Brazilian Police Target Chinese Money Laundering Scheme

November 28, 2024 TruthUSA

Brazilian Federal Police on Tuesday launched an operation called Tai-Pan against a Chinese criminal organization accused of currency evasion and money laundering involving almost 6 billion reais ($1 billion) in the past five years, with China being the main destination for these transactions of funds with illicit origins.

The investigation, which began in 2022, brings evidence of the involvement of criminal groups linked to illegal activities such as drug trafficking, arms trafficking, and smuggling.

According to the federal police, its main objective was to move a constant flow of money to China, but it also served people looking to hide capital, launder money, or send or receive money from abroad.

The case revealed a parallel and illegal banking system, which moved billions not only within Brazil but also in the United States, Canada, Panama, Argentina, Bolivia, Colombia, Paraguay, Peru, the Netherlands, England, Italy, Turkey, Dubai, and especially Hong Kong and China.

Dozens of people were involved in the case, including Brazilians as well as foreigners who held various jobs and positions, such as military and civil police officers, bank managers, and accountants.

Investigations indicate that the suspects, as well as individuals and companies involved in the case, have moved around 120 billion reais ($20 billion) in recent years.

In addition to 16 preventive arrest warrants and 41 search and seizure warrants, the Brazilian Federal Court ordered the blocking of assets and values of more than 200 companies, estimated at around $10 billion reais ($1.7 billion).

China at Center of Fentanyl Crisis

Robert Evan Ellis, a researcher and professor of Latin American affairs at the U.S. Army War College, told The Epoch Times there are similarities between this case in Brazil and the recent cases of money laundering coordinated by Chinese nationals in the United States involving Mexican cartels.

“This is a particular challenge,“ Ellis stated. ”First of all, because the amount of technical access that persons in law enforcement in the region have to cooperate with their Chinese counterparts and oversight into bank accounts in Chinese banks and other aspects of trade involving PRC-based companies is very limited. And so in the shadows, it’s easier for criminal groups to hide.”

In June, the Department of Justice (DOJ) revealed that it had uncovered a scheme involving the Mexican Sinaloa cartel and “underground banks” run by Chinese nationals that helped launder $50 million from drug trafficking between 2019 and 2023.

In July, two Chinese residents, members of a U.S.-based Chinese money laundering organization, and a Mexican resident were sanctioned by the Treasury Department.

The trio were among 24 people involved in the case who were identified as associates of the Sinaloa cartel in Los Angeles.

In May, the DOJ arrested two men, one of them Chinese, in connection with another case involving an alleged money laundering scheme involving the Mexican Sinaloa and Jalisco cartels.

U.S. prosecutors accused them of working for a transnational money laundering organization, conducting financial transactions with profits derived from the sale of fentanyl and other illicit drugs in the United States.

According to statements by prosecutors in the case, Chinese underground banking networks act as brokers, operating bank accounts inside and outside China.

Ellis said that a restriction imposed by the Chinese regime that generally restricts people who live, work, or invest in China from withdrawing more than $50,000 from within the country is now being used by these money laundering groups.

“In Mexico, what you saw was a complex scheme in which Mexican cartel representatives with bulk cash in the United States would transfer that cash to wealthy business people in China in terms of the ownership of that cash still in the United States without the Chinese government. And so the Chinese government, without the cash ever moving across borders, allowed the wealthy people in China to essentially get their money out to the United States,” Ellis said.

A recent report by the Brooking Institution also points out that criminal groups from China have expanded their money laundering schemes so much around the world that they are even “displacing large established Latin players in the Black Peso Market and becoming the go-to actors for Mexican cartels.”

The report also identified more than 100 criminal networks linked to China, with diverse structures and involvement in various illegal economies.

According to the U.S. Drug Enforcement Administration (DEA), the Sinaloa and Jalisco cartels are the source of much of the fentanyl flow that is sent to the United States. They are responsible not only for the production of fentanyl but also for pressing the drug into fake pills that are very similar to legitimate medicines, such as the anti-anxiety drug Xanax and the painkiller OxyContin.

China, meanwhile, is mainly responsible for supplying the chemical precursors used to produce fentanyl, as well as the machines used to press it.

In a report released in June, Annie Milgram, administrator at the DEA, stated that “[The two cartels] rely on chemical and pill pressing companies in China to supply the precursor chemicals and pill presses needed to manufacture the drugs.”

The Chinese regime has also been accused of subsidizing the industry of fentanyl precursors.

In April, the Select Committee on the Chinese Communist Party brought new evidence that the Chinese regime continues to “directly” subsidize “the manufacture and export of illicit fentanyl.”

Brazil and Increased Economic Ties With China

Ellis said this new scheme uncovered in Brazil was a result of the strengthening of financial ties with the Chinese regime.

“What we’re seeing in Brazil here on a massive scale is consistent with the evolution of Chinese organized crime ties that you see across the region, which is specifically with the development of licit commerce and connections between people and commercial infrastructure between China and Latin America, as well as financial infrastructure. Naturally, options for illicit activities are also evolving,” he said.

“This is a growing problem that authorities in Brazil, like Mexico and other places, will have to deal with as one of the unfortunate consequences of growing legitimate commercial and financial ties.”

China is now Brazil’s largest trading partner, and last year, bilateral trade between the countries reached an all-time high of $157 billion.

On Nov. 20, after the G20 meeting held in Brazil, Brazilian President Luiz Inácio Lula da Silva met with the leader of the Chinese Communist Party, Xi Jinping.

During the meeting, 37 agreements were signed between the two countries in 15 different sectors, such as technology, agriculture, educational exchange, and others.

On the same day, Brazil’s National Bank for Economic and Social Development signed a loan agreement with the China Development Bank. The loan, the first to be made in Chinese currency in the country, will amount to 5 billion renmimbi ($690 million).

Briefly mentioning the agreement between the two banks, Ellis pointed out that the Tai-Pan operation is “a reminder that such expanding penetration by the Chinese financial system does create ever greater vulnerabilities to organized crime and money laundering”

During the meeting between the two leaders, it was also announced that bilateral relations between Brazil and China had been upgraded to the status of “Global Strategic Partnership to the level of Community of Shared Future for a Fairer World and a Sustainable Planet.”

Yuan Hongbing, a former law professor at Australia-based Peking University and an old acquaintance of Xi from the 1980s, told The Epoch Times that the Chinese leader is determined to revive the international communist movement and dominate the future of humanity in the name of communism.

What Xi calls a “community of common destiny” would be in conflict with President-elect Donald Trump’s proposal to “make America great again,” he said.

Marcos Schotgues contributed to this report

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