When Rosario D'Onofrio walked into Milan's colorful Chinatown neighborhood in March 2020, he allegedly carried 180 000 euros in cash.< /p>
An Italian football referee who is accused of moonlighting as a drug dealer known as «Rambo» met with a Chinese money launderer who could help him pay suppliers in Spain for a shipment of hashish, prosecutors claim.
When the money was transferred, it did not go abroad. Instead, all D'Onofrio's contact had to do was send a text message to his employee in Spain, who was ordered to pay the same amount to the local supplier.
This effective transfer, known as » mirror transaction» — did not leave a direct trace for the police. D'Onofrio paid the Chinese launderer only 2,700 euros, that is, a commission of only 1.5 percent.
The March 2020 incident, uncovered by Italian anti-mafia prosecutors, is an example of a growing problem for authorities in Europe. , North America and Latin America as criminal gangs increasingly use China's vast network of intermediaries to clean up their dirty money.
(D'Onofrio was arrested by Italian police last November. His lawyer declined to comment on the case to Reuters last month.)
China's influence on the money laundering industry is so great that some experts believe that China controlled organizations and individuals are now responsible for half of the industry.
Even the Mexican and Colombian drug cartels that used to carry out such activities «inside the house» are now using Chinese launderers to service their empires. , US lawmakers heard last month.
The World Bank estimates that between 2% and 5% of global GDP is laundered annually. Photo: STR/AFP
In the UK, meanwhile, the National Crime Agency (NCA) has warned that some Chinese students have become «mules» for gangs moving illegal money in and out of the country.
By some estimates, through companies linked with China, can now go through up to half of the world's money laundering. The country and its citizens have become the main intermediary in the global flow of shadow money, filling a market gap created by the suppression of other methods of clearing cash.
“Criminals will always adapt, just like governments do,” says Maria Nizzelo, a financial crime researcher at the Royal United Services Institute (RUSI).
Money laundering is what keeps things going wheels of organized crime. Without it, criminals cannot easily spend their illegal proceeds.
By definition, this practice is damn hard to detect. Most experts estimate that 2 to 5 percent of the world's GDP is laundered each year, or $2 to $5 trillion, according to the World Bank.
Most of this is due to the drug trade. Mexican and Colombian cartels have long relied on black market peso exchanges and cash smuggling for their needs.
However, this has become more difficult since Mexico limited US dollar bank deposits to $4,000 per month and Colombia introduced strict new anti-money laundering laws, forcing the cartels to look for new opportunities.
In Latin America, criminals are increasingly turning to Chinese gangs who offer near-instant money transfers for minimal fees. While other brokers charge a commission of 10 to 15 percent, the Chinese can charge up to 6 percent, and sometimes nothing at all.
Commissions are lower because these groups treat drug money as a side job. Their main profit is helping Chinese politicians and the elite move their money offshore, away from the prying eyes of Beijing.
Drug cartels in Latin America are turning to Chinese gangs for money transfers. Photo: ALEXANDRE MENEGHINI/REUTERS
Under China's currency control, people cannot send the equivalent of more than $50,000 overseas per year. As a result, elites who want to spend freely abroad may have difficulty getting cash. The dollars amassed by the cartels in the US provide a useful pool of liquidity.
“It's a symbiotic relationship,” explains Channing Mavrellis, director of illicit trading at Global Financial Integrity, a Washington-based think tank. «Each of the Chinese and the cartels has what the other wants.»
To transfer money internationally, money launderers rely on age-old methods such as trade-based money laundering (TBML), according to John Cassara, who served as a CIA intelligence officer and special agent in the US Treasury Department.
TBML includes include overcharging or undercharging for everything from watches and gold to cheap knick-knacks, effectively paying off debts with the value of other goods.
TBML has only expanded in scope as China's trade with the world expanded. boom. Customs police are also relatively uncomplicated compared to banking regulation.
“I think people are just beginning to understand the extent of transnational crime in China,” Cassara says. “These are systems that have been around for a long time, but effectively bypass our anti-money laundering countermeasures.”
Another of the most characteristic techniques used by Chinese gangs is fei jian, or “flying money.” .
A form of underground banking based on trust between family, friends and business associates and has long been legally used by millions of Chinese workers to send wages home when they work abroad.
“The underground banking system has virtually no accounting procedures, and uses coded messages, chips, and phone calls to transfer money from one country to another,” the US Department of Justice said in a statement.
This document The system is open to abuse: gang-linked brokers offer services to both cartels, workers and wealthy clients.
Nate Sibley, a research fellow at the Hudson Institution in Washington, says US criminal proceeds are often served by gang-controlled Chinese income-generating businesses such as restaurants, casinos and dry cleaners.
This means cash is easy to disguise , and they can be put into legitimate bank accounts without suspicion.
«Many of these businesses are hard-working Chinese Americans, but gangs use them,» Sibley notes.
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According to experts, Chinese-controlled entities and individuals account for half of the money laundering industry. Credit: THOMAS PETER/REUTERS Once the dollars are safely in a bank account, money launderers can sell them to the Chinese elite or buy real estate and pay for college on their behalf. In return, the elite sends the corresponding amount in yuan plus a fee from their Chinese bank account to the gang's account in China. Money is not leaving the US or China.
A 2019 NCA report found that the UK was the same as the UK, where gang operatives tricked Chinese students into helping by telling them they needed to use their bank account on behalf of a fellow student or an unbanked Chinese worker. who wanted to send money home.
Some students consciously help out and—for a fee—collect criminal money and distribute it to mules' accounts. According to the NCA, in one case, the gang gained control of 600 mule accounts at a single bank.
Many of those who play along have short visas and little risk of being caught, Lawrence Howland says. , a former HM Revenue and Customs Investigator who worked as a UK Government Liaison in China and is now Director of Compliance at Buckles Solicitors.
«This is a serious problem,» he adds, «and as Chinese business opportunities expand internationally, so will criminals' ability to transfer money.»
Most Western experts agree that to solve problem, as well as cooperation from the Chinese government, which often provides only minimal support.
With so many transactions, many of which are carried out on platforms such as WeChat and Alipay, says Mavrellis of Global Financial Integrity it is not clear whether the Chinese authorities can easily thwart the gangs.
But Kassara argues that Beijing cannot be unaware of what is happening. Collectively, he refers to Chinese criminal networks as the «United Communist Party of China.»
“The government is very effective in cracking down on websites and social media that they believe pose a threat to the CCP regime. If they want, they could end this as well.”
China insists that “it has never been, is not, and never will be a global center for money laundering.”
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