[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
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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
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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
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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.
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\1\ The prepared statement of Senator Hassan appears in the
Appendix on page 29.
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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.
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\1\ The prepared statement of Dr. Felbab-Brown appears in the
Appendix on page 31.
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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.
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\1\ The prepared statement of Ms. Realuyo appears in the Appendix
on page 65.
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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.
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\1\ The prepared statement of Mr. Urben appears in the Appendix on
page 81.
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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.]
A P P E N D I X
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