As U.S. Ramps Up Operations Against Cartels & Criminal Networks, Leveraging Threat Intelligence Critical to Disrupt Money Laundering and Illicit Trade
As I have underscored in numerous events and press interviews this week in Washington DC, as the United States ramps up more robust and targeted law enforcement, intelligence, and security operations against the Mexican cartels and transnational criminal organizations (TCOs) causing violent havoc across borders, and pursuant to numerous Presidential executive orders and designations of such TCOs as terrorist organizations, the United States partnering with Canada, Mexico, and other allies must take a threat convergence approach to disrupt and dismantle their money laundering and strategic corruption activities including across these networks’ diversified array of licit and illicit enterprises.
In the past few weeks, The White House has announced new American presidential executive orders and national security policies to disrupt the corruptive influence and financial power of the Mexican cartels and other transnational criminal organizations, particularly those fueling the illegal fentanyl trade that is harming communities across North America, and beyond.
As part of the full spectrum U.S. national security responses to fight today’s Mexican cartels and other transnational criminal organizations, I have been clear that we must also augment these American efforts and leveraged authorities towards fully optimizing llicit finance actions and tools including to more robustly target the illicit finance enablers of today’s drug trafficking networks including Chinese money laundering organizations (CMLOs) in the United States, Canada, Mexico, China, and where threat intelligence directs us to numerous financial safe havens and hubs of illicit trade arounds the world.
How Dirty Monies from Drug Trafficking and Global Illicit Trade Flow through China
Chinese money laundering organizations (CMLOs) leverage underground banking system that has long served China’s immigrant diaspora, and have become the go-to partners for Mexican fentanyl traffickers and other transnational criminal organizations needing to launder profits from the illegal fentanyl trade, drug trafficking operations, and an array of other criminal activities around the globe.
CMLOs represent one of the most worrisome new threats in combating transnational organized crime. CMLOs, many associated with China-based criminal organizations, have become key players in the multi-billion-dollar criminal empires run by Mexican-based cartels and other transnational criminal organizations (TCOs). CMLOs operating in the United States act as foreign currency exchanges, enabling TCOs to seamlessly exchange U.S. dollars derived from criminal activity for foreign currencies. By using encrypted apps to communicate with criminal associates and employing complex money laundering schemes, such as underground banking, these organizations move vast sums of dirty money quickly and quietly. In addition to laundering drug proceeds, CMLOs are implicated in farreaching criminality that spans multiple crime types, including financial fraud and cyber-related schemes perpetrated against U.S.-based individuals and corporations.
CMLOs are known to recruit witting and unwitting PRC nationals living in the United States to assist with the creation of bank accounts at U.S. financial institutions. These “money mules” are often enlisted by CMLOs using social media platforms, including messaging apps such as the Chinese app WeChat. Money mules may be told they are providing money transmission services for international students, or they are servicing unbanked Chinese citizens residing in the United States. Money mules are known to use counterfeit Chinese passports supplied by the CMLO to open bank accounts for the explicit purpose of moving, concealing, and laundering the proceeds of a variety of crimes, including drug trafficking, human smuggling, prostitution, bank fraud, fraudulent mass marketing, and other financial fraud schemes. CMLOs are known to use encrypted messaging applications such as WeChat, QQ, and other PRC-based programs, to purchase highquality counterfeit Chinese passports that are produced in the PRC and shipped to the United States. HSI investigations have confirmed that some of these passports also contain counterfeit U.S. visas as well as counterfeit entry stamps. Upon receipt, CMLOs provide these counterfeit passports to money mules to establish bank accounts at U.S. financial institutions and to evade detection by law enforcement. “Chinese Money Laundering Organizations: Cleaning Cartel Cash”.
With drug cartels exploiting financial loopholes, anonymous shell companies, and hubs of illicit trade zones, TCOs and other illicit networks are becoming harder to track and dismantle. Experts warn that these criminal enterprises launder hundreds of billions of dollars every year through sophisticated schemes, including trade-based money laundering (TBML), m-payments, mirror swaps, underground banking, cryptocurrency exchanges, offshore banking, and other novel and emerging money laundering and transactional commerce methodologies.
Many anti-money laundering professionals and national security experts are also calling for aggressive U.S. countermeasures, such as enforcing the Corporate Transparency Act (CTA) to unmask anonymous shell companies, expanding Trade Transparency Units (TTUs), and developing a TBML National Strategy to track illicit financial flows globally, examine coruption nodes, and analyze inter-connected illicit vectors and data points to illumine how the Mexican cartels and designated TCOs are in fact expanding criminalized markets and the global illegal economy.
In addition to enabling Chinese triads to help finance the dirty monies of designated Mexican cartels and TCOs, China’s Belt and Road Initiative (BRI) has also triggered alarms, with some anti-illicit trade and anti-crime experts arguing that it facilitates strategic corruption and illicit financial activity across risky ports and free trade zones (FTZs), which further finances the multi-trillion-dollar global illegal economy.
A 2020 U.S. Treasury Department sanctions release concluded that “The Chinese enterprises behind the BRI projects have several things in common: their leadership has links to criminal networks or actors involved in illicit activities in other parts of Southeast Asia, as well as China; they have pre-existing organizations engaged in casinos and crypto currencies; they advertise themselves online to be associated with Beijing’s BRI and flaunt connections with key Chinese government agencies; and all of them have established associations that actively seek to assist Chinese nationals.”
Today, China is the biggest global illicit market player (in 11 of the 12 biggest transnational crime sectors).
CCP Inc.’s involvement in expanding illicit economies around the globe has had a triple whammy effect. It:
- increases tremendous illicit wealth for its ruling CCP elite;
- hurts U.S. national security, American competitiveness, and innovation; and
- finances China’s global ambitions to become the predominant superpower by 2049 in a multi-polar world, a goal that President Xi Jinping has openly stated.
In fact, ICAIE has in recent years reported on how CCP Inc. has leveraged corruption, illicit markets, and predatory trade and lending practices to become the world’s largest player in almost every major sector of transnational crime including: counterfeits, trafficking in weapons, humans, wildlife, illegally-harvested timber, fish, and natural resources, theft of IP and trade secrets, illicit tobacco, organ harvesting, and other crimes.
Several trillion U.S. dollars in illicit proceeds every year are generated from predicate offenses for money laundering that touch China’s jurisdiction and markets, and are often used to finance China’s authoritarian regime.
The Chinese Communist Party (CCP) is arguably one of the world’s biggest transnational illicit trade syndicates and a prolific enabler of crime and corruption globally, whose complicity in the fentanyl illegal trade is killing tens of thousands of Americans every month.
These Chinese threats will require even more attention as numerous illicit industries driven by China (and Chinese triads) continue to expand including across Latin America.
Moreover, in February 2025, the U.S. Department of State noted that “strategic competition” is the frame through which the United States views its relationship with China, in response to the direct challenges that China presents to U.S. interests. The United States “will address its relationship with China under the principles of reciprocity and fairness. The United States works to deter China’s aggression, combat China’s unfair trade policies, counter China’s malicious cyber activity, end China’s global trafficking of fentanyl precursors…end China’s abusive, unfair, and illegal economic practices.” The United States is dedicated to countering the Chinese Communist Party’s (CCP) licit and illicit activities and malicious cyber attacks against U.S. government, private sector, and critical infrastructure networks to help protect American citizens, businesses, and industries.
In Panama, for example, China is leveraging bribery of government officials to win concession rights to control the port of Colón and other critical infrastructure along the Panama Canal.
Alarmingly, China already owns, controls, or operates important sections of more than 40 major ports across Latin America, in many of which Chinese triads are also quite active.
As a former SOUTHCOM Commander testified a few years back, China is the No.1 underwriter for the Mexican drug cartels, other criminal networks, and an array of antagonestic American adversaries. The Chinese government has been complicit in enabling the tens of billions of dollars in dirty money by the cartels and other TCOs to be laundered through China.
Additionally, risky free trade zones and ports have also become hot hubs for money laundering in Panama, the tr-Border Area (TBA), UAE’s Jebel Ali Free Zone (JAFZA), and many others in Colombia, the Golden Triangle Special Economic Zone in the MeKong Valley in Southeast Asia, and across Europe, Asia, and other regions.
The inauguration of operations in Chinese-controlled mega container port of Chancay, Peru in November 2024, likely represents a transformational moment in global supply lines and the correlation of Great Power forces in the Western Hemisphere. Its importance is perhaps matched only by the 2018 initiation of the PRC’s autonomous, military control deep space station in Neuquén, Argentina, in displacing the United States’ strategic influence, military power and economic interests.
The magnitude of the impact of the hemisphere’s newest mega container port in the PRC’s global strategy of economic and technological dominance is hard to overstate. In the strategic hemispheric and global contexts, the port will solidify China’s control of key choke points in those supply chains–particularly crucial links to the United States–while directly challenging vital U.S. hemispheric interests.
The $1.3 billion investment by PRC state owned COSCO Shipping in Chancay, with more than $2.2 billion more to be injected in the next three phases of the port construction over the next six years, is the PRC’s most important strategic port acquisition in Latin America and is the crown jewel of its Belt and Road Initiative (BRI). This is part of a concerted effort by the PRC to not only expand its dominance of global trade, but is likely to become a preferred hub of illicit trade, as BRI projects, particularly ports in China’s control are very much inter-connected, and are noted by law enforcement authorities for being hubs of criminality, trade-based money laundering, strategic corruption and malign influence operations.
President Trump’s executive orders also seek to leverage existing laws, including the Foreign Corrupt Practices Act (FCPA), to combat narco corruption by the Mexican cartels and other TCOs. This presents and opportunity to leverage the prosecution of strategic corruption more aggressively across illicit economies by following the money to inter-connected financial safe havens and high-risk hubs of trade hubs, criminalized ports, and FTZs.
With the fentanyl crisis continuing to claim lives in the United States, Canada, and growing impact zones in South America, marrying a whole-of-government with a whole-of-society framework becomes indispensable in dismantling the corruptive power and financial wherewithal of Mexican cartels, TCOs, and their enabling networks behind these operations is just as critical as tackling illicit drug operations.
As the U.S. ramps up law enforcement, intelligence, and security efforts ramp up, partnering with the private sector, the battle against the drug cartels and transnational criminal organizations is entering a new phase—one that will test the strength of U.S. financial and national security policies, and our cross-border cooperative with partners in Canada, Mexico, and across the international community.
Equally important, it is important to take a more holistic and robust approach including greater coordination across the US government and leveraging all national authorities and capabilities including from the intelligence and defense communities and tools such as Corporate Transparency Act’s focus on anonymous shell companies and beneficial ownership; the Foreign Corrupt Practices Act (FCPA) to target narco corruption and China’s strategic corruption via the Belt and Road Initiative (BRI); developing a national Trade-Based Money Laundering (TBML) National Strategy; and expanding the Trade Transparency Units (TTUs) more globally.
MARKET RISKS AND COMPLIANCE RELATED TO THE U.S. DESIGNATIONS OF MEXICAN CARTELS AND INTERNATIONAL CRIMINAL ORGANIZATIONS AS TERRORIST ORGANIZATIONS
American companies, multinationals, and international merchants need to take extreme care of their operations by examining who their clients and business partners are in Mexico and across Latin America as the United States (and Canada) have designated drug cartels and other transnational criminal organizations (TCOs) as terrorist organizations.
The U.S. Department of State designated eight criminal organizations as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs) as threats to the safety of the American people, markets, the national security of the United States, and the stability of the international order in the Western Hemisphere: Tren de Aragua, Mara Salvatrucha (MS-13), Cártel de Sinaloa, Cártel de Jalisco Nueva Generación, Cártel del Noreste (formerly Los Zetas), La Nueva Familia Michoacana, Cártel de Golfo (Gulf Cartel), and Cárteles Unidos as FTOs and SDGTs.
Canada has also designated seven of these international criminal organizations as terrorist organizations.
Decoupling such businesses and companies from cartel activities may be a challenge given how the cartels and other criminal groups reinvest their blood monies from drugs by diversifying and operating in sectors like agriculture (e.g., avocados, tortillerías, beef, vegetables), banking, tourism (hotels, resorts, restaurants), transportation and mining — exposing businesses and companies vulnerable to American (and Canadian) sanctions, asset seizures, suspension of travel visas, fines, and criminal prosecution for those who have had business ventures (or viewed as providing “material support”) linked to the Sinaloa and Jalisco New Generation (CJNG) cartels, and other cartels and TCOs.
Besides the tens of billions of dollars cartels and other TCOs make from the drug trafficking industry, Mexican drug cartels and TCOs are also involved in many illegal ventures across Latin America that result in profits including extortion, counterfeit medicines (online pharmacies), the theft of petroleum and ores, weapons trafficking, migrant smuggling, financial scams/fraud, money laundering, prostitution, and tax evasion.
Terrorist designations may also force some businesses and companies into the shadows of illicit finance and underground banking systems, where cash is used instead of electronically traceable transactions, making it harder for law enforcement to examine the cartels’ financial structures. However, there are equal security concerns with doing so since it would expose many to further criminalities, coercive threats, and further sanctions since such informal banking operations are often controlled by the cartels and other TCOs including Asian triads and Chinese money laundering organizations.
Businesses and companies should consult legal advice to survey their operations in countries where such cartels and TCOs are active to assess their exposure.
ACCESS ICAIE INTERVIEWS:
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THE WHITE HOUSE EXECUTIVE ORDER:
DESIGNATING CARTELS AND OTHER ORGANIZATIONS AS FOREIGN TERRORIST ORGANIZATIONS AND SPECIALLY DESIGNATED GLOBAL TERRORISTS
20 January 2025
By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Immigration and Nationality Act (INA), 8 U.S.C. 1101 et seq., the International Emergency Economic Powers Act (IEEPA),50 U.S.C. 1701 et seq. it is hereby ordered:
Section 1. Purpose. This order creates a process by which certain international cartels (the Cartels) and other organizations will be designated as Foreign Terrorist Organizations, consistent with section 219 of the INA (8 U.S.C. 1189), or Specially Designated Global Terrorists, consistent with IEEPA (50 U.S.C. 1702) and Executive Order 13224 of September 23, 2001 (Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), as amended.
(a) International cartels constitute a national-security threat beyond that posed by traditional organized crime, with activities encompassing:
(i) convergence between themselves and a range of extra-hemispheric actors, from designated foreign-terror organizations to antagonistic foreign governments;
(ii) complex adaptive systems, characteristic of entities engaged in insurgency and asymmetric warfare; and
(iii) infiltration into foreign governments across the Western Hemisphere.
The Cartels have engaged in a campaign of violence and terror throughout the Western Hemisphere that has not only destabilized countries with significant importance for our national interests but also flooded the United States with deadly drugs, violent criminals, and vicious gangs.
The Cartels functionally control, through a campaign of assassination, terror, rape, and brute force nearly all illegal traffic across the southern border of the United States. In certain portions of Mexico, they function as quasi-governmental entities, controlling nearly all aspects of society. The Cartels’ activities threaten the safety of the American people, the security of the United States, and the stability of the international order in the Western Hemisphere. Their activities, proximity to, and incursions into the physical territory of the United States pose an unacceptable national security risk to the United States.
(b) Other transnational organizations, such as Tren de Aragua (TdA) and La Mara Salvatrucha (MS-13) pose similar threats to the United States. Their campaigns of violence and terror in the United States and internationally are extraordinarily violent, vicious, and similarly threaten the stability of the international order in the Western Hemisphere.
(c) The Cartels and other transnational organizations, such as TdA and MS-13, operate both within and outside the United States. They present an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States. I hereby declare a national emergency, under IEEPA, to deal with those threats.
Sec. 2. Policy. It is the policy of the United States to ensure the total elimination of these organizations’ presence in the United States and their ability to threaten the territory, safety, and security of the United States through their extraterritorial command-and-control structures, thereby protecting the American people and the territorial integrity of the United States.
Sec. 3. Implementation. (a) Within 14 days of the date of this order, the Secretary of State shall take all appropriate action, in consultation with the Secretary of the Treasury, the Attorney General, the Secretary of Homeland Security, and the Director of National Intelligence, to make a recommendation regarding the designation of any cartel or other organization described in section 1 of this order as a Foreign Terrorist Organization consistent with 8 U.S.C. 1189 and/or a Specially Designated Global Terrorist consistent with 50 U.S.C. 1702 and Executive Order 13224.
(b) Within 14 days of the date of this order, the Attorney General and the Secretary of Homeland Security shall take all appropriate action, in consultation with the Secretary of State, to make operational preparations regarding the implementation of any decision I make to invoke the Alien Enemies Act, 50 U.S.C. 21 et seq., in relation to the existence of any qualifying invasion or predatory incursion against the territory of the United States by a qualifying actor, and to prepare such facilities as necessary to expedite the removal of those who may be designated under this order.
Sec. 4. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
THE WHITE HOUSE,
January 20, 2025.
U.S. DEPARTMENT OF STATE’S TERRORIST DESIGNATIONS OF INTERNATIONAL CARTELS:
19 February 2025
Press Statement
Marco Rubio, Secretary of State
Today, the State Department is fulfilling one of President Trump’s first promises since he took office. I’m pleased to announce the Department’s designation of eight organizations as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs).
As President Trump said in Executive Order 14157, cartels and other transnational organizations “threaten the safety of the American people, the security of the United States, and the stability of the international order in the Western Hemisphere.”
The State Department announces the designation of Tren de Aragua, Mara Salvatrucha (MS-13), Cártel de Sinaloa, Cártel de Jalisco Nueva Generación, Cártel del Noreste (formerly Los Zetas), La Nueva Familia Michoacana, Cártel de Golfo (Gulf Cartel), and Cárteles Unidos as FTOs and SDGTs.
The intent of designating these cartels and transnational organizations as terrorists is to protect our nation, the American people, and our hemisphere. That means stopping the campaigns of violence and terror by these vicious groups both in the United States and internationally. These designations provide law enforcement additional tools to stop these groups.
Terrorist designations play a critical role in our fight against terrorism and are an effective way to curtail support for terrorist activities. Today’s actions taken by the State Department demonstrate the Trump Administration’s commitment to protecting our national security interests and dismantling these dangerous organizations.
