exclusive
Cash rules in the international drug business. In order to move large sums of money around the world, criminals are increasingly turning to reliable service providers: Chinese money laundering networks.
The amount of cash in the glove compartment of the Audi A3 makes the officers suspicious. They fished out 91 fifty-euro bills from the manual of the car that they took out of circulation shortly after the Dutch border. There is also another 2,320 euros in the wallet of the driver, a Chinese man named Linfei Y., who lives in Prato near Florence.
And the officials at the Osnabrück main customs office suspect that there could be more. They take the vehicle to a workshop and eventually find 27 bundles of money shrink-wrapped in the tank. The investigators confiscated a total of 781,320 euros on this February day in 2018.
Linfei Y. will later say that he sold an apartment in China and wanted to invest the money in Europe. He had the cash transported to Amsterdam by ship. In this way, he wanted to circumvent a Chinese state law that prohibits taking large sums of money out of the country. But researchers from the Education and Science Center of the Federal Financial Administration examined the banknotes and found traces of cocaine.
No surprise in itself, cocaine is widespread in Europe; traces of it can be found on almost every euro note. But not in the amount that stuck to the 50 euro bills from Linfei Y’s car. The researchers also found traces of cannabis.
Courier trips with large amounts of cash
Linfei Y. is not the only Chinese who was recently noticed in Europe with large sums of cash. Investigators assume that Chinese criminals have established themselves as an important interface in the international drug trade. Her specialty: courier trips with large amounts of cash and a network of underground banks.
Demand for these services is high because the drug business runs on cash throughout the entire supply chain. Drug cartels want to be paid in cash in dollars or euros, consumers pay in cash. But moving cash from continent to continent is risky. That’s why drug criminals turn to special service providers.
In a recent report on financial crime, the European police authority Europol writes of a parallel “underground financial system”. The Chinese networks seem to be particularly popular, as research by MDR and the “Frankfurter Allgemeine Zeitung” (FAZ). The services are offered worldwide, including in Germany.
A sophisticated system
As early as 1994, the US anti-drug agency DEA drew attention to “Chinese underground banks”. These are anonymous, faster and cheaper than conventional banks. The DEA wrote at the time that Asian drug smugglers, among others, would use it in order to shift the profits from heroin sales in the USA to Hong Kong.
The case of Wen Kui Z. provides insights into how the system works. At the beginning of October, the Italian financial police arrested the Chinese businessman. Italian drug dealers are said to have regularly visited his shop in Rome. According to investigators, they delivered millions of euros in cash here, which Z. and his accomplices transferred abroad. In some cases, Z. is said to have relied on money couriers who brought suitcases full of cash to China on scheduled flights.
Z. and accomplices are also said to have smuggled large sums of money past the Italian authorities without the cash leaving Italy. This is said to have been done, among other things, via a system that in China is called “Feiqian”, “flying money”. This works similarly to the “Hawala” system: In a country, such as Italy, there is a dealer who receives cash. This dealer reports the handover to a representative in another country, such as Spain.
In Spain, the shop steward pays out the cash, for example to contacts of the drug cartels who have to be paid for a delivery of cocaine. The trustee receives some of his money at a later date, for example through payments of fictitious invoices.
In the service of the Calabrian mafia
In addition to Italy, Chinese money launderers have recently appeared in investigations in the Netherlands, France and Poland. They are internationally active and well connected with other criminal organizations. Among other things, the collaboration with the Calabrian mafia ‘Ndrangheta stands out. Back in 2017, Calabrian key witness Giuseppe Tirintino, once a drug broker for the ‘Ndrangheta, told how Chinese money laundering networks would move money around the world in real time.
They also appeared as part of the international anti-mafia operation “Eureka”, which led to a number of arrests in Germany in May of this year. Over the course of one month in 2020 alone, people connected to the ‘Ndrangheta are said to have handed over seven million euros to Chinese contacts, sometimes in an industrial area in Rome, sometimes in the parking lot of a hotel.
Hardly any knowledge of Chinese structures
In this country too, there are always clues that lead to Chinese underground bankers or money couriers. In 2021, two Chinese people, father and son, were arrested on a train from Amsterdam to Germany. They were carrying 1,229,635 euros in cash, which they wanted to take to a hotel in Cologne. Traces of cocaine were found on banknotes, suitcases and hands. The two were convicted, but made no statements about their clients.
The authorities in Germany, however, pay little attention to the money laundering networks from China. Upon request, the Federal Criminal Police Office said that it could not provide any information about such activities in Germany because no “concrete evaluations” were being carried out. Oliver Huth, state chairman of the Association of German Criminal Police Officers in North Rhine-Westphalia, criticized in an interview with MDR and the FAZ: “We know next to nothing about the Chinese structures.”
Huth led the investigation into the anti-mafia operation “Eureka” at the North Rhine-Westphalia State Criminal Police Office. For Huth, the fact that Chinese criminals work on an equal footing with the Calabrian mafia and the Latin American cartels shows clearly how established they have become. “These are well-structured, professional, internationally present networks,” he says. “And we don’t know at all how they work.”