Colombians Charged in Massive China-based Money Laundering Scheme

SHARETweet about this on TwitterShare on FacebookShare on LinkedInShare on Google+

An enormous money laundering scheme in China involving Colombian nationals highlights the growing interaction between Chinese and Latin American criminal groups. 

US authorities charged three Colombians with participating in a China-based criminal operation which prosecutors say laundered more than $5 billion in drug profits from the United States, parts of Africa, Europe and several countries in Latin America, reported Reuters.

The suspected ringleaders, identified as Christian Duque-Aristizabal, alias “Juguete,” and Jhon Hincapie-Ramirez, alias “El Profe,” are awaiting US extradition in Panama and Colombia, respectively. The third suspect, Henry Poveda, alias “Calvo,” is in US custody and considering a plea agreement, according to his lawyer.

Dubbed the “Guangzhou Enterprise,” the operation consisted mainly of wiring drug money to a host of Chinese businesses like casinos, importers/exporters and factories. That money was then used to buy counterfeit goods that were shipped and sold internationally in exchange for capital not linked to drug trafficking.

The three Colombians also allegedly laundered money in their home country through brokers. The brokers would offer drug money (in dollars) at a discount to South American importers, in exchange for “clean” Colombian pesos, according to the New York Times.  

SEE ALSO: Coverage of Money Laundering

In April a Hong Kong woman named Yuling Luo pleaded guilty to money laundering in connection with the Guangzhou Enterprise. US authorities have reportedly said other suspects remain at large, but have yet to publicly identify them. 

None of the banks or drug traffickers involved in the scheme have yet to be identified. US authorities may be able to go after suspected Chinese banks if US-based bank branches were involved in any of the alleged financial transactions, said Jodi Avergun, an attorney and former US Drug Enforcement Administration (DEA) official.

InSight Crime Analysis

As China and Latin America’s legal economies become more intertwined, it appears a similar trend is taking place between their criminal underworlds. Chinese mafias have already made their presence felt in Latin America through extortion and human smuggling, while groups like Mexico’s Jalisco Cartel – New Generation are moving to exploit China’s burgeoning cocaine market. The Guangzhou Enterprise is the latest sign of this trend. 

“Criminals exploit whatever vulnerabilities they can,” Evan Ellis, a research professor of Latin American Studies at the US Army War College, told InSight Crime. “More trans-Pacific commerce increases not only the flow of goods — which creates smuggling opportunities — but builds relationships between people in both legal and illegal activities.”

SEE ALSO: Coverage of Criminal Migration

As one example of this, the large number of undocumented Chinese immigrants entering Latin American countries has provided an important source of income for Chinese mafias in the region. Chinese criminal groups can reportedly charge up to $60,000 per person to bring immigrants to countries with Pacific coastlines like Ecuador and Colombia, often the first stop in an undocumented immigrant’s long journey to the United States. 

Alongside these relationships has been an increase in Chinese and Latin American banks opening branches and doing business on both sides of the Pacific in order to finance international contracts and projects. This financial infrastructure can be exploited by money launderers, especially given the lack of coordination between Chinese and Latin American regulators and authorities.

“It’s an area that’s relatively safer for [criminals] to hide flows of money because there’s not as easy visibility,” Ellis said. 

Authorities in both China and Latin America are looking to address the issue, but Ellis does not expect trans-Pacific money laundering to end anytime soon.

“It’s an emerging trend we’re seeing and [that we’re] going to see more of in the future,” he said. 

SHARETweet about this on TwitterShare on FacebookShare on LinkedInShare on Google+