[HN Gopher] A Chinese American gangster transformed money launde...
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A Chinese American gangster transformed money laundering for drug
cartels
Author : Jerry2
Score : 84 points
Date : 2022-10-14 19:59 UTC (3 hours ago)
(HTM) web link (www.propublica.org)
(TXT) w3m dump (www.propublica.org)
| O__________O wrote:
| TLDR: "Li and his fellow Chinese money launderers married market
| forces: drug lords wanting to get rid of dollars and a Chinese
| elite desperate to acquire dollars. The new model blew away the
| competition."
|
| Comment: Nation states have been waging asymmetric warfare for
| long time, this is not new. China has become a major player in
| the illegal drug trade by supplying money laundering and
| chemicals [1]. Oldest modern reference I am aware of on the topic
| as it relates to China is a book on military strategy written in
| 1999 by two colonels in the People's Liberation Army titled
| Unrestricted Warfare.[2]
|
| __________________
|
| [1] https://google.com/search?q=china+fentanyl
|
| [2] https://wikipedia.org/wiki/Unrestricted_Warfare
| imwillofficial wrote:
| This is a fantastic and vastly underrated book
| [deleted]
| bluepizza wrote:
| I really do wonder where China might even have got this idea
| from.
| dwringer wrote:
| Sun Tzu?
| layman51 wrote:
| Are you referring to the Opium Wars?
| joe_the_user wrote:
| Yes, "The First Opium War (Chinese: Di Yi Ci Ya Pian Zhan
| Zheng ; pinyin: Diyici Yapian Zhanzheng), also known as the
| Opium War or the Anglo-Sino War was a series of military
| engagements fought between Britain and the Qing dynasty
| between 1839 and 1842, during the Century of humiliation. The
| immediate issue was the Chinese seizure of private opium
| stocks at Canton to stop the banned opium trade, and
| threatening the death penalty for future offenders. The
| British government insisted on the principles of free trade
| and equal diplomatic recognition among nations, and backed
| the merchants' demands."[1]
|
| https://en.wikipedia.org/wiki/Opium_war
| GauntletWizard wrote:
| I was going to guess they were thinking of the CIA's
| "Golden Triangle", which operated similarly and makes a
| narratively nice "turnabout is fair play" argument[1]
|
| [1] https://en.wikipedia.org/wiki/Allegations_of_CIA_drug_t
| raffi...
| joe_the_user wrote:
| As the OP says, every state has been doing this stuff
| since forever.
|
| The US has had maintain a certain "better than that"
| image at times but states have managed their images for a
| long time too.
| chrischen wrote:
| Isn't the Chinese government trying to curtail capital outflow?
| Scoundreller wrote:
| No, their entire economy revolves around exporting value-
| added goods.
|
| They restrict currency movements, but that doesn't work when
| you can ship out goods and deposit payments overseas. Drugs
| is one way to do this, but so is virtually any other good.
| Aunche wrote:
| This doesn't seem to be the case here as most of the "value
| add" is occurring in the US. Bitcoin is another Chinese
| export that enable capital outflow, but China is taking a
| lot measures to crack down on it. I'm sure the Bitcoin
| miners that are still allowed to operate have connections
| in the CCP, but that doesn't mean the party itself is
| particularly happy about mining.
| Scoundreller wrote:
| For drugs yes, but China is a machine that takes raw
| materials and manufactures them into finished goods. Just
| look for the "Made in ______" label on so many goods.
|
| Sure there's lots of margins on the marketing side that's
| captured and retained wealthy countries, but China is
| capturing some percentage of so many finished products.
| joe_the_user wrote:
| China tries to curb capital outflows but they are so huge
| they're essentially institutionalized despite these efforts.
| okasaki wrote:
| Ah yes the Chinese version of the Protocols of the Elders of
| Zion
| bergenty wrote:
| Who are the Jews in this version?
| zoklet-enjoyer wrote:
| Fentanyl came in from China for years before they moved the
| synthesis to Mexico. I was active in online drug forums before,
| during, and shortly after Silk Road. So many drugs came from
| China and their government didn't care. It would not surprise me
| if they encouraged it not just because of monetary gain, but
| because of political objectives. I have believed since 2010 that
| it was a form of warfare that they could plausibly deny. So much
| fentanyl was coming in for so cheap, it was crazy. I don't know
| anything about what's going on now, but they were practically
| giving it away back then
| db1234 wrote:
| Chinese seem to have learned a thing or two about drug trade
| from their former adversary, the British.
|
| https://en.wikipedia.org/wiki/Opium_Wars
| readthenotes1 wrote:
| And they make video games to consume endless hours of Western
| productivity
| mc32 wrote:
| It's a double-edged sword. They also lose productivity due to
| games addiction by their own pop.
| hayst4ck wrote:
| I think this point is underrated (albeit a bit unrelated).
|
| If China is looking to abuse the world in the way it has been
| abused, and to cause humiliation to others the way it has
| been humiliated, then getting the nations workforce to spend
| their time sitting in front of a computer doing an almost
| entirely unproductive activity for hours on end, creating a
| dopamine high that most other activities and certainly hard
| acitivities like studying can't compete with, then video
| games share an aweful lot of properties with opium. Real
| money for digital currency or goods is also something that is
| ridiculous enough it should probably be heavily regulated.
| Scoundreller wrote:
| It's just easy to synthesize and potent so it's easy to
| smuggle.
|
| Manufacturers get pitted against each other and end up selling
| for cost + markup and a small risk premium.
|
| Overall, drugs are cheap, it's the regulations that make it
| expensive/difficult to acquire.
|
| Easy to interdict heroin or opium from Afghanistan, not so easy
| for potent synthetics coming from an export powerhouse.
|
| Safety for the consumer isn't a concern for the regulators so
| you end up with this situation.
| dirtyid wrote:
| >political objectives
|
| Perhaps, but it's mostly:
|
| >government didn't care
|
| There's no reason to dedicated domestic PRC resources to
| crackdown (technically) legal cancer drug manufacturers to
| subsidize US/DEA war on drugs. Priority is to crack down
| domestic drug trafficing in PRC / golden triangle. The entire
| reason synthesis moved to Mexico with PRC precursors was
| because past US admins politically pressured PRC to do
| something about it. Like if PRC wanted to be politically
| belligerant, they'd start exporting directly again.
| ttul wrote:
| Nowadays, the precursors go to Mexico, essentially in unchecked
| volumes. A widespread network of tiny independent producers
| then manufacture a kilo at a time in little shacks all over the
| place, selling their stock to the cartels, who handle
| transportation to the US market.
| hayst4ck wrote:
| I was pretty skeptical about a lot of the negative press about
| China for a long time. Then the Chinese colonial takeover over
| Hong Kong went from soft to hard in 2019, during which they
| leveraged organize crime to try to quell dissent.
|
| https://en.wikipedia.org/wiki/Triad_(organized_crime)#Chines...
|
| This made it very clear to me that organized crime is a wing of
| the Chinese government.
|
| Before I probably wouldn't have believed a post like this, but
| now it seems enough in alignment with all parties interests
| that I find it more likely to be true than false.
| CTDOCodebases wrote:
| The US has done this as well.[0]
|
| Though I think it's fair to distinguish between using
| organised crime during times of war against an enemies
| military vs using organised crime during times of peace to
| grind down a competing nations civilian population.
|
| [0] - https://en.wikipedia.org/wiki/Operation_Underworld?wpro
| v=sft...
| hayst4ck wrote:
| I would imagine in the US the best parallels or examples
| would involve corporations or para-government entities
| (like political parties) leveraging organized crime to
| fight labor movements or civil rights movements. I would be
| extremely surprised if there weren't examples, but I don't
| know them off the top of my head.
| klooney wrote:
| In fairness, you could say this about the state security
| services in any major country. Criminals are useful, and
| will do stuff the state doesn't want to get caught doing.
| ipaddr wrote:
| Why bring up another country as a defense?
| jimt1234 wrote:
| The FBI has used organized crime to help achieve its own
| goals. One example: https://www.theguardian.com/world/2007/
| oct/31/usa.internatio...
| xkcd-sucks wrote:
| Tangentially related, this reminded me of a documentary
| film on mass killings in Indonesia titled "The Act of
| Killing": https://en.wikipedia.org/wiki/The_Act_of_Killing.
| It is an excellent film.
|
| Basically it comprises interviews of gangsters who were
| recruited by the government to conduct mass executions of
| undesirable people, and the subjects describe some reasons
| for which the work was tasked to organized crime rather
| than to official government employees.
| pphysch wrote:
| [deleted]
| burkaman wrote:
| ProPublica also reports on HSBC money laundering:
| https://www.propublica.org/article/hsbcs-money-laundering-la...
| ASalazarMX wrote:
| And it was linked right there in the first paragraphs of the
| article!
| pphysch wrote:
| manuelabeledo wrote:
| > ... this global criminal is working on behalf of the
| notoriously anti-drug Chinese government
|
| Anti-drug _inside_ their borders. They are very pro-drug
| everywhere else, especially the US [0].
|
| Regardless, what's with the whataboutism? Yes, HSBC, like
| many other major banks, have been facilitating drugs and
| arm trade worldwide, but that is not the topic at hand,
| thus it is irrelevant to the discussion.
|
| [0] https://www.brookings.edu/blog/order-from-
| chaos/2022/03/07/c...
| pphysch wrote:
| Fentanyl is a legal but controlled substance in the US.
| It is not malicious for a company to supply fentanyl to
| US hospitals.
|
| But the bottom line is that blaming China or its
| government for private companies selling chemical
| _precursors_ that may end up in street fentanyl is like
| blaming Canada for supplying US with deadly firearm
| _precursors_ in the form of aluminum. Blaming Canada for
| our gun crisis is analogous to blaming China for our
| opioid crisis. Meanwhile, the Sacklers are sleeping
| soundly on piles of blood money.
|
| It is a deeply unserious, and 100% politically motivated
| narrative. Just because it is incessantly regurgitated
| does not make it any less unserious.
| glogla wrote:
| > blaming China or its government for private companies
|
| There are no truly private companies in China, once they
| reach a certain size or influence level.
| collegeburner wrote:
| we don't have a "gun crisis".
| manuelabeledo wrote:
| > Fentanyl is a legal but controlled substance in the US.
| It is not malicious for a company to supply fentanyl to
| US hospitals.
|
| This is a naive take, and one that proves that you didn't
| even care to read the article. These substances are not
| sold to hospitals, which should be obvious since
| hospitals do not import tons of opioids and chemical
| precursors in bulk.
|
| Also, it hardly compares to Canada exporting aluminium. A
| more accurate comparison would be if Canada would export
| gunpowder to Mexico, and arm trade happened massively
| through the southern border.
|
| > It is a deeply unserious, and 100% politically
| motivated narrative. Just because it is incessantly
| regurgitated does not make it any less unserious.
|
| So banks, big pharma, and the US may be to blame, but
| China wouldn't? The US played drug politics for decades
| now, and China would not? That's an odd take. Even if
| this was all a huge smear campaign against China,
| ignoring the fact that the Chinese government would be
| interested in destabilising other countries is naive at
| best.
| JamesianP wrote:
| I thought they made guns out of steel. What's the
| aluminum for?
| collegeburner wrote:
| something like an AR lower is probably aluminum though
| bolt/BCG/barrel are still steel.
| [deleted]
| consumer451 wrote:
| Tu quoque falacy
|
| https://en.wikipedia.org/wiki/Tu_quoque
| pphysch wrote:
| Since when does rebutting an article's lede amount to "tu
| quoque"? I think you have your logical fallacies mixed
| up.
| djmips wrote:
| You essentially said "what about HSBC" 'tu quoque' -
| whataboutism is a form.
|
| I agree with you on the lack of evidence for implicating
| the Chinese government involvement with their quote from
| "some guy" - "why wouldn't they". rolling my eyes.
| rr888 wrote:
| > Because China bad, and he's Chinese, or something like
| that... Meanwhile, HSBC gets a gentle slap on the wrist now
| and then
|
| HSBC might be headquatered in London but its largely a
| Chinese bank still (assuming HK is China)
| Aunche wrote:
| HSBC is operating in a mostly distinct part of the same
| industry. HSBC doesn't hire waiters to carry suitcases full of
| money.
| paywallasinbeer wrote:
| Related: a fascinating article about Asian drug networks
| https://www.reuters.com/investigates/special-report/meth-syn...
| chatterhead wrote:
| alx__ wrote:
| Ironic that the CIA showed other countries the basics of how to
| do this :/
|
| https://en.wikipedia.org/wiki/Allegations_of_CIA_drug_traffi...
| joe_the_user wrote:
| The thing about the article is it talks about "it's hard to
| distinguish corruption and policy" in China. It seems like a
| large look at drug and money flows would say the same about the
| US, China and Mexico and look at the particular agencies in
| each nation where the corruption is concentrated.
| _jal wrote:
| > It seems like a large look at drug and money flows would
| say the same about the US
|
| It is policy in the US. There are a number of simple policy
| changes that would make money laundering much harder for
| most. Start with anonymous corporation ownership.
|
| Or you could get serious and enforce already existing AML
| laws against large banks. Of course then a lot of people who
| actually matter would be in trouble, and more would have to
| pay taxes, and we can't have that, now can we?
| JumpCrisscross wrote:
| > _anonymous corporation ownership_
|
| Who does this? Non-public or behind an attorney is very
| different from anonymous.
| _jal wrote:
| Lots of people.
|
| There is a legal difference, of course, between "truly
| anonymous" and merely effectively so. I am including
| situations like the designated trustee knows who the
| owner is, and if subpoenaed, will disclose that the owner
| is an Isle of Man corporation with a Panama address.
|
| Here is discussion about it for Delaware corporations,
| but my understanding is South Dakota is currently the
| most popular US state in which to incorporate for, uh,
| privacy reasons.
|
| https://gfintegrity.org/press-release/delaware-bills-
| mere-wi...
| [deleted]
| 20221014ta wrote:
| In this incoming cold war, expect the Chinese to attract support
| by setting up tax havens the IRS can't touch
|
| Already seen with Russian oligarchs sending their yachts to HK
|
| The US shall, of course, return the favour
| chatterhead wrote:
| Considering they are hiring so many new IRS agents I just might
| be on board the China Trust Truck.
| [deleted]
| forkLding wrote:
| Just a note: The money-laundering system this criminal is part of
| is called a Di Xia Qian Zhuang in Chinese or "underground banks"
| (https://fintrac-canafe.canada.ca/intel/advisories-
| avis/bank-...), originally started in the 1980s in Mainland China
| when free-market reforms brought non-regulated "banks" (more just
| a group of people calling themselves a bank) and informal "loan"
| companies/loan sharks, they were soon co-opted by corrupt
| officials to bring money out of the country and since about 2018
| any Chinese citizen who wishes to bring money for big purchases
| like real estate investment outside of China uses a form of
| underground banking since China puts an annual limit of $50,000
| USD on money that can be taken out of the country
| (https://nhglobalpartners.com/moving-money-in-and-out-
| china-r...).
|
| Technically speaking, if you want to exceed the limit, you can
| send in an application form to explain and hopefully get approved
| to take out more money than that $50,000 limit but the original
| intent of this law was to restrict money flowing out of China and
| it is very hard to get approved beyond the limit.
| ttul wrote:
| It's almost as if handing a $600B industry to criminals might
| have been a bad idea. Instead of dealing with national level
| corruption, we could just end the war on drugs.
| newsclues wrote:
| Check out Wilful Blindness by Sam Cooper about the Vancouver
| model of OC money laundering
| dirtyid wrote:
| >Prosecutors charged him with leading a conspiracy that washed at
| least $30 million, a number backed by direct evidence. The full
| amount was likely in the hundreds of millions, according to law
| enforcement documents and interviews.
|
| ...
|
| >"They had to know it was illegal," Ciesliga said. "Just the
| sheer amount of money, and the volume and consistency and
| frequency, there's no legitimate businesses that are moving that
| kind of money. Any alert anti-money laundering investigator would
| have detected this kind of activity."
|
| This article has been given folks conniptions over PRC influence
| in Americas / Unrestricted warfare memes. Honestly even given
| generous interpretation of 100s of millions as a billion, over
| the alleged timeframe (first courier picked up in 2016, we're
| talking about ~150M per year, aka a few hundred houses in a nice
| western city or a few thousand international university tuitions.
| Operation is peanuts. Especially vs 20B-40B per year drug trade
| in Americas, 20B per year PRC telecom scams, or the 100s of
| billion per year PRC capital flight racket. Doesn't feel large
| enough to be on PRC radar for domestic enforcement, nor is PRC
| short of $$$ to do influence OPs to need laundering via such
| schemes. That said, I'd like to see a more detailed accounting of
| PRC/Asian syndicate influenced footprint in the Americas.
| Tangokat wrote:
| "Wealthy Chinese who want to get around limits on moving money
| out of China "buy" the $350,000 from Li's couriers in the U.S.
| They often use the U.S. dollars to buy real estate or pay for
| U.S. college tuition. "
|
| You can buy real estate in the US in cash no questions asked? Is
| that true?
| conductr wrote:
| > A Form 8300 must be filed by any trade or business (including
| real estate) that receives more than $10,000 in cash in the
| course of a single transaction or two or more related
| transactions. It is not a SAR and is not used to report
| suspicious activity. Form 8300 is an information report that is
| required to be filed by any trade or business (such as a car or
| boat dealer) that receives in excess of $10,000 in cash in a
| single transaction. Therefore, if for any reason a real estate
| agent or broker receives more than $10,000 in cash from a buyer
| or seller in the course of a real estate transaction, the form
| must be filled out and filed, and can be found at
| http://www.irs.gov/pub/irs-pdf/f8300.pdf(link is external).
|
| https://www.nar.realtor/money-laundering-and-terrorism-finan...
|
| This is also usually how drug dealers get busted after paying
| cash for a car. It goes to the IRS and then basically every
| federal agency has it (DEA, FBI, etc)
| heelix wrote:
| Ah man. The dealerships do not appreciate a large bag of
| cash. I found a car that I wanted and got a cashiers check
| for it at my local bank. They wanted what I considered an
| outrageous amount of fees (like $8) to do it. So... I asked
| for cash. Nope - don't have that on hand... will take time,
| yada yada. At that point, it was the principal of the
| thing... and said fine, see you in a day or two. Eventually I
| got it - drove over to pick up the car, and the dealership
| freaked out. They took it. Filled out all sorts of extra
| forms. My Bride is correct - I am a dumbass. Won't do that
| again.
| schainks wrote:
| Yes, agents do minimal due diligence on the origins of cash. As
| long as buyer and seller are happy to make a deal, agents get
| paid and everyone gets what they want.
|
| A friend of mine who is an interior designer in an affluent
| area has received calls from clients that go like this:
|
| 1. A Chinese couple showed up at their door with a suitcase of
| cash in the middle of the day offering to buy their house, on
| the spot. The cash value was about 2x the value of the home.
|
| 2. The client declined. They _just_ remodeled, why leave?
|
| 3. The Chinese couple gets upset, not understanding why paying
| 2x for a home on the spot isn't a sweet deal. They leave to go
| find someone else willing to take the cash to move out ASAP.
| powersnail wrote:
| As someone who has never bought real estate, why not? Is cash
| not universally accepted as a currency?
| mavili wrote:
| It's not about the cash per se, it's big brother wanting to
| know how you got the money in the first place. If you can
| show it's all legal and taxes paid then no problem cash is
| fine. But of course as soon as you mention cash, eyebrows are
| raised "why would someone want to keep that much cash and not
| want to put it in a bank if they are all clean?"
|
| Big brother wanting its lion share in everything you earn is
| the crux of it.
| mutt2016 wrote:
| Federal tax. Provincial tax. School tax. Sales tax. Federal
| sales tax. Tax on fuel. Tax on alcohol. Tax on tax on tax.
|
| Well... At least the infrastructure isn't falling apart and
| crime isn't rampant...in rich neighbourhoods.
| markdown wrote:
| In America, if you have unexplained wealth, the government
| can sue your notes and coins.
| smackeyacky wrote:
| It would raise a lot of red flags with agencies[0] looking to
| crack down on using the proceeds of crime. That doesn't mean
| it can't be done.
|
| [0]https://www.fincen.gov/what-we-do
| [deleted]
| givemeethekeys wrote:
| Let's say you sell a house for $1MM on paper where in reality
| you've accepted 2MM more in cash.
|
| There's not much the government can do, but you now have 2MM in
| cash that you need to hide. The buyer knows you have 2MM, and
| who knows who they'll tell about it.
|
| Now, if you accepted cash for the full value of the house and
| deposited it in a bank, then yes, the bank reports it for you,
| and the IRS - if it is a priority - would look into it.
|
| The IRS got a massive funding boost recently. Let's see how
| they use the money in the next little while.
| foobarian wrote:
| Say you deposit the money, let the IRS find out about it, but
| then just report it on the tax return and pay the taxes -
| what is the problem?
| givemeethekeys wrote:
| No problem with that. The reporting happens when you
| deposit the money. At that point the question is one of,
| "from whom did you get all this cash and how did they get
| it?"
| newsclues wrote:
| I'm guessing these transactions occur within the community.
|
| A local realtor/finance company works with these clients.
| alaskamiller wrote:
| Yes. Silicon Valley, Orange County, Seattle, Dallas, Vancouver
| Washington or Canada.
|
| EB5 visa is $550k minimum to buy a business in impacted
| investment areas designated by USA.
| kevin_thibedeau wrote:
| Even better when the "impacted area" your visa is fixing is
| in midtown Manhattan and you solve the blight by building
| your own luxury pied-a-terre after moving Harlem 80 blocks
| south.
| gautamdivgi wrote:
| Don't you have to show you've employed Americans citizens or
| green card holders? Or is just showing some investment good
| enough?
|
| Either way - pretty sure it easy enough to fudge the
| employees too.
| usednet wrote:
| cuteboy19 wrote:
| I thought they were talking about Changpeng Zhao for a moment
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