land, sea, or now air, because I think you have
    heard about the drones; now that are crossing and dropping
    payloads. These are the things that we need to really impress
    upon how we can keep abreast of all this emerging technology.
        I look at emerging technology from the dark side of
    globalization. How is AI, for example, or how our drones are
    being abused, and then more importantly, exploited for the bad
    as opposed to the good. We have seen the Mexican cartels very
    adroit at incorporating new technologies like crypto payments,
    like drones to surveil, figuring out where are the kind of
    weaknesses on our border, Nevada, Arizona. They are quite smart
    in the way they apply it.
        But the bigger thing is how could we keep abreast, and that
    has to do a lot with resources. Keeping our analysts really up-
    to-date with how new technology is being applied by the
    criminal cartels.
        Senator Rosen. I appreciate you thinking about all of that
    because they are going to try to stay one step ahead of us, and
    our job is to try to maybe out thank them, and to try to get
    one step ahead of them.
        But you talked about educating, and we do need to educate
    our law enforcement so that fentanyl guidance for law
    enforcement. Of course, this week the President signed into law
    the END FENTANYL Act, a bipartisan legislation I co-led with
    Senator Scott and Chair Hassan. This new law is going to help
    crack down on drug smuggling requiring CBP to update its
    outdated guidance more frequently so that CBP officers have
    more information on how to better handle this. As you said,
    they are constantly coming up with new ways to get these drugs
    in.
        Again, how can we be sure that other nations are up-to-
    date? Are they up-to-date on their fentanyl guidance documents
    for their law enforcement personnel? Then to Mr. Urben, are
    drug enforcement personnel in Mexico, China, and other
    countries, are they receiving that proper training?
        Ms. Realuyo. I work actually at the Perry Center where we
    are an arm of the Defense Department. Through education and
    academic engagements, we try to share and more importantly,
    export our best practices. I just finished a course for 46 mid-
    level to senior law enforcement, and policy, and military
    officers from 16 countries. Now, they were taught what the
    fentanyl threat that's coming to their countries. I think, that
    they found fentanyl now in Guatemala, Panama, Colombia, and
    Costa Rica. It is not just the United States and Canada facing
    this.
        The big question is how do you build that trust with your
    partner? I also work with U.S. Northern Command and Army North,
    and we are doing a lot of what we call confidence building
    exercises where we actually show techniques and you would be
    pleased to hear that the U.S. military and law enforcement are
    actually teaching the Mexican counterparts how to handle
    fentanyl.
        I do not know if you realize also we are not using canine
    units to the extent possible because the drug is so powerful on
    a human being. It actually overwhelms the canines who are quite
    valuable in terms of these things. But for example, maybe the
    Mexicans did not know that until they attended the training.
    These are the types of ways that day by day at the tactical and
    operational level, they are actually quite good relations.
        The bigger question is how do we get to the political will
    at the strategic level to see eye to eye and understand that
    the threat of fentanyl is killing not just Americans, but
    Mexicans as well. That is coming around, I hope.
        Senator Rosen. Thank you. Mr. Urben, do you want to talk
    about the international cooperation, make sure they are
    receiving some of this training?
        Mr. Urben. Sure. Like I mentioned earlier, I was overseas
    for 10 years. With DEA, whether it's DEA, Homeland Security
    Investigations (HSI), Federal Bureau of Investigation (FBI), we
    develop relationships with our counterparts. Certainly, over
    the last few years, that intelligence, that training, that
    information has certainly been pushed out to the field where we
    have trained our foreign counterparts.
        For example, I was in Vietnam and talked about this very
    issue with my foreign counterparts. We are very good at in DEA
    is certainly pushing out the international training component.
    I am very confident that that has happened over the last few
    years in terms of building capacity and their awareness of how
    dangerous fentanyl is and being trained on how to handle it.
        Senator Rosen. Thank you. Thank you very much, Madam Chair.
        Senator Hassan. Thank you. Senator Lankford.

                 OPENING STATEMENT OF SENATOR LANKFORD

        Senator Lankford. Thank you. Thanks to all of you for
    expertise that you are bringing. Can I ask just a broad
    question? What other nations are dealing with the fentanyl use
    like we are? It is such an incredibly inexpensive drug to be
    able to produce. Obviously, it is killing a hundred thousand
    Americans now we are seeing. What other nations are dealing
    with the drug addiction issues that we are dealing with right
    now, for fentanyl, specifically?
        Dr. Felbab-Brown. Currently Mexico, even though Mexican
    President Lopez Obrador continues to deny that fentanyl is used
    in Mexico and Canada, which has some of the same death rates as
    the United States. Fentanyl is also used in parts of Europe,
    Estonia, where there has been a long-established market and
    various fentanyl amounts have popped up around other parts of
    Europe, like Northern Nordic countries.
        The bigger issue in Europe currently is other type of
    synthetic opioids, so-called nitazenes. Fentanyl has been
    seized in various other parts of the world. But part of the
    challenge of answering your question, Senator Lankford, is that
    very many countries do not in fact monitor either the flows or
    the use of fentanyl. There might be much more than is known.
        Senator Lankford. Right. For the countries that have been
    successful in trying to be able to deter fentanyl use in their
    country, what have they found to be successful?
        Dr. Felbab-Brown. I think the sole case of success are the
    Nordic countries about a decade and a half ago where fentanyl
    was showing up in Norway, in Finland around 2005, 2006, and
    2007. This was before fentanyl became a mainstream drug, and
    because the ease of production was significantly simplified.
        At the time, the Nordic countries were able to very rapidly
    dismantle fentanyl supplying networks, how they did
    investigations and arrested the entire network that was
    bringing it in. But those networks were small, marginal, they
    were not networks with the power, the extent of Mexican cartels
    that are robustly establishing operations around Europe these
    days, or the diversification and scale of Chinese criminal
    networks. It was very different days than they are right now.
        Senator Lankford. Obviously, thank you, the technology's
    increased for detection of fentanyl, but we are still not there
    to have a visual spectral analysis to be able to pick it up, to
    be able to evaluate that.
        As far as the movement of technology, Senator Hassan and I
    have continued to be able to work on outbound inspection to try
    to pick up guns and drugs heading south, or guns and cash, I
    guess heading south, and then also the inbound.
        It is my understanding we have about $300 million worth of
    non-intrusive inspection (NII) equipment sitting in a warehouse
    waiting for Congress to be able to finish out the allocation of
    the dollars to actually install it. I am sure that will make a
    difference for us.
        But as far as inspection equipment and locations for that,
    or new types of technology for detecting it, what are we seeing
    at this point? Both handheld, that can be used by local law
    enforcement or at a border. We seeing anything?
        Mr. Urben. There has been a dramatic improvement in terms
    of detection, in terms of handheld, and at the border. It just
    needs to be deployed, but deployed on both sides of the border
    to detect the fentanyl coming in. Right?
        There is another component of Mexico where we need to
    buildup capacity there, but within the United States, there has
    been an improvement in terms of technology just needs to be
    purchased, trained, and, and delivered to the field. Every
    field officer or investigator that has to deal with this issue
    on a narcotics unit should have a handheld detector so they
    know what they are dealing with.
        But in terms of Mexico itself, if I could digress, there
    needs to be a dramatic improvement in terms of resources down
    there, and you could push those resources out there as well to
    impact the fentanyl trade.
        Senator Lankford. Resources are one thing, the personnel to
    actually run it and that are trusted partners to be able to do
    that in those areas, that's something very different.
        Mr. Urben. It's something very different. From my
    perspective, and Senator Romney brought this up, in terms of
    organized crime, it needs to be the goal of the United States
    to take down the Mexican cartels. The reason I say that is the
    only way we are going to actually win this battle against
    fentanyl is to go after the Mexican cartels.
        There is an opportunity with new leadership coming in
    Mexico. We need to go back to Plan Colombia and what has
    demonstrated success. It is not going to be easy, but the
    things that I would suggest are one vetted units. We need to
    buildup the capacity of Mexico and our joint operations within
    the United States to go after the cartels. There should be a
    collaborative relationship. They are an ally of ours. We share
    a border with them. We have tremendous trade with them. We
    should commit to this relationship.
        There are new things we do, not just with vetted units in
    Mexico, but things called joint investigative teams where we
    work collaboratively, in the United States, with officials from
    other countries. They do this in Europe a lot. Again, we should
    fully commit to that.
        The second part is extraditions. We can do this tomorrow
    and this would have a dramatic impact on Mexican cartel
    members. We have a treaty with Mexico, they should honor our
    extradition requests, and that would have a dramatic impact. I
    could go on and on to different ideas, but building up that
    capacity and committing to it would make a big difference.
        Senator Lankford. There has been some push for additional
    authority to be able to sanction individuals in these cartels.
    You are also talking about extradition. We need the additional
    authorities to be able to pass for the sanction authorities,
    but what authorities already exist that are not currently being
    used?
        Mr. Urben. The last sanction order, the Executive Order
    (EO) that the Biden administration came out with, it is a low
    threshold to sanction individuals and companies that are
    facilitators of the fentanyl trade. That is what I talked about
    earlier in terms of standing up a sanctions platform whether to
    go after Chinese chemical companies or any facilitator in
    Mexico. If we cannot impact them with arrest and extradition,
    just frankly sanction them, it is a good use of time and money.
        Senator Lankford. OK. Criminal consequences here for those
    that are trafficking in fentanyl, is there a need to be able to
    increase consequences, obviously, on the Federal level for
    trafficking across the border, or to be able to hold people to
    greater account if there is a death from fentanyl, to be able
    to trace that back to everyone in the chain of distribution?
        Mr. Urben. Absolutely. Everyone should be prosecuted to the
    fullest extent of the law from the death back to the source of
    supply. We should be using the racketeering laws that we had
    that we went after Italian organized crime. We should be going
    after Chinese organized crime that's operating in this
    country----
        Senator Lankford. Is that happening right now?
        Mr. Urben. No. We should have that.
        Senator Lankford. That is one of the concerns that I have,
    is that those are authorities that currently exist right now.
    That if you have the death of a 25-year-old based on a fentanyl
    use of something they thought was an OxyContin, was actually
    had fentanyl laced in it, that individual being able to track
    back all the distribution to the beginning.
        Mr. Urben. There have been prosecutions on exactly what you
    are saying. There needs to be more because every death that is
    a result of drugs trafficked from the Mexican cartel should
    result in one of those prosecutions.
        Senator Lankford. Thank you.

                  OPENING STATEMENT OF SENATOR OSSOFF

        Senator Ossoff [presiding.] I am briefly assuming the
    duties of the chair while Chair Hassan votes. Professor
    Realuyo, Chair Hassan and I helped to lead a bipartisan
    delegation to Beijing last fall, and our bipartisan delegation
    unanimously and with force raised directly with President Xi,
    our insistence that China takes stronger action to end the
    export of fentanyl precursor chemicals from China's chemical
    manufacturing sector onward, much of it to Mexico where it is
    synthesized and the fentanyl winds up on the streets of the
    United States.
        What is your assessment of progress or a lack of progress
    that has been made on China living up to its commitment, which
    were reinforced at a bilateral meeting between Presidents Biden
    and Xi to crack down on fentanyl precursor exports?
        Ms. Realuyo. I welcomed your delegation's visit. We are
    excited to see the fact that you were there to provide some
    more pressure, and the San Francisco summit between Presidents
    Biden and Xi. There are some small incremental steps, but we
    have yet to see what is going to come of it. I am in the trust,
    but verify camp, and more importantly, nothing happens in China
    without the Chinese Communist Party (CCP) knowing.
        There are some arguments that, they cannot control the big
    pharmaceuticals or the big chemical companies are known. It is
    more the smaller ones that are very hard to control there's
    always going to be an excuse as to why they are not enforcing.
    This is where I think that we need to hold them accountable
    with regular verifiable reports on law enforcement actions that
    they have taken. Or more importantly, also for them to share
    with us their intel on which of the illicit fentanyl and
    precursor chemical companies they are looking at and then what
    actions they are taking against them.
        Then we also spoke earlier in the hearing about the Chinese
    money laundering organizations. China makes money on both
    sides. It makes money through the precursor chemicals and the
    fentanyl sales to the Mexican cartels and others, but then
    also, they are making one to two percent on the money that they
    are laundering, which are U.S. dollars that are very precious
    to the Chinese who have very limited access to hard currency.
        There is not really this interest. Perhaps there is a
    diplomatic interest because they have been shamed into a corner
    to make it look like they are playing ball with us. But I think
    we have to hold them to account much more. It's only been one,
    the first meeting was in late January of the new joint kind of
    working group on fentanyl, but whether it is quarterly or every
    month even to see what actions they have taken, that is the
    question I have as to how true the commitment is. Not by word,
    but by action.
        Senator Ossoff. Thank you, Professor. Mr. Urben, on a
    bipartisan basis here in the Senate and in the administration,
    there is a strong will to sustain that pressure on the PRC to
    end the export of fentanyl precursor chemicals to our
    hemisphere and anywhere in the world.
        Were China to live up to its obligations to end that export
    business, from what other sources in the world do you expect
    the gap in the market might be filled?
        Mr. Urben. Sure. If the Chinese chemical companies were no
    longer a source of supply for the Mexican cartels, I think the
    first place they would go is India. I think they would source
    India as a possible place for their chemicals. If the Chinese
    lived up to this agreement, I think as the Mexican cartels had
    to adapt to a different source of supply, whether it be India,
    Eastern Europe, or another Asian country, it would present
    investigative opportunities because these are other places
    where we have joint relationships and work with those other
    countries like India on ongoing investigative matters. That
    would be the first place I would look for the Mexican cartels
    to go to.
        Senator Ossoff. I will ask my office to place an inquiry
    with DHS and DOJ to ascertain whether current law enforcement
    cooperation relationships are postured to begin those
    investigations or augment what investigations are already
    underway. Now to what extent are we seeing supply entering the
    market from sources other than China at this moment?
        Mr. Urben. To my knowledge, there are not any. The Chinese
    are still the primary precursors, chemical suppliers to the
    Mexican cartels. That has not changed yet. There is not
    intelligence that certainly I am aware of that indicates that
    the Mexican cartels are seeking other sources of supply,
    significant other sources of supply for those chemicals.
        Senator Ossoff. Professor, can please characterize rest of
    world demand and consumption.
        Ms. Realuyo. Of fentanyl itself, the United States and
    Canada are still the primary consumers of illicit fentanyl, and
    that is why the rate of deaths are so dramatic in our two
    countries. We are starting to see there- is two ways we look at
    fentanyl. There is legitimate fentanyl that is diverted. These
    are the ones that you have heard about stolen from hospitals or
    someone who actually takes it from the supply chain that is
    legitimate. Then the one that we are looking at in our hearing
    today is illicit fentanyl.
        I spend a lot of time working in Latin America, so it is
    obviously in Mexico, but we were starting to see reports of
    fentanyl being intercepted in Guatemala, Costa Rica, Panama was
    a diversion case, and Colombia. I work a lot in Colombia where
    we are starting to see fentanyl-laced and other synthetic drugs
    start to appear.
        Post-Covid, all the discotheques and bars have reopened,
    which is a point of sale for a lot of these kind of drugs. We
    have actually seen the Colombians start to ask for increased
    awareness and training on how to handle synthetic drugs. Also,
    that Colombia still continues to be the top producer of cocaine
    that also need precursor chemicals that also come from China.
    These are the things that we are looking at.
        The other day, on Friday, Secretary Blinken was at the
    United Nations (UN) in Vienna on a global meeting basically
    warning that this fentanyl crisis is coming your way. A lot of
    this it is because there is underreporting, and then more
    point, people do not recognize what a fentanyl overdose looks
    like.
        Here in the United States we actually have access to Narcan
    and there are ways that we're measure the numbers are so high
    because we are tracking the numbers. Other countries do not
    necessarily commit a death to an autopsy. That is why other
    countries that might be experiencing fentanyl-related deaths
    are not recording them. The numbers are lower in Canada, I
    understand, because they do not test for cause of death as much
    as we do in the United States.
        But it is concerning as it grows bigger and better. Also,
    the Europeans are expecting fentanyl to arrive for their summer
    season of the party goers in places like Spain and Greece.
        Senator Ossoff. That was my next question, is given how
    addictive and lucrative this trade is, why hasn't it penetrated
    Europe?
        Ms. Realuyo. It is starting now and the bigger thing is
    perhaps they are not detecting it. It is kind of hard to detect
    because it is usually in capsule or pill format that does not
    emit the odor that the canine units that our colleagues at DEA
    use can detect heroin, cocaine, and marijuana that have an odor
    and that the dogs are trained for.
        I was in Spain like three weeks ago where they had the
    first death of an adolescent, 14 years old, with what is called
    pink cocaine, which is actually a synthetic drug. Now the
    Spanish are trying to figure out who are the traffickers that
    brought it there. We do know that the Mexican cartels are
    trafficking, not just in cocaine, but maybe starting to bring
    those fentanyl-laced pills as well to the European market.
        As I mentioned earlier, it costs about $0.30 cents for
    these pills to be produced in a lab in Mexico. It is being sold
    on the streets here in front of Nat Stadium at $15 to $20 for
    that same pill, extremely lucrative.
        Senator Ossoff. What is the flow from precursor production,
    to fentanyl production, to trafficking and sale in Europe? Can
    you map that for us please?
        Ms. Realuyo. It is a little bit different. The synthetics
    that they have in Europe are actually different drugs than what
    we have. Fentanyl's probably the last to enter the market. The
    bigger thing is because synthetics produce a much more
    effective high, and a little bit more addictive, and are easy
    to take because it is basically a pill. It is kind of an easier
    way to be introduced to drugs.
        This is a part that I am was trying to understand is how
    could you educate our partner nations about the fear that
    adolescents and younger people are going to be consuming the
    way that we do in the United States. But we probably can expect
    that the same exact routes that are maritime routes that are
    being used to push cocaine, that here in the United States we
    do not consume compared to before, are being shipped to Europe,
    are probably the same exact maritime routes that are going to
    be used in order to piggyback with these synthetic drugs,
    including fentanyl.
        Senator Ossoff. Dr. Felbab-Brown, your take please on the
    rest of world market and trends in production, trafficking,
    sale, use, and overdose outside of the United States.
        Dr. Felbab-Brown. You have said why hasn't it not arrived
    to Europe? I would phrase it, why hasn't it not yet arrived to
    Europe? The reality is that there are all the significant gaps
    in drug markets. Essentially, they are a function of
    traffickers being interested to building a new market.
        In the 1980's when the United States started experiencing
    the cocaine epidemic, there was plenty of coca cultivated in
    the Andes, and plenty of cocaine produced to supply Europe.
    Yet, traffickers were not interested in developing those roots
    for another decade and a half.
        As I have mentioned earlier, Mexican cartels are bringing
    up significant networks around Europe. They are both partnering
    with Bulgarian, Turkish, and Albanian actors. They are also
    starting to develop methamphetamine production in Europe in
    places like the Netherlands, Belgian, and Spain. Some of that
    meth is going for sales abroad, including to Asia Pacific.
        But those actors are primary possibilities for shipping
    cocaine and more for shipping fentanyl and more importantly for
    manufacturing fentanyl in Europe. It is also very possible that
    Chinese actors will be selling either finished fentanyl, or
    other synthetic opioids, or their precursors to actors within
    Europe.
        In my view, it is a matter of time before it does hit in
    Europe, and in a matter of time where traffickers will seek to
    penetrate highly valuable markets in Australia, New Zealand,
    and Japan.
        Senator Ossoff. Thank you. Madam Chair, I was just getting
    started. But one more question, if I might, which is the
    bipartisan border security measure co-authored by a Member of
    the Subcommittee, Senator Lankford, included some provisions to
    substantially augment our capacity to detect, interdict, and
    stop fentanyl flows into the us.
        The story of that legislation is well known. Congressional
    Republicans stopped it in its tracks at the cynical and
    politically motivated request of the former President. I
    introduced some legislation last week as a potential stop gap
    measure to surge fentanyl detection equipment and technology to
    the Southern Border.
        I know, Mr. Urben, that you have touched on the importance
    of detection technology, technical advances in detection
    technology during your testimony today. But can you just
    comment for a moment on what more you think can be achieved if
    we field sufficient and more sophisticated detection technology
    at ports of entry?
        Mr. Urben. Ports of entry, obviously, we want to detect the
    fentanyl before it comes in and it is dispersed throughout the
    United States for sale. The more resources you can surge at the
    border and ports of entry in order to detect with more
    sophisticated equipment that is needed, it will benefit
    everyone in law enforcement.
        The second part of this is in terms of equipment that you
    would push out to the field within the United States. Your
    investigator in narcotics unit needs those detectors so we can
    efficiently identify the fentanyl to protect the officer, to
    protect the public.
        The more equipment that is being pushed out is a benefit to
    everybody in terms of efficiently moving forward in
    investigations and protecting officers as they deal with the
    threat.
        Senator Ossoff. Thank you, Mr. Urben. Thank you, Madam
    Chair.
        Senator Hassan [presiding.] Thank you, Senator Ossoff, and
    thank you all. I have a few more questions, and because I had
    to leave to go vote, there may be a little bit of overlap. I
    apologize if you have covered it in my absence.
        But let me start. This is a question really to all of you.
    In recent years, there has been an increase in the number of
    Mexican youth dying from fentanyl overdoses, and you have
    mentioned that. The new domestic impact of the fentanyl crisis
    may increase the willingness of Mexican leaders to cooperate
    with U.S. law enforcement in our efforts to stop fentanyl
    trafficking.
        What steps can Congress take now to ensure that our Federal
    law enforcement has the tools and authorities that it needs so
    that it is ready to cooperate, perhaps with a newly cooperative
    Mexican government in combating fentanyl? We will start with
    you, Dr. Felbab-Brown.
        Dr. Felbab-Brown. Thank you, Madam Chair. I think the most
    important issue is really to work on will of the Mexican
    government to cooperate. There are plenty of opportunities for
    cooperation if that will is resurrected. Currently, it is very
    weak how we get to resurrecting the will.
        Certainly, improving non-intrusive board inspection is an
    important element, but I would advocate also improving or
    strengthening even intrusive border inspections. That is
    economically painful, but 100,000 Americans dying, it is far
    more painful. The cost of the fentanyl crisis is well over $2
    trillion at this point. So intrusive inspection is something
    that the Mexican government will start paying attention to.
        Indictment portfolios of Mexican government officials who
    collaborate with cartels or who subvert law enforcement efforts
    to jointly collaborate are also very important. There might be
    a time where considering the foreign terrorist organization
    designation against the cartels might become appropriate as
    well.
        I would also say though, that on the United States side, we
    should be expanding both intelligence collections on Mexican
    cartels, prioritize them higher in the collections priorities
    list, as well as expand the frequency, the extent of organized
    crime drug task forces. They are very powerful, very effective,
    and they need to look at all aspects of the cartels'
    activities, not simply fentanyl because their expansion into
    legal economies, their expansion into wildlife trafficking,
    their expansion into water distribution, all feed their
    economic power, their smuggling networks, and their political
    power within Mexico.
        Senator Hassan. Thank you. Ms. Realuyo.
        Ms. Realuyo. Just to compliment what Vanda has said. There
    is an anticipation. As you know, there is going to be a new
    president of Mexico in the next coming months, and we hope that
    person would be a female for the first time is more pragmatic,
    but it also is an opportunity in their first 100 days for the
    United States to exert pressure and actually exact from them
    collaboration and cooperation on the counter-narcotics front.
        That could be partnered with, as I mentioned, if they do
    not play ball, we should actually think about imposing tariffs
    because we are their greatest trading partner. And ways that
    you can actually put together the instruments of national power
    beyond the law enforcement and military aspect, but include
    those economic and trade pieces with United States-Mexico-
    Canada Agreement (USMCA).
        The other piece we need to take a look at is how we can get
    them to collaborate. There's a National Security Act that was
    passed under AMLO that is extremely cumbersome for American law
    enforcement officials to work with actionable intelligence with
    their counterparts. Through diplomatic means, there should be a
    way to reverse that and more importantly, get more boots on the
    ground in order to go after the cartels we know where the labs
    are, we know who the heads are, and more importantly, it is
    just a question of action and political will on the Mexican
    side.
        The change of government could be an opportune moment, but
    we would have to encourage policymakers to act quickly to show
    what the carrots and sticks are in terms of getting movement to
    dismantle the Mexican cartels.
        Senator Hassan. Thank you. Mr. Urben.
        Mr. Urben. It is a real opportunity as the national
    security law that my fellow panelists just mentioned really set
    back law enforcement engagement with United States and Mexico
    decades. We need a complete reset.
        The opportunities exist with vetted units. We need to
    establish this relationship through law enforcement, judicial
    process, because as I said before, Mexico is our neighbor. They
    are an ally. We have tremendous trade. We need to establish a
    relationship that goes forward well into the future with this
    collaborative relationship to go after transnational organized
    crime.
        So reestablishing vetted units. We went from 120 to less
    than 20 vetted unit members after this national security law.
    We need to get back to 200. Extraditions; extraditions we have
    a treaty, they should be done tomorrow. As soon as we ask for
    an extradition, that should be done in a timely manner, and the
    same thing will happen in Mexico that when we did in Plan
    Colombia when we brought AUC and the FARC to justice. They
    essentially capitulated, and that is how, essentially, Plan
    Colombia was a success.
        We need to establish joint investigative teams. That is a
    concept that happened in Europe, where we put together Mexican
    liaison officers with U.S. law enforcement. Again, we are going
    to collaborate well into the future. It is not going to change.
        Last, a sanctions task force. I have to bring up Federal
    agents in Mexico do not have diplomatic immunity. That is
    absolutely absurd, and to move forward, they need to be
    established with diplomatic immunity. No doubt within the
    United States, you need to increase funding. You need to have a
    legislation that allows Federal law enforcement to wiretap
    encrypted applications. Data targeting is another component
    that you could really leverage against the Mexican cartels and
    Chinese money launderers. There's funding that's specifically
    needed for that.
        Senator Hassan. OK. Thank you. That is very helpful. I want
    to follow up a little on that to make sure that the Federal
    Government is focused on targeting and dismantling the criminal
    organizations that manufacture and transport fentanyl as well
    as those who support these groups through money laundering.
        How would prioritizing cartels and transnational criminal
    organizations as a target for our intelligence community (IC)
    improve our Federal law enforcement's capacity to disrupt these
    entities? Mr. Urben.
        Mr. Urben. The intelligence community has tremendous
    resources and insight and data tanks. We should be using all of
    that collaboratively with U.S. law enforcement to target these
    organizations. It is an untapped resource, and it should be
    used much more robustly as we go after the Mexican cartels and
    then Chinese money launderers.
        Senator Hassan. OK. Thank you. To Ms. Realuyo, U.S. law
    enforcement is seeing an uptick in fentanyl precursor shipments
    that originate in India. How will transnational criminal
    organizations adapt and change their practices if us Chinese
    and Mexican officials begin cracking down on illicit
    trafficking in their own countries more aggressively?
        Ms. Realuyo. That was brought up by Senator Ossoff. We were
    looking at how it is like a balloon effect, right? If we
    actually stop and lower the access to Chinese precursors, it is
    going to go to India. But India's a much more reliable partner.
    I know that there are already talks about the kind of morphing
    of the supply chain with our Indian counterparts. That is
    actually a promising area where we would be able to more easily
    set up joint investigative task forces with a more willing
    partner than necessarily with Mexico or with China.
        But remember, these groups are so agile and so innovative.
    There have been talks about they are producing their own
    chemicals in Mexico as well, which we should kind of put in
    there as an option. But they have a great thing going now, and
    it is very hard to stop this flow that is coming from China.
    The business is so lucrative, it is very hard for anyone to
    turn away from some product that has tremendous profit margin,
    more lucrative than any other product right now in the world.
        Senator Hassan. Thank you. Dr. Felbab-Brown, in 2021,
    President Biden created the Council on Transnational Organized
    Crime to centralize resources from across the Federal
    Government that are dedicated to countering transnational
    criminal organizations. What has the council accomplished so
    far, if anything?
        Dr. Felbab-Brown. I think establishing the council was a
    great idea, but to my knowledge, the council has not had even
    one meeting.
        Senator Hassan. OK. Could the United States better leverage
    existing organizations such as the Financial Crimes Enforcement
    Network (FCEN) to disrupt these sophisticated criminal groups?
        Dr. Felbab-Brown. Yes, absolutely. Elevating financial
    intelligence, both for the purpose of seizing money, but also
    for the purpose of building network picture and being able to
    mount arrests and prosecution is crucial.
        I think there are great opportunities to break down, still,
    very strong existing stove piping among law enforcement
    agencies, bring in more departments, think about utilizing
    wildlife crime investigators because both Chinese and Mexican
    criminal networks are often deeply implicated in wildlife
    trafficking. The level of hiding, the level of obstruction they
    put for law enforcement in the domain is often far weaker than
    in other domains. Focusing on that element will have
    potentially high payoffs in terms of detecting other parts of
    the network.
        I think there are very significant opportunities to truly
    move to a whole-of-government approach on the United States
    side, and not simply against fentanyl flows, right, but against
    the networks that smuggle fentanyl, including their political
    and government protectors.
        Senator Hassan. Thank you. I want to thank all three of you
    for joining us today in this discussion. Before the hearing
    ends, I want to give each of you a chance to highlight any
    areas of international counter fentanyl efforts that we did not
    cover today. If you think we have covered everything you wanted
    to say, just say so, but I always like to give people the
    opportunity. We will start with you, Mr. Urben.
        Mr. Urben. I think we have certainly covered Mexico and
    China. I do think there is two components. One is international
    cooperation with countries in Asia that do not have a fentanyl
    problem, but have a Chinese organized crime problem. They could
    be allies with us in this fight. You have Vietnam, Thailand,
    Laos, Australia. All those countries, we could increase
    resources in terms of our collaboration with law enforcement
    and it would benefit us in terms of attacking Chinese organized
    crime.
        The second one, we did not talk a lot about what we can do
    within the United States, but I do think going after Chinese
    money launderers using the racketeering laws, diminishing the
    ability of the use of WeChat for Chinese money launderers would
    be a dramatic improvement.
        The last part is data targeting that we have talked about
    here in terms of bringing all the data together to go after the
    cartels with target packages.
        Senator Hassan. Thank you. Ms. Realuyo.
        Ms. Realuyo. Just to compliment my co-witnesses, I think
    the real issue still goes back to demand. We did not cover it
    as much in the United States, but why does this market exist?
    Because of the demand. We have to educate. We are one of the
    most educated populations in the world. It is a shame that we
    have so many young people dying from the scourge of fentanyl
    poisonings. So how do we do that?
        Then more importantly, we did not really talk about it, the
    social media platforms are the means by which this addiction,
    and more importantly, the euphoria, and the attraction of
    synthetic drugs, including fentanyl and these drugs are
    creating the market.
        Also, that is how they basically push the product. I think
    in collaboration across all the agencies, we have to do a
    better collection of data of how these networks are
    interrelated, and then more importantly, use all the force of
    the U.S. Government in terms of our law enforcement
    intelligence agencies to break down the networks.
        There is specific nodes, and I still go back to it is all
    about the money. The Sinaloa Cartel, we have all the Chapitos,
    the sons of El Chapo, and El Chapo, under indictment, or
    imprisoned, and extradited, but we have still never captured
    the financier. It is very difficult to basically replace a
    financier compared to all the other ones who are running the
    different networks.
        So still going after the money, but also try to deal with
    that demand side. Then the enablers, which are literally the
    social media platforms that are seducing our young into
    becoming, sadly, users of such a deadly drug.
        Senator Hassan. Thank you, and Dr. Felbab-Brown.
        Dr. Felbab-Brown. Among the issues that we touched on is
    India. I think that it is important to continue building
    cooperation. The Biden administration has been doing so, but we
    have to realize that law enforcement in India, particularly
    counter-narcotics law enforcement, is very weak. The
    pharmaceutical industry is very powerful, yet subject to
    minimal regulations and their enforcement.
        India is already a significant supplier of synthetic drugs
    globally. So important opportunity to build those, this
    relationship, but a very long road as to what needs to happen.
        There are also significant opportunities to be engaging
    with our European partners on synthetic drugs broadly, and
    fentanyl and synthetic opioids, specifically. They tend to be
    some of the most trusted partners with whom we have the most
    robust relationships, and they are very useful as Mexican
    cartels are expanding their operations significantly in Europe
    and in other parts of the world.
        Synthetic drugs, specifically, synthetic opioids, fentanyl,
    nitazenes, are very different than other drugs because of the
    price-potency ratio, but also because they are driven by
    supply. This is not what customers are asking for, at least,
    not in the initial stages. It is not that one day users in the
    United States started asking for fentanyl. It is not that one
    day users in Britain have started asking for nitazenes, it is
    because it is driven by supply. Hence the importance of holding
    hearings like you just did, Chair Hassan, and focusing on
    expanding cooperation against supply.
        Senator Hassan. Thank you, all three of you, for spending
    so much time and care with us this afternoon. To Dr. Felbab-
    Brown, Ms. Realuyo, and Mr. Urben, your testimony today has
    made a real difference, and it is a real contribution to our
    nation's security. I thought this was a fruitful discussion. We
    have a lot of new ideas that you have all identified, and some
    new problems to solve.
        This hearing record will remain open for 15 days until 5
    p.m. on April 4th for submissions of statements and questions
    for the record. With that, this hearing is adjourned. Thank
    you.
        [Whereupon, at 3:52 p.m., the hearing was adjourned.]

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