[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]




                         CHINA IN OUR BACKYARD:
                      HOW CHINESE MONEY LAUNDERING
                    ORGANIZATIONS ENRICH THE CARTELS

=======================================================================

                                HEARING

                               before the

                      SUBCOMMITTEE ON HEALTH CARE
                         AND FINANCIAL SERVICES

                                 of the

                         COMMITTEE ON OVERSIGHT
                           AND ACCOUNTABILITY

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 26, 2023

                               __________

                           Serial No. 118-25

                               __________

  Printed for the use of the Committee on Oversight and Accountability





                [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]





                       Available on: govinfo.gov
                         oversight.house.gov or
                             docs.house.gov

                               ______
                                 

                 U.S. GOVERNMENT PUBLISHING OFFICE

52-120 PDF                WASHINGTON : 2024








               COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY

                    JAMES COMER, Kentucky, Chairman

Jim Jordan, Ohio                     Jamie Raskin, Maryland, Ranking 
Mike Turner, Ohio                        Minority Member
Paul Gosar, Arizona                  Eleanor Holmes Norton, District of 
Virginia Foxx, North Carolina            Columbia
Glenn Grothman, Wisconsin            Stephen F. Lynch, Massachusetts
Gary Palmer, Alabama                 Gerald E. Connolly, Virginia
Clay Higgins, Louisiana              Raja Krishnamoorthi, Illinois
Pete Sessions, Texas                 Ro Khanna, California
Andy Biggs, Arizona                  Kweisi Mfume, Maryland
Nancy Mace, South Carolina           Alexandria Ocasio-Cortez, New York
Jake LaTurner, Kansas                Katie Porter, California
Pat Fallon, Texas                    Cori Bush, Missouri
Byron Donalds, Florida               Shontel Brown, Ohio
Kelly Armstrong, North Dakota        Jimmy Gomez, California
Scott Perry, Pennsylvania            Melanie Stansbury, New Mexico
William Timmons, South Carolina      Robert Garcia, California
Tim Burchett, Tennessee              Maxwell Frost, Florida
Marjorie Taylor Greene, Georgia      Becca Balint, Vermont
Lisa McClain, Michigan               Summer Lee, Pennsylvania
Lauren Boebert, Colorado             Greg Casar, Texas
Russell Fry, South Carolina          Jasmine Crockett, Texas
Anna Paulina Luna, Florida           Dan Goldman, New York
Chuck Edwards, North Carolina        Jared Moskowitz, Florida
Nick Langworthy, New York
Eric Burlison, Missouri

                       Mark Marin, Staff Director
       Jessica Donlon, Deputy Staff Director and General Counsel
                    Tyler Sanderson, Senior Counsel
      Mallory Cogar, Deputy Director of Operations and Chief Clerk

                      Contact Number: 202-225-5074

                  Julie Tagen, Minority Staff Director
                      Contact Number: 202-225-5051

                                 ------                                

           Subcommittee on Health Care and Financial Services

                   Lisa McClain, Michigan, Chairwoman

Paul Gosar, Arizona                  Katie Porter, California Ranking 
Virginia Foxx, North Carolina            Minority Member
Glenn Grothman, Wisconsin            Alexandria Ocasio-Cortez, New York
Russell Fry, South Carolina          Jimmy Gomez, California
Anna Paulina Luna, Florida           Greg Casar, Texas
Nick Langworthy, New York            Becca Balint, Vermont
Eric Burlison, Missouri              Summer Lee, Pennsylvania
                                     Jasmine Crockett, Texas








                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page
Hearing held on April 26, 2023...................................     1

                               Witnesses

                              ----------                              
Mr. Anthony Ruggiero, Senior Director and Senior Fellow, 
  Foundation for Defense of Democracies; and Former Deputy 
  Assistant to the President, Senior Director for 
  Counterproliferation and Biodefense, National Security Council
Oral Statement...................................................     5
Mr. Christopher Urben, Former Assistant Special Agent in Charge, 
  Special Operations Division, U.S. Drug Enforcement 
  Administration
Oral Statement...................................................     7
Ms. Channing Mavrellis, Illicit Trade Director, Global Financial 
  Integrity
Oral Statement...................................................     8

Written opening statements and statements for the witnesses are 
  available on the U.S. House of Representatives Document 
  Repository at: docs.house.gov.

                           Index of Documents

                              ----------                              

* Questions for the Record: to Mr. Ruggiero; submitted by Rep. Gosar.

* Questions for the Record: to Mr. Urben; submitted by Rep. Gosar.









 
                        CHINA IN OUR BACKYARD:
                     HOW CHINESE MONEY LAUNDERING
                   ORGANIZATIONS ENRICH THE CARTELS

                              ----------                              


                       Wednesday, April 26, 2023

                        House of Representatives

               Committee on Oversight and Accountability

           Subcommittee on Health Care And Financial Services

                                                   Washington, D.C.

    The Subcommittee met, pursuant to notice, at 2:30 p.m., in 
room 2247, Rayburn House Office Building, Hon. Lisa C. McClain 
[Chairwoman of the Subcommittee] presiding.
    Present: Representatives McClain, Gosar, Grothman, Fry, 
Luna, Langworthy, Burlison, Porter, Casar, Balint, Lee, and 
Crockett.
    Mrs. McClain. The Subcommittee on Health Care and Financial 
Services will come to order.
    Welcome. Thank you for coming. Appreciate it.
    Without objection, the Chair declares a recess at any time. 
I recognize myself for the purpose of making an opening 
statement.
    Welcome to the Subcommittee on Health Care and Financial 
Services. Today's oversight hearing focuses on the role that 
Chinese money laundering organizations are playing to enrich 
the cartels. We will hear from former Federal law enforcement 
and foreign policy experts to better understand how these 
criminal organizations came to dominate the money laundering 
industry. We will also learn about the different tools Congress 
and the Administration can use to cutoff these networks, which 
is critical.
    Illicit fentanyl presents one of the biggest, if not the 
biggest, threat to public safety that the United States, in my 
opinion, has ever seen. Fentanyl is now the leading cause of 
death for Americans aged 18 to 45, unfortunately claiming more 
American lives in that group than suicide, COVID-19, and 
automobile accidents. In 2020 alone, 2,759 Michiganders lost 
their life to drug overdose poisoning, with approximately 75 
percent of those drug overdose deaths involving synthetic 
opioids like fentanyl.
    President Biden's open border policies have exacerbated the 
fentanyl crisis. Cartels have taken advantage of the open 
border and overwhelmed officials, smuggling deadly narcotics 
across our borders and into American communities all over our 
great country. And it only takes a tiny amount to kill.
    Looking into the profits from this dangerous enterprise, 
criminal organizations based in the People's Republic of China 
have captured the money laundering business of the cartels and 
for the cartels. These Chinese money laundering organizations 
have developed an incredibly efficient system that is 
increasingly difficult for our law enforcement to detect. Quite 
frankly, they are really smart on how they do it.
    Prior to the rise of Chinese money laundering 
organizations, cartels laundered their own profits on the 
Black-Market Peso Exchange and had to wait at least 6 weeks 
before they received their ``clean'' funds. Disturbingly, now 
Chinese money laundering organizations have a system that 
ensures that cartels receive their profits within hours of 
handing over illicit drugs to a courier.
    Not only are these Chinese money laundering organizations 
able to do this quickly and with incredible efficiency, they do 
it at a fraction of the cost that the cartels were previously 
forced to pay.
    Altogether, the efficiency and cost effectiveness of the 
Chinese money laundering organization has significantly 
increased the cartels' bottom line and allowed their illicit 
business to grow and expand. And it is kind of like that common 
phrase ``follow the money,'' right?
    As a result, more and more Americans are losing their lives 
to synthetic opioid addiction and fentanyl poisoning, and 
Chinese money laundering organizations have a nearly foolproof 
system in place that does not require placing illicit funds 
into the United States banking system. And I think that is a 
really key point for us to understand.
    Using Chinese banking apps and other popular Chinese 
encrypted communications technologies, like WeChat, Chinese 
money laundering organizations are able to launder cartel drug 
money all while evading detection by U.S. law enforcement.
    It is no secret that China has become a global hub of money 
laundering activity. The State Department estimated that $154 
billion in illicit funds pass through China each and every 
year. It is imperative that Congress work to understand the 
extent of the Chinese Communist Party's complicity in these 
money laundering schemes. Wealthy Chinese Party elites are 
turning a blind eye to these laundering networks and China's 
role in this illicit drug manufacturing.
    Americans are tired of seeing their friends and loved ones 
fall prey to fentanyl and opioid addiction. And as a Members of 
Congress, we owe it to our constituents to do everything that 
we can to eradicate this dangerous drug from our communities. 
We must hold these bad actors accountable.
    I want to thank the witnesses, and we look forward to your 
testimony.
    I now yield to Ranking Member Porter for her opening 
statement. With that, the floor is yours, ma'am.
    Ms. Porter. Thank you very much, Madam Chairwoman.
    If there is one number that I want us to remember today, it 
is 97. That is how many times more Americans died from 
synthetic opioids in 2021 than 1999. This is a five-alarm fire, 
but the fire has been burning for years. And it really started 
raging during the last decade, and China-based money laundering 
organizations have fueled it.
    Plain and simple, these organizations are making it easier 
for drug cartels to do business. They are processing illegal 
money flows quicker and cheaper for the cartels, and the 
cartels are getting richer and richer selling deadly synthetic 
opioids.
    And let us not forget, it is not just money launderers. 
China-based suppliers have been providing the raw materials for 
synthetic opioids for years.
    Republican or Democrat, there should be no question that 
China-based suppliers and money launderers are a big part of 
the opioid crisis and that more must be done to stop them. But 
if there is one thing I have learned about tackling the issues 
that matter here in Congress, you rarely get to boil it down to 
one problem, one attack line, or one easy fix, and that is 
especially true when it comes to issues involving multiple 
countries.
    You think it is hard to get Democrats and Republicans to 
agree on regulations? Try getting the Chinese Communist Party 
to come to the table with the U.S. to regulate China-based 
fentanyl suppliers and money laundering organizations.
    It is especially hard when we are still resetting the 
relationship with China after the last Administration. This 
Administration has the task of undoing the tension with China 
just enough to get China to work jointly on this problem.
    However difficult, this task could not be more important. 
At the end of the day, the Chinese Communist Party needs to 
recognize and own its role in failing to stop a crisis that is 
claiming too many lives.
    The best tools the United States and China have to address 
these issues are the ones that we unlock cooperatively, but we 
also need to be prepared to act alone, especially if the 
Chinese Communist Party does not or will not do its part. And 
that means sanctions.
    On April 14, the Treasury Department imposed sanctions on 
two entities and five individuals based in China who are 
responsible for supplying chemicals to produce fentanyl for 
U.S. markets. I am all about holding powerful people 
accountable, and penalizing big fentanyl suppliers is certainly 
a step in the right direction. But just like any problem that 
builds over the course of decades, one set of sanctions is not 
going to fix the problem. Not even one type of solution is 
going to fix the problem.
    To end the opioid epidemic, we have to be just as serious 
about expanding access to drug treatment resources as we are 
about cracking down on drug traffickers. The opioid crisis is a 
complex, multifaceted problem, and it is going to require 
collaboration across Government agencies and across party 
lines.
    With that challenging road ahead, we simply cannot afford 
distractions. Unfortunately, at the same time that Republicans 
announced this very important hearing, they also tossed in a 
big distraction that they like to call the ``Biden border 
crisis.''
    As badly as we need immigration reform and have for years, 
this issue is not about immigration. At the end of the day, 
cracking down on an illegal drug market is primarily an 
economic issue. That is why we are talking about it in the 
Health Care and Financial Services Subcommittee.
    Believe me, I will be at the front of the line anytime we 
need to tell our government to do more on an issue, but let us 
not misidentify the problem. This issue has been decades in the 
making, and the buck does not stop with any one person for 
years and years of increasing fentanyl deaths.
    We all have to commit to doing more. If we avoid political 
finger pointing--and I am proud that the Chairwoman and I have 
a history of doing exactly that--I am hopeful that this hearing 
will be a step toward finding solutions.
    I yield back.
    Mrs. McClain. Thank you. And I could not agree more. This 
issue is not a Democrat-Republican issue, socioeconomic. This 
issue affects each and every American, and we have to work 
together to find solutions to fight against the CCP. So, I am 
pleased to work with my colleague.
    I am also pleased to introduce our witnesses today, who are 
here to discuss the rise of Chinese money laundering 
organizations and their work for the cartels.
    Mr. Chris Urben is the managing director at Nardello and 
Company. And prior to joining Nardello and Company, Mr. Urben 
was responsible for developing and leading sensitive global 
undercover DEA operations that dismantled several of the most 
significant transnational criminal organizations.
    Mr. Urben has spent several decades with the DEA, where he 
has developed an extensive global network in various fields of 
law, finance, and international investigations. Welcome.
    Next, Mr. Anthony Ruggiero. Did I say that correctly?
    Mr. Ruggiero. Ruggiero.
    Mrs. McClain. Ruggiero? OK. Is a Senior Fellow at the 
Foundation for Defense of Democracies and the Senior Director 
of FDD's Nonproliferation and Biodefense Program. Mr. 
Ruggiero's broad experience in the field of 
counterproliferation, nonproliferation, and sanctions spans 
more than 20 years, including more than 19 years in the U.S. 
Government in both Republican and Democrat Administrations.
    Most recently, Mr. Ruggiero--OK, say it again.
    Mr. Ruggiero. Ruggiero.
    Mrs. McClain. Ruggiero?
    Mr. Ruggiero. Yes.
    Mrs. McClain. Ruggiero. Am I saying that right? Mr. 
Ruggiero served as Deputy Assistant to the President for 
National Security Affairs and National Security Council's 
Senior Director for Counterproliferation and Biodefense.
    Ms. Channing--OK, you got to help me--Morales?
    Ms. Mavrellis. Mavrellis.
    Mrs. McClain. Mavrellis?
    Ms. Mavrellis. Mm-hmm.
    Mrs. McClain. Mavrellis, thank you. Is the Illicit Trade 
Director for Global Financial Integrity, a Washington, DC, 
based think tank, and Ms. Mavrellis has over a decade of 
experience working on issues related to anti-money laundering 
and countering terrorism financing.
    Thank you all for coming to testify on this very important 
issue today.
    And pursuant to the Committee Rule 9, the witnesses will 
please stand and raise their right hand.
    Do you solemnly swear or affirm that the testimony that you 
are about to give is the truth, the whole truth, and nothing 
but the truth, so help you God?
    [A chorus of ayes.]
    Mrs. McClain. Let the record show that the witnesses all 
answered in the affirmative.
    We appreciate all of you being here today and look forward 
to your testimony. Let me remind the witnesses that we have 
read your written statements, and they will appear in full in 
the hearing record.
    Please limit your oral arguments to 5 minutes. And as a 
reminder, please press the button on the microphone in front of 
you so that you--so that we know it is on and Members can hear 
you.
    When you begin to speak, the light in front of you will 
turn green. After 4 minutes, it will turn yellow. When the red 
light comes on, your 5 minutes has expired, and we would ask 
you to wrap up as soon as possible.
    So, with that, I recognize the first witness. Please begin 
with your testimony, and our first witness is Mr. Ruggiero.
    Thank you.

                     STATEMENT OF ANTHONY RUGGIERO

                   SENIOR DIRECTOR AND SENIOR FELLOW

                 FOUNDATION FOR DEFENSE OF DEMOCRACIES

                FORMER DEPUTY ASSISTANT TO THE PRESIDENT

        SENIOR DIRECTOR FOR COUNTERPROLIFERATION AND BIODEFENSE

                       NATIONAL SECURITY COUNCIL

    Mr. Ruggiero. Thank you. Chairwoman McClain, Ranking Member 
Porter, and distinguished Members of the Subcommittee, thank 
you for the opportunity to address you today on this important 
issue.
    More than 100,000 Americans died from drug overdoses in a 
12-month period ending in November 2022. This is both a 
national security and a public health crisis that requires 
bipartisanship to meet the challenge.
    Narcotraffickers have a problem. They run a cash business 
inside the United States without an easy way to repatriate 
profits back to Mexico. At some level, the financial measures 
to combat money laundering have worked and made it more 
difficult for the cartels to simply drive bulk U.S. dollars 
over the border. That is where Chinese money launderers come 
in. They see an opportunity for profit and have exploited it.
    The scheme, as we know it, involves some of the largest 
banks in China, which are also the largest banks in the world. 
While the Biden administration has focused on combatting U.S. 
demand for drugs and the export of fentanyl precursors from 
China, it has not tackled the problem of the Chinese financial 
sector's role in laundering the proceeds from drug sales.
    While Chinese banks fear losing access to the U.S. 
financial system, the current Administration and its successors 
may avoid strong actions against Chinese banks because they 
fear the impact on the global economy. In my written testimony, 
I provided examples of how governments in the United States and 
Europe have and can target these banks without causing broader 
disruptions.
    I also provided four recommendations for Congress and four 
recommendations for the Biden Administration. Specifically, 
Congress should revise and update the Fentanyl Sanctions Act, 
including increasing sanctions on foreign persons that engage 
in or facilitate opioid trafficking, and revise it to target 
individuals or entities that are grossly negligent with respect 
to financial transactions, precursor exports, or other such 
actions that facilitate narcotics traffickers.
    Congress can also develop persistent oversight measures, 
including require a Presidential certification prior to lifting 
any fentanyl-related sanctions and also borrow from the Global 
Magnitsky sanctions regime and insert an authority that 
requires the Administration to review and respond to any 
congressional nominations for sanctions imposition.
    This Committee can also task Government Accountability 
Office with examining whether narcotics-related anti-money 
laundering sanctions and export control measures are being 
effectively enforced by the interagency.
    For the Administration, I recommend issuing a new advisory 
to financial institutions on illicit financial schemes and 
methods related to the trafficking of fentanyl and other 
synthetic opioids, and I recommend that they surge capacity to 
Treasury, Justice, and other departments to address the 
narcotrafficking issue.
    When we see things like yesterday, with regard to North 
Korea, which is a separate subject, fines and large fines, 
those usually take years in the making. So, surging capacity 
hopefully can shorten that.
    The Administration also should not shy away from 
specifically naming China's role in money laundering. Every 
public statement on the issue should remind the American public 
that China is essential to the operations of the drug cartels. 
In private, the message to Chinese banks should be even more 
blunt. Chinese banks are processing tens of millions of dollars 
in transactions for narcotraffickers, and the U.S. Government 
is prepared to use all available tools to stop it.
    The Administration should increase cooperation with Mexico 
and Canada, using the senior-level Trilateral Fentanyl 
Committee as a launching point for actions on illicit finance 
and identifying the transfer of illicit cargo across all three 
countries.
    The Chinese financial sector must be incentivized to 
cooperate on the fight against narco money laundering. While 
the Chinese Communist Party and Chinese President Xi Jinping 
restrict U.S.-China diplomatic engagement, the Chinese 
financial sector values its access to the U.S. financial 
system. But that access should come with conditions. Chinese 
banks, individuals, and companies cannot finance the drug trade 
that is killing Americans.
    Thank you for inviting me to testify, and I look forward to 
addressing your questions.
    Mrs. McClain. Thank you.
    And now, Mr. Urben, for your opening testimony or your 
statement?

                     STATEMENT OF CHRISTOPHER URBEN

                FORMER ASSISTANT SPECIAL AGENT IN CHARGE

                      SPECIAL OPERATIONS DIVISION

                  U.S. DRUG ENFORCEMENT ADMINISTRATION

    Mr. Urben. Good afternoon, Chairwoman McClain, Ranking 
Member Porter, and distinguished Members of this Subcommittee. 
Thank you for this opportunity to address you today on this 
important issue.
    I saw Chinese organized crime increased involvement in 
money laundering firsthand as I served as a group supervisor 
with the Drug Enforcement Administration. I spent 24 years 
working for DEA, where I helped dismantle significant 
international and drug trafficking money laundering 
organizations around the world.
    In 2018, I was assigned to DEA's Special Operations 
Divisions, where I supervised a team that focused on this new 
and evolving threat. We were receiving reports from the field 
that drug cartels were using Chinese organized crime networks 
to launder the cash. This was a dramatic change from business 
operations that have been going in the past.
    Chinese organized crime would charge only 1 to 2 percent to 
launder the funds that they were laundering, and they could 
deliver the funds to the traffickers in their home countries 
immediately and could guarantee payment of the laundered funds. 
I knew from my prior experience that the most predominant 
laundering method that had been employed by the cartels was 
known as the Black-Market Peso Exchange. It was complex and 
dangerous, resulting in transaction costs of between 7 and 10 
percent and delays of at least a week or more.
    Because the Black-Market Peso was connected to the cartels, 
laundering involved a constant risk of violence, theft, and law 
enforcement intervention. My team focused on understanding and 
combatting this new threat. Money is the lifeblood of the 
cartels, and the methods that Chinese organized crime was using 
enriched and enabled them to traffic even more fentanyl and 
other deadly drugs into the United States.
    This was also adversely affecting the integrity of our 
Nation's financial system. The DEA seized hundreds of millions 
of dollars in criminal proceeds that Chinese organized crime 
was generating, arrested and debriefed participants, and 
persuaded some of them to cooperate. We also seized and 
searched numerous phones and other records reflecting how 
Chinese organized crime was transforming money laundering.
    These enforcement actions provided the insight that allows 
me to explain how the network operates. As reflected by the 
graphic in Exhibit 1 in my testimony, the current Chinese money 
laundering model involves at least three participant 
countries--the United States, China, and Mexico.
    Here is how it works. Every day in the United States, 
Chinese money brokers pick up narcotic proceeds from the sales 
of fentanyl, methamphetamine, heroin, cocaine in the form of 
bulk U.S. cash. A drug distribution, for example, gang in New 
York that owes payment to the Mexican cartel delivers to the 
Chinese broker, proceeds.
    That Chinese broker then sells the U.S. dollars to Chinese 
customers who want to spend the money in the U.S. acquiring 
real estate, paying for college tuition, gambling, or making 
other investments.
    The Chinese customers pay in China for the cash they 
received in the U.S. The proceeds in China are used to buy 
goods for export to Mexico or South America, where the goods 
are sold by the Chinese brokers in Mexico to recoup their 
funds. The Chinese brokers accomplish all of this with a 
trusted electronic encrypted communications network that allows 
this to happen instantly.
    What makes this so effective and hard to detect? First, it 
minimizes the movement of funds. Dollars stay in the U.S., 
pesos stay in Mexico, and RMB stays in China.
    Second, it takes advantage of the huge and increasing 
volume of trade with China and the existence of capital flight 
controls, ensuring a constant stream of customers for this 
cash.
    Third, it uses technology to its advantage. Advertising the 
sale of the dollars on Internet chat rooms and then 
communicating, again, primarily via WeChat, which is an 
encrypted network that is resistant to surveillance by U.S. law 
enforcement and that facilitates speed and trust within the 
Chinese organized crime network. It is a key component to that.
    While the threat of Chinese organized crime is real and 
growing, much more can be done to combat it. More investigative 
resources, such as translators, data scientists, and 
experienced targeting analysts, would enable law enforcement to 
have the tools needed to detect and investigate these networks 
where they operate.
    In the private sector, where I work now for Nardello and 
Company, the global investigative firm, I am also seeing 
greater awareness by the business community that it needs to 
understand this emerging threat and develop the tools to 
address it. More investments in training and detection will 
facilitate private sector organizations' compliance with anti-
money laundering laws and help protect the integrity of our 
financial system.
    Congress also can play a vital role in providing resources, 
incentives, and the authority for the Government and the 
private sector to work together to combat this threat.
    Thank you again for this opportunity to be here today.
    Mrs. McClain. Thank you very much.
    Next, Ms. Mavrellis, for your opening statement.

                    STATEMENT OF CHANNING MAVRELLIS

                         ILLICIT TRADE DIRECTOR

                       GLOBAL FINANCIAL INTEGRITY

    Ms. Mavrellis. Thank you. Chairwoman McClain, Ranking 
Member Porter, and distinguished Members of the Subcommittee, 
it is an honor and a privilege to testify before you today 
about Chinese money laundering organizations, or CMLOs.
    In the last few years, reporting has increased on the 
involvement of CMLOs with the laundering of narcotics proceeds 
in the Western Hemisphere. However, this is not a new 
phenomenon, having been documented by the Drug Enforcement 
Administration since at least 2016. More importantly, the 
drivers behind the involvement of CMLOs are solidly linked to 
other countries' domestic policies, not U.S. immigration or 
border policies.
    Specifically, China's economic policy in regard to foreign 
exchange controls prevents money from freely moving into or out 
of the country unless it abides by strict rules. Those Chinese 
citizens seeking to exchange or transfer in excess of $50,000 
frequently turn to informal means.
    Additionally, Mexico adopted a stricter AML/CFT policy in 
2010 by placing stringent restrictions on the deposit of U.S. 
dollars into Mexican bank accounts, combatting narcotics-
related bulk cash, and pushing cartels to search for new money 
laundering strategies such as the use of CMLOs. At the same 
time, Colombia has taken steps to develop one of Latin 
America's most rigorous AML regimes, causing some cartels to 
look outwards for help in laundering or moving narcotics 
proceeds.
    CMLOs and transnational criminal organizations, TCOs, 
operating in the U.S. have a symbiotic relationship. TCOs face 
the age-old problem of laundering and repatriating the proceeds 
of crime from one jurisdiction to another and from one currency 
to another. This is particularly difficult with large volumes 
of cash proceeds, which is a common thing for drug trafficking 
organizations, or DTOs.
    On the other hand, CMLOs are looking to access large 
volumes of U.S. currency by informal means. They each have what 
the other wants.
    While other professional money laundering organizations 
profit from the purchase of criminal proceeds, CMLOs' primary 
objective is to gain access to U.S. dollars outside of formal 
channels in order to evade China's currency controls. 
Therefore, while other professional money laundering 
organizations and brokers may charge a 10 to 15 percent 
commission, CMLO brokers can undercut the competition by only 
charging up to 6 percent or nothing at all. They make their 
profit by reselling the U.S. currency to Chinese nationals.
    Once a commission is agreed upon and the cash collected in 
the U.S., CMLO brokers are able to provide DTOs with near 
instant access to a corresponding amount of funds. For example, 
Mexican pesos in Mexico.
    CMLOs have several options on how to handle the U.S. 
currency. They frequently use money laundering mechanisms that 
are unique to the Chinese context. They can make the funds 
available to the Chinese citizens via an informal value 
transfer system, specifically through flying money--also known 
as fei ch'ien--or through a mirror exchange via the Chinese 
underground banking system.
    According to a former DEA senior supervisory agent, the 
CMLO will typically use WeChat, a Chinese instant messaging 
system, to offer the currency on message boards. A CMLO 
associate and the Chinese buyer will meet in person to exchange 
the cash, and then the buyer transfers an agreed-upon amount of 
renminbi from their Chinese bank account to the CMLO's Chinese 
bank account.
    Another tried and true method that has been frequently used 
by CMLOs and narcotics traffickers is the Black-Market Peso 
Exchange, BMPE, a type of trade-based money laundering scheme 
that is particularly difficult to detect since the value of 
commodities, rather than the money itself, is shifted.
    BMPE schemes have often been conducted as a two-country 
transaction involving the destination and source countries, for 
example, the U.S. and Colombia. With the involvement of CMLOs, 
the schemes have now become three-country transactions with 
renminbi made available in China that can be used to purchase 
Chinese goods, which are exported to the TCO's country of 
choice and then sold, with the profits going to the TCO.
    As long as CMLOs can provide low commission rates, near 
real-time mirror exchanges, and handle large volumes of cash, 
they will remain a preferred money laundering service for DTOs. 
Correspondingly, and looking to the future, the drivers behind 
CMLO success are unlikely to abate. With the government's 
authoritarian nature and crackdowns a constant, an ever-
expanding middle class, and President Xi publicly vowing to 
adjust excessive incomes of China's super rich, the demand for 
U.S. dollars will be sustained, if not grow.
    The U.S., as well as the international community, need to 
take the threat presented by CMLOs very seriously. My 
recommendations include the following.
    Study the role of Chinese professional money laundering 
networks to gain greater insight on how they operate.
    Target the individuals, entities, and countries 
facilitating financial crimes and money laundering by applying 
economic and other targeted financial sanctions, as well as 
exploring policies to hold accountable countries that fail to 
sufficiently investigate financial crimes.
    Continue to make combatting corruption a high priority in 
the U.S. national security strategy.
    And finally, provide sufficient resources to FinCEN to 
ensure that it can appropriately take on existing as well as 
emerging challenges from financial crime risks.
    Thank you, and I look forward to your questions.
    Mrs. McClain. Thank you all for your testimony.
    It is very enlightening, and I think if I have it in a 
nutshell--and please correct me if I am wrong--but the Chinese 
money laundering plan/scheme does it more efficiently, right, 
in hours instead of weeks, charges less of an interest rate--
two percent as opposed to seven or eight.
    The money actually does not hit our banking systems at all. 
And with the money laundering, they never touch the drugs. It 
is literally just the money changing hands. Do I have it in a 
nutshell?
    Mr. Urben. In a general sense, yes. I mean, it eventually 
hits our banking system because once it is sold to Chinese 
nationals here----
    Mrs. McClain. Can you talk a little bit more about that, 
please?
    Mr. Urben. Sure, sure. So, I think the easiest way to do it 
is once--let us stay within the United States. Once a Chinese 
broker picks up those narco dollars, which were the day before 
they were the proceeds of fentanyl, heroin, cocaine, and all 
that.
    Mrs. McClain. They have a bag of cash.
    Mr. Urben. They have a bag of cash. So, the Chinese broker 
receives that from the distribution gang. Let us say, let us 
just keep it with New York, right?
    Mrs. McClain. OK.
    Mr. Urben. They then go out on the Internet chat room or 
WeChat and advertise those dollars. Chinese nationals, whether 
back in Mainland China or here in the United States, buy those 
dollars. So, you would have a transaction similar in nature 
where a bag of cash would be delivered in this example or maybe 
a cashier's check, depending on what that----
    Mrs. McClain. Is your mic on, sir? OK. Can you just speak 
into the mic a little closer?
    Mr. Urben. Sure, sure. Once that cash is received by the 
Chinese national, right, back in China there is a bank-to-bank 
transaction that happens with RMB for the equivalent amount.
    Mrs. McClain. So, stop right there for a second. That is 
happening in China?
    Mr. Urben. That bank-to-bank transaction for the equivalent 
amount is in Mainland China, correct.
    Mrs. McClain. OK.
    Mr. Urben. It does not--the cash does not--the RMB does not 
exit China. It stays within China. That Chinese national 
receives the $100,000 in cash and then uses it to acquire real 
estate, pay college tuition, gamble, buy other investments.
    Mrs. McClain. And they do that with cash here in the United 
States, or do they use our banking system?
    Mr. Urben. So, eventually, it will go into the banking 
system most likely, to purchase----
    Mrs. McClain. But not necessarily by the Chinese national. 
I am the Chinese national. I have purchased $100,000 just of 
cash, right? I paid a premium for it. I have $100,000 of cash.
    I now, as the Chinese national, can use that. Either I 
deposit that in my bank account here in the United States?
    Mr. Urben. Yes, you would deposit it in your bank account 
or pay for whatever services or asset you were buying.
    Mrs. McClain. But talk to me how we can do that in the 
banking system? Because I have to have a trail of where that 
money came from, unless I do it several deposits under, I think 
it is $10,000, right?
    Mr. Urben. Yes. I mean, they would file the correct CTR or 
suspicious activity report with it. But the Chinese national 
depositing has a story or can legitimately say, at least to the 
banking official, why they are depositing, let us say a 
cashier's check that they have gotten as part of that money 
laundering process, what appears to be maybe a relative or some 
way they were involved with the renminbi.
    Mrs. McClain. And how are we tracking that? Probably no 
different than we track any other funds that come?
    Mr. Urben. It is very difficult to track because it is 
disconnected from the actual events of the drug money 
laundering, right? So, it is difficult for the bank to detect 
that under the current selectors that they are looking at.
    So, they need to be trained. There need to be additional 
guidance, and there needs to be----
    Mrs. McClain. And that is what you are recommending is 
perhaps additional training, resources for additional training 
on that. Because unless we choke their money supply off, we are 
not fixing this problem.
    Mr. Urben. No.
    Mrs. McClain. Maybe it is sanctions. I mean, maybe there is 
not just one lever that we pull.
    Mr. Urben. I think all the levers need to be pulled to 
impose costs on the Chinese money laundering organizations, 
right, to make it more difficult for them. So, the financial 
institutions can certainly do this with enhanced due diligence, 
but it is going to take an increased effort and cooperation 
with the Government to share intelligence, and then additional 
enhanced reporting and compliance.
    Ms. Mavrellis. I will add that one of the challenges is 
that so much of the current anti-money laundering countering 
the financing of terrorism or AML/CFT system is very much 
focused on the financial system in terms of instilling 
safeguards in formal financial institutions' formal channels.
    The challenge is that either the Chinese money laundering 
organizations are using informal channels, so they do not touch 
the system, or a lot of times, these Chinese nationals that are 
purchasing the cash are, as Mr. Urben said, they are using 
those cash in making deposits in, for example, real estate, 
which----
    Mrs. McClain. But it would be a cash deposit, right?
    Ms. Mavrellis. It would be, but it is still an exempted, 
you know, sector, as well as college tuition, making a cash 
payment for college tuition.
    Mrs. McClain. Thank you. And I am all out of time. Do you 
want--OK, all right.
    The Chair now recognizes Ms. Lee.
    Ms. Lee. Thank you so much, Madam Chair.
    Thank you so much to the panel. I appreciate the 
seriousness and the urgency of this topic, but I do question 
sometimes the way that we use our time and our resources in 
this Committee.
    We spent all morning talking about waste and fraud and 
abuse in our Government programs, yet this hearing feels like 
we are not always getting to the heart of the matter. And it 
feels like sometimes we spend more time looking to create a 
bogeyman or for a bogeyman than we do looking for humane and 
proven solutions, and this is not a laughing matter.
    The opioid crisis facing this country is a real, legitimate 
threat. Since 1999, drug overdoses have killed over 1 million 
Americans. That is far higher than the 58,220 American troops 
killed during the Vietnam War.
    In my home city of Pittsburgh, more than 1,590 people have 
died from drug overdoses since January 2021, and we are in this 
Subcommittee chasing our tails and listening to another hearing 
on China. What are we really going to do about this?
    Former President Trump had discussed sending special forces 
to target cartel leaders and was apparently seeking battle 
plans to strike Mexico. Republican Congressmen have introduced 
a bill to authorize the use of military force to put us at war 
with cartels, and Senators have indicated that they are open to 
sending U.S. troops to Mexico even without that nation's 
permission.
    Republicans would rather invade sovereign nations and line 
the pockets of war-profiteering friends than spend a single 
penny actually helping Americans suffering from addiction. The 
only other effort we seem willing to do are trying to lock up 
more Black and Brown folks for possession and shutting down all 
immigration from the Southern border. We can do better, and we 
can do more.
    Our neighborhoods and cities need help to expand treatment 
programs, especially in rural and low-income communities. 
People need to know about the risk of fentanyl being laced into 
other substances. And first responders need to understand 
things like synthetic opioids decreasing the effectiveness of 
Narcan in helping people who are overdosing.
    I have seen firsthand how communities can come together to 
tackle this problem head on. Pennsylvania recently 
decriminalized fentanyl testing strips, and a study by the 
University of Pittsburgh found that the overdose rate fell by 
30 percent in Pennsylvania in counties that implemented a 
community-focused strategy.
    We have got to look outside the box that is our failed 
prison system and fund the programs that work. I have been here 
in Congress just over 100 days, and I am already sick and tired 
of kangaroo court hearings. And I imagine the regular folks 
whose hard-working tax dollars are wasted here are sick of it, 
too.
    We have a duty to our constituents and the American people. 
I ask the Committee to stop putting our politics over people's 
lives.
    I have no questions, and I yield back.
    Mrs. McClain. The Chair now recognizes the gentlelady from 
Florida, Mrs. Luna.
    Mrs. Luna. Thank you so much for being here.
    To just correct my colleague from across the aisle, China 
is a bogeyman. And as we see moving forwards toward 2023, they 
are not here to be our friend. They are coming to eat our 
lunch. But furthermore, the reason why we focus on China is if 
you have read any of the materials presented before this 
Committee, you will see that China is, indeed, working with 
cartels and the government of Mexico in order to bring fentanyl 
into this country.
    As someone who has had many of my family members impacted 
by that, it is not just a Black and Brown issue, and I say that 
as a Hispanic American woman. This is an issue affecting all 
communities, regardless of socioeconomic status or race.
    And, so, to say that we are sitting here wasting people's 
time because we are addressing the very real threat of China is 
actually something that is a slap in the face to every single 
American that has actually ever had a family member that 
struggled with drug addiction. So, save me the pearl-clutching.
    To ask some questions of you, Ms. Mavrellis, do you know if 
any BRICS countries are currently aiding in some of these CMLOs 
that are currently engaged with this illegal black-market 
exchange?
    Ms. Mavrellis. I am unaware of any BRICS countries. There 
are definitely issues--you have issues in terms of Brazil and 
synthetics being produced there. It also serves as an exit 
country for narcotics going to Europe.
    India has similar issues with currency control. So, there 
can be challenges there in terms of accessing U.S. capital or 
other capital. But another issue is definitely Russia in terms 
of not necessarily involving narcotics money laundering here, 
but accessing the U.S. financial system or trying to evade 
sanctions.
    But by far, it is definitely China that is responsible 
for--and I say China, I am kind of using it as both the 
government as well as illicit state and non-state actors. They 
are responsible for a lot of the transnational crime as well as 
illicit financial flows that are occurring.
    Mrs. Luna. Thank you. Mr. Urben, can you tell me what the 
policy is in China for if you are caught selling drugs?
    Mr. Urben. It is severe, you know, criminal penalties and a 
prison sentence if you are caught selling drugs. I do not know 
the exact----
    Mrs. Luna. To my understanding, it is execution.
    Mr. Urben. OK.
    Mrs. Luna. So, the reason I bring that up is because there 
seems to be this notion and idea that if you want border 
security because you want to protect people from actually 
consuming and bringing drugs into this country, that somehow it 
is considered inhumane. But I would ask anyone on this panel if 
they have ever had a family member that has been strung out, to 
see the long-term impacts of that.
    In my opinion, if you are selling drugs to someone, if you 
are responsible for their death, you do deserve the death 
penalty because you are ruining a life, and you are ruining a 
family.
    Mr. Ruggiero, could you tell me what can we do as part of 
Congress to ensure that we are obviously functioning in a 
nonpartisan fashion in an effort to really protect the United 
States from this continued issue with China?
    Mr. Ruggiero. Well, thank you.
    You know, in my written testimony, I talk about different 
ways to improve the Fentanyl Sanctions Act, which was a 
bipartisan effort several years ago. I think there is ways to 
increase oversight measures to make sure that the 
administration is actually tackling the role of Chinese banks. 
As I noted in my opening and in my written testimony, there is 
this fear of going after Chinese banks.
    And as Mr. Urben showed, you know, the other thing, if I 
could use his graphic, the dark lines there, the black lines 
ensure that there are sort of three separate financial systems 
having those transactions. And so, what we really need, as I 
said in my written and my oral testimony, is we need the 
Chinese banks. We need them incentivized to look for these 
types of transactions.
    And part of that comes from us not being afraid to use the 
tools--the United States, that is--that we have. And if the 
Administration does not have those tools, to come to Congress 
and ask them for it.
    Mrs. Luna. Thank you so much for your time. Obviously, we 
are here to get answers.
    Chairwoman, I yield my time.
    Mrs. McClain. Thank you. The Chair now recognizes Ranking 
Member Porter.
    Ms. Porter. Thank you very much.
    Republicans and Democrats both should, and I believe do, 
want to address the devastating fentanyl problem. But to do 
that, we have to correctly define the problem, and I appreciate 
your educational approach from across the panel to this 
hearing.
    I want to take a minute, though, to just kind of press on 
this statement that Republicans made when they announced this 
hearing. ``President Biden's border crisis is enriching China 
and the cartels as they partner together to traffic deadly 
fentanyl to the United States.''
    So, I want to evaluate this theory a little bit. Do you 
think this sums up the problem? Raise your hand.
    [No response.]
    Ms. Porter. OK. So, if this a Biden border crisis, we 
should see it in the data. So, I brought a chart, and I hope it 
is big enough that you can read.
    This shows CDC data on drug-related overdose deaths from 
1999 to 2021, and the gray line here shows the trend in 
overdose deaths from synthetic opioids like fentanyl.
    So, Mr. Ruggiero, the worse fentanyl trafficking gets, we 
are going to see the impact in the fatality data. If the Biden 
border crisis was the driver of all of this, when would it have 
started on this graph?
    Mr. Ruggiero. January 2021.
    Ms. Porter. Correct. Because that is when President Biden 
was sworn into office. But the problem pre-dates that, as you 
can see. The gray line started spiking in 2013, but it really 
took off in 2017.
    So, fentanyl----
    Mrs. Luna. Will the gentlewoman yield for a question real 
quick?
    Ms. Porter. No, I want to finish----
    Mrs. Luna. I just want to point out that Biden was the Vice 
President under the Obama----
    Ms. Porter. I did not yield yet.
    Mrs. Luna. Sorry. I just wanted to point that out.
    Thank you.
    Ms. Porter. OK. I did not yield. So, you cannot talk. And 
now we have a little issue here.
    So, President Trump restricted immigration starting back in 
2020 with the onset of the pandemic. So, did fentanyl deaths go 
down in 2020, Mr. Ruggiero?
    Mr. Ruggiero. No.
    Ms. Porter. No. They actually went up. So, if pandemic 
migration restrictions did not cutoff the fentanyl supply that 
is killing Americans, I think we can safely stop blaming 
immigration for what is a cartel problem.
    So, let us focus on the other part of Republicans' 
statement. China-based suppliers and money launderers and the 
cartels are to blame for this issue.
    Ms. Mavrellis, what policy solutions are available to 
Congress and the President to address this specific policy 
issue?
    Ms. Mavrellis. Well, I definitely support Mr. Ruggiero's 
statement in terms of targeting the Chinese financial system. 
If you look at China as an actor in itself and its response to 
different challenges, it moves swiftly toward internal threat, 
so things like internal narcotics trafficking.
    If you look at issues in terms of like the wildlife 
trafficking within the country, how it impacted or was related 
to COVID-19, they swiftly moved to close down wet markets. 
However, if you look at overall wildlife trafficking, they are 
the number-one illegal consumer of wildlife goods. You have 
issues with ivory trafficking.
    So, they are only going to make strong movements if it 
impacts them internally. So, it is trying to hold them--or 
trying to find a way for them to see how this relates to them 
or makes an impact.
    They have been cracking down on Chinese underground banking 
systems. Every time they do, they seize tens of billions of 
dollars' worth of funds. The challenges there, they are doing 
it because of potential losses they are facing internally from 
evasion, things like that. It is not just because of-- it is 
related to illicit proceeds or illicit financial flows, things 
like that.
    So, definitely putting pressure on the financial system. I 
would say also looking at ways to have better ways to address 
informal mechanisms. So, the flying money, the Chinese 
underground banking systems, the trade-based money laundering, 
those are all very difficult to address because so much of the 
current AML/CFT policy and system--and not just the U.S., but 
globally--is faced toward the formal financial system.
    So, we are kind of leaving our backdoor open.
    Ms. Porter. Yes. I thought that was really interesting in 
your testimony the quote you gave from somebody who said we 
have done a pretty good job of closing the front door, which is 
the financial system, but we left the backdoor of international 
trade wide open.
    In my remaining time, I just wanted to ask you about, in 
your written testimony, you talk about trade transparency 
units, and I was intrigued and wanted to hear why can't we get 
that? These are voluntary, right, agreements to exchange trade 
data. Why can't we have the data flow more frequently?
    Because getting it a month after the transaction means 
that, essentially, you are losing sight of the flows of those 
trade-based transactions.
    Ms. Mavrellis. I think part of it was just it was not 
designed for the idea of catching things in real time. It is 
more kind of an auditing system. The way that things like SARs 
and CTRs, they are used kind of to look at what has happened 
versus being able to stop something necessarily in real time.
    So that is why GFI, Global Financial Integrity, really 
pushes for the free and public exchange of trade data and also 
pushes for greater exchange of trade data between TTUs, which 
are heavily located within Latin America.
    Ms. Porter. Thank you.
    Mrs. McClain. Thank you. The Chair now recognizes the 
gentleman from South Carolina, Mr. Fry.
    Mr. Fry. Thank you, Madam Chair. I really appreciate you 
having this hearing. I was just in district yesterday visiting 
a recovery center, actually, and talking to them about some of 
their plans to expand access to people in the Pee Dee region of 
South Carolina and what they were doing.
    And when I was in the state legislature just last year, and 
even before, I led an effort, it was a bipartisan effort to 
address some of the challenges related to the opioid epidemic 
in the state. We passed 18 bills, had a record investment.
    And I look at the numbers, and they just frustrate me, 
quite frankly, because you see the numbers of overdose deaths 
continually climb. And of course, we know that it is fentanyl. 
It is fentanyl that is coming across, predominantly, our 
Southern border, that is coming into this country, that is 
laced into multiple drugs and is killing everybody, really, 
quite frankly. It does not matter what demographic you are, 
what race, what gender or sex, age brackets. You name it, it is 
killing everybody in this country.
    And there is a lot of, I think, things that we can do in 
Congress to address it. There are a lot of things that states 
and local governments can do to address it. But this is really 
interesting to me because I look at this, and of course, 
fentanyl--you know, you look at the headlines every single day. 
``Three found dead in downtown L.A. after possible fentanyl 
overdoses.''
    Headline, ``Texas School District on third fentanyl 
overdose as police make fourth arrest connected with drug 
deals.'' Headline, ``35 fentanyl-related overdose deaths in 
King County in less than 1 month.'' Headline, ``Fentanyl deaths 
in young children on the rise in accidental deaths.''
    We cannot continue to allow this to happen. I am actually 
really intrigued by all of your testimony on things that we can 
do and the problem, as you see it, as it pertains to the cash-
flow.
    So, Mr. Urben, in an article from August 2022, you stated 
that, ``One reason Chinese MLOs were successful is because they 
are trusted.'' Can you explain this further, and what can 
Congress do to break up that trust between China and the 
cartels?
    Mr. Urben. Yes, and thank you. Thank you, sir.
    In regard to trusted, right, it is a trusted network. So, 
there are a couple of components to that. One is historically 
going back decades, the Chinese underground banking system, 
right? So, where they facilitated payment of workers that were 
abroad back to China.
    So, this network had already existed in the Chinese 
diaspora around the globe, right? So, you could have whether it 
be Mexico or the U.S. So, that is the initial trust within the 
culture of China when it comes to finances.
    The encrypted app, WhatsApp, allows them a trusted network 
to communicate across that network, right? So, the person that 
they are communicating with, they are essentially ensured that 
they know to some degree who that person is because they have 
WeChat handles that stay consistent over time.
    Now if you compare that to, as I described, the old Black-
Market Peso Exchange, which cost the Mexican cartels and the 
Colombian cartels dramatically more in terms of cost and 
manpower, right, because it was not a trusted network, right, 
and that is why violence was imposed if moneys went missing or 
they were seized by law enforcement.
    So, that is how I describe trust in that it allows the 
Chinese network to move the cash quickly, right, and then I 
think it has not been detailed yet. They absorb all the risk, 
right? So, I think that is a tremendous point that the Chinese 
money launderers offer to the Mexican cartel, which was not 
there before. So, they are absorbing the risk.
    So, if it gets seized by law enforcement or it goes 
missing, there is--violence is not part of the equation because 
they have taken the loss, essentially. So----
    Mr. Fry. Thank you. And we have heard from the other two 
witnesses, but for you specifically, what policy suggestions 
would you recommend to make money coming in from China clearer 
and to prevent that criminality?
    Mr. Urben. So, whether it was money coming in from China or 
funds that I detailed in that diagram, you know, it is enhanced 
due diligence, right? There has to be enhanced due diligence so 
there is a track record of where those funds came from so 
investigations can followup on that in the future.
    I think there is a couple components that I think that 
would help with this. One is scaling up, like I mentioned 
before, specific subject matter experts and expertise that can 
leverage data, whether it is in the financial system or it is 
judicially acquired data by law enforcement.
    So, there is vast amount of data that exist that we can 
leverage now. It is difficult to do that because we need 
specific data scientists. I want to say data targeters, 
analysts that can take that data and give snapshots of insights 
to provide that to law enforcement for action.
    So, I think that is the first component. The other one is 
dedicating resources to sufficient authority to deal with these 
encrypted apps. That has been going on in terms of law 
enforcement and dealing with the encrypted apps for a number of 
years. But specifically, with this one, we need to negate the 
ability of Chinese money laundering organizations to leverage 
WeChat, as I have described before.
    Mr. Fry. Thank you, Madam Chair. I yield my time.
    Mrs. McClain. Thank you. The Chair now recognizes the 
gentleman from Arizona, Mr. Gosar.
    Mr. Gosar. Thank you, first to the witnesses, for coming 
here. This is very, very important.
    So, the capturing by the Chinese of the illegal drug trade 
is self-inflicted to a large degree, thanks to the U.S.'s fiat 
money system. Because the dollar dominates all other currencies 
currently, foreign nationals cannot afford expensive U.S. goods 
priced in dollars.
    Conversely, U.S. consumers have access to cheap foreign 
goods priced in a comparatively weak currency like the yuan, 
currently. This leaves Chinese nationals flush with U.S. 
dollars, but unable to use the money in the U.S. due to 
protectionist Chinese laws, giving the U.S.-based Chinese 
criminals an opening to work with the cartels.
    Chinese criminals agree to take U.S. dollars from the 
cartels earned from the drug and trafficking trade and exchange 
them for a Latin American currency. That leaves the U.S.-based 
Chinese criminals with ready-to-invest cash in the United 
States, exactly what these rich Mainland Chinese need in order 
to circumvent Chinese protectionist law that prevents them from 
directly investing in the United States without a middleman. 
The U.S.-based Chinese criminals then take the cash and invest 
in United States securities, stocks, real estate on behalf of 
Mainland China.
    So, status quo U.S. monetary policy enriches Chinese 
nationals, who utilize U.S.-based Chinese criminal middlemen to 
divert--to invest dirty money obtained from the cartels whose 
drug trafficking is killing our young folks.
    A return to the gold standard would be a great step to halt 
the enrichment of the Chinese by ending the flow of cheap goods 
to the United States, a one-way dumping that has destroyed the 
U.S. manufacturing base there over the past 40 years. Jobs will 
flow back, and there might be even more--there would be no more 
rich Chinese who would need to have help from criminals to 
invest their money in the United States.
    Mr. Ruggiero and Mr. Urben, is the Chinese Communist Party 
complicit in the trafficking of illegal drugs like fentanyl in 
the United States?
    Mr. Ruggiero. Well, I am not--thank you. I am not sure if 
they are complicit, but I think the Chinese Communist Party and 
the Chinese financial system, as was mentioned by another 
panelist earlier, when they want to crack down within the 
financial sector, they have the tools to do that. And so----
    Mr. Gosar. But where are the chemicals coming from?
    Mr. Ruggiero. Currently, in China. Many instances, China.
    Mr. Gosar. Yes. Thank you.
    Mr. Ruggiero. If you are talking about the precursors.
    Mr. Gosar. Yes, yep. How about you, Mr. Urben? Do you 
agree?
    Mr. Urben. Well, I mean, in terms of the investigative 
efforts that I was behind when I was with DEA, I did not have 
visibility on these things within Mainland China.
    Mr. Gosar. OK. But we definitely know the chemicals are a 
plethora on China, right?
    Mr. Urben. Absolutely. They are the primary source of 
precursor chemicals for the manufacture of fentanyl.
    Mr. Gosar. What evidence in the public record exists to 
back up the assertion that the Chinese Communist Party is 
involved in money laundering and drug trafficking from 
narcotics flowing across our Southern border in the United 
States?
    Mr. Urben. I am not aware of it being in the public record 
in terms of that specifically, sir.
    Mr. Gosar. OK. Mr. Urben, in your experience investigating 
money laundering from China, would you consider another 
situation where the rapid creation of several corporations or 
LLCs, for example, with no discernible legitimate business 
indicative of a potential money laundering scheme?
    Mr. Urben. To answer your question based on the details 
that you told me, a number of LLCs created with--with no 
background to it that would legitimize why it was created is 
customarily used to launder funds, especially if there are 
numerous ones created, and you do not know who the beneficial 
owners are.
    Mr. Gosar. So, what does it signal to you when there are 
multiple LLCs layered on top of each other with no unique or 
distinguishable services attributed to them?
    Mr. Urben. The end of your question, what should be? I 
would view it as a potential money laundering set-up to----
    Mr. Gosar. That is where I am going. So now either witness, 
have you seen instances where Chinese nationals use different 
companies to hide money originating from China or the fact that 
there is Chinese ownership involved?
    Yes, ma'am?
    Ms. Mavrellis. So, there was a very infamous case that came 
out a couple of years ago of Xizhi Li, and he was laundering 
tens of millions of narcotics proceeds. He is--correct me if I 
am wrong--either a U.S. citizen--or sorry, U.S. national or a 
permanent resident. But he is a Chinese national, and he was in 
the U.S.
    And he used several different methods. He used a U.S. 
seafood company. He used a Guatemalan casino. And he used U.S. 
and Chinese banking accounts to conduct these transactions.
    Mr. Gosar. Thank you very much. You have been very 
enlightening. We need to spend a little more time understanding 
this.
    So, thank you, and I yield back.
    Mrs. McClain. Thank you. The Chair now recognizes Ms. 
Balint.
    Ms. Balint. Thank you so much.
    Excuse me. Thank you all for being here. I really 
appreciate it.
    Windham County, Vermont, where I live, has the highest rate 
of opioid deaths in my state. And according to the Vermont 
Department of Health, most opioid-related accidental and 
undetermined deaths right now among Vermonters involve 
fentanyl.
    And combatting the opioid epidemic and ensuring that 
Americans have access to recovery and treatment is extremely 
important to me. I literally am here representing families who 
have lost children to fentanyl.
    I am grateful, I am grateful for President Biden's 
leadership on this issue. In 2021, President Biden imposed 
sanctions on foreign nationals involved in the illicit drug 
trade. The Departments of State and Treasury have sanctioned 
roughly 40 individuals and entities involved in the illicit 
drug trade since 2021, including individuals who traffic and 
cartels that traffic mostly in fentanyl in the United States.
    Ms. Mavrellis, can you explain how imposing sanctions like 
these help to tackle drug trafficking in the United States? I 
think Vermonters would like to understand this better.
    Ms. Mavrellis. Sure. Well, as a fellow Vermonter or, 
rather, a flatlander, I should say, it is definitely--imposing 
sanctions makes it harder or raises the cost of doing business 
for cartels or for any other individual that is involved. And 
when it comes down to it, they are focused on the bottom line, 
and that is why we always talk about following the money and 
being able to not just detect, but seize narcotics proceeds.
    When it comes to our success, I think the global estimate 
is less than 1 percent of illicit proceeds are detected. As 
GFI's founding president, Raymond Baker, says, we are a decimal 
point away from failure.
    And, so, no matter how much you stop in terms of the actual 
products going over the border, if you are not stopping the 
flows of money coming back, that is just going to keep getting 
reinvested more and more into the scheme. So, it is incredibly 
important to shut down the financial flows and raise the cost 
of doing business.
    Ms. Balint. Thank you. I appreciate that.
    The other thing I wanted to ask you about is the Biden-
Harris Administration has been working closely with global 
partners to eliminate the North American-wide threat of 
fentanyl. We have got Mexican President Obrador and Prime 
Minister Trudeau of Canada working together on a Trilateral 
Fentanyl Committee.
    And again, I think Vermonters would be very much--
obviously, Canada is our neighbor to the north. We would be 
very interested to know how this multinational committee can 
combat the fentanyl problem that we are seeing in Vermont.
    Ms. Mavrellis. I am not aware of this committee, but I 
would say being able to have the three countries align their 
policies is extremely important. When it comes to how TCOs 
operate or they are going to look for jurisdictional arbitrage. 
So, they are going to try to use jurisdictions that have weaker 
controls, that have weaker policies and regulations, and 
exploit those in order to conduct business more easily.
    Ms. Balint. It feels like working with global partners is 
really the only way that we are going to be able to attack this 
problem. It is massive. Is that fair to say?
    Ms. Mavrellis. Yes. I mean, it is not an easy solution, 
particularly when it comes to how do you solve a problem like 
China? A lot of other times, like I have said before, many 
countries will generally actively try to combat transnational 
crime, even if it is maybe not having a huge impact on them. 
China is one of those countries that really does not always 
participate. It is looking very inward to its inward impact.
    So, for example, we talk about, you know, the production of 
precursors and other chemicals. They have thousands of 
pharmaceutical companies. They have tens of thousands of 
chemical companies. This is a large part or at least a good 
contributor to their economy, and they are not going to 
necessarily crack down on these industries and sectors if it is 
going to have an important repercussion.
    The same way China is responsible for about 80 percent of 
counterfeit items globally. That means it has probably a very 
significant amount of citizens employed in that. So, they are 
not necessarily going to cut down or crack down on 
counterfeiting maybe as directly as necessary because it is 
going to have serious repercussions internally in terms of 
unemployment and impacts to the country as GDP.
    Ms. Balint. Thank you.
    In closing, I just want to say we cannot do this alone. We 
have to be working in partnership with any willing partners 
that will help us to deal with this, and this is what 
Vermonters, the people I represent, need from us. We have to do 
whatever it takes to save lives.
    So, thank you.
    Mrs. McClain. Thank you. The Chair now recognizes Mr. 
Burlison.
    Mr. Burlison. This is new territory for me. This is wild. 
It is like watching the show Ozark, right?
    So, what is remarkable is how they are laundering the 
money. So can you elaborate what kind of--are they--what is the 
pattern where they purchase goods from China, and how is that 
able to--then they sell them in Mexico. Is that what is 
happening?
    Mr. Urben. Yes. So that is--that is the third component to 
complete the money laundering cycle, right? So just going back, 
the Mexican cartel has already been made whole. They have 
already moved the funds within the United States. And once that 
bank-to-bank transaction happens in China, right, it goes from 
the Chinese broker to a Chinese manufacturer.
    The Chinese manufacturer manufactures goods and ships those 
to a Mexican business that sells those goods. The funds from 
the sale of those goods may complete the Chinese broker who 
initially provided the funds to make the Mexican drug cartel 
whole. So that happens on an ongoing basis.
    And this was a very simplistic chart up there, obviously. 
You have to think of when I said the dollars stay in the U.S., 
pesos in Mexico, and RMB in China. There are giant pots of 
funds there, right? There is billions of dollars that are 
flowing through this whole process over the course of the year.
    So, it is not a one-for-one transaction in terms of that 
$100,000, for example, that was a bank-to-bank transaction in 
RMB or $100,000 worth of goods were produced and sent to 
Mexico. It is vast components of this that are put together to 
ship the goods and then sell them in Mexico.
    So that is happening on an ongoing basis, and it 
undermines, you know, the integrity of their markets as well 
because those businesses most likely are trying to avoid taxes 
and regulation related to those goods. They do not have to 
spend money or wire money to China for the purchase of those 
goods. They are providing funds in Mexico for the goods they 
are going to receive and sell.
    So, there is a multitude of players in this, and that is, 
again, a very simplistic detailed mapping of how the money 
moves. But those goods are being produced on an ongoing basis 
and sent and sold, whether it be in Mexico, Central America, or 
South America.
    Mr. Burlison. To what extent has China acknowledged--do 
they acknowledge any of this? Have they helped or aided the 
United States in any of the previous transactions or events 
that occurred that were known criminal activities?
    Mr. Urben. I mean, again, my visibility with Chinese 
assistance on the investigations that I was involved in, again, 
I coordinated with our office in Beijing and the embassy. We 
provided the information.
    My visibility was limited, at best, of what was happening 
in China or the assistance that we were given in terms of the 
investigative efforts. We mostly focused our investigative 
efforts outside of China to deliver judicial endgames.
    Ms. Mavrellis. I will add that they have not--they do not 
have the reputation of responding quickly or being a 
collaborative player when it comes to providing information, 
investigative information. And that is why we suggest that the 
U.S. Government looks for opportunities to have policies to 
hold accountable countries that are failing to sufficiently 
investigate financial crimes or share information. There is 
definitely challenges in cooperation with China and receiving 
that information in terms of financial intelligence.
    Mr. Burlison. So, within this, there has got to be someone 
who is keeping ledgers or some books, right? Someone, one of 
these brokers has got to somehow in their communications be 
keeping track of a ledger. Would that not be true?
    Mr. Urben. In a general sense, it is true, right? So, for 
the visibility that we did have, whether it be on a Chinese 
broker in Mexico or a Chinese broker within the U.S., the law 
enforcement actions that we were able to participate in, there 
was data there. And that is when I was describing earlier, 
there is the data to leverage.
    I do not want to get into the specifics of what there is to 
leverage because it might affect an ongoing operation. But in 
each place, there are very sophisticated detailed records and 
ongoing transactions that they have to keep track of. So, it 
all balances out in the end.
    And again, just our visibility in China was very, very 
limited.
    Mr. Burlison. There has got to be--so because the money 
moved, because everything was received, they have built up a 
trust factor, right, and then that machine continues?
    Ms. Mavrellis. I mean, the systems that are being used, so 
the flying money. When we talk about flying money or fei 
ch'ien, that is just basically the Chinese system of hawala. 
So, you have that, you have the underground banking that is 
conducting these mirror exchanges where funds in one location 
are made available or they are received, and then they are made 
available in another location.
    These transactions have been around, or these types of 
methods have been around for hundreds of years. They have 
traced it back to like Tang Dynasty. So, they are very, very 
long--very, very well-established. They are often used for 
legitimate reasons like sending remittances. That is how they 
historically have been. But they also are perverted to engage 
in this type of illicit activity.
    But as Mr. Urben said, because these systems are so much 
based on trust, because you are going back and forth with these 
shipments, with the movement of value, and you are kind of 
expecting them to balance each other out, it is based on trust. 
So that when a Mexican cartel engages with a Chinese money 
laundering organization, they know that the systems are in 
place and that they have been there for a very long time.
    These systems are also very much reliant on family 
connections. A lot of times, they are inside the Chinese--they 
are, No. 1, definitely inside the Chinese community, and there 
is largely between family connections.
    Mrs. McClain. Thank you. The Chair now recognizes the 
gentleman from Wisconsin, Mr. Grothman.
    Mr. Grothman. Thank you.
    Just in general for you folks, do we have a fentanyl 
problem in China? Do you know how many people die every year of 
fentanyl overdose in China?
    Ms. Mavrellis. I can tell you there is not a fentanyl 
problem in terms of what we are seeing here. I have no figures 
about how many people die from it. It is difficult. The numbers 
that are released by the Chinese government are not necessarily 
absolutely realistic or reflect the current situation, but I 
would say not at the same level.
    Mr. Grothman. Why is that? Why is that?
    Ms. Mavrellis. They have very draconian measures in terms 
of cracking down on those individuals who use or traffic the 
goods or traffic narcotics. You know, they were successfully 
able to get rid of opium within a few--short period after the 
country opened up because they did not want to have that kind 
of activity within their country.
    Mr. Grothman. OK. Well, you said draconian. Give me an 
example of draconian.
    Ms. Mavrellis. So, technically, they do not exist anymore, 
but they are putting individuals like drug users, they go 
around and actually try to count the number of drug users 
within society, and those that are considered drug users are 
put into kind of rehabilitation programs, which involves forced 
labor. And, as noted earlier, there can be extreme cases such 
as the death penalty.
    Mr. Grothman. OK. I will ask you, Mr. Urben, would you 
describe China as being complicit in America's drug overdose 
epidemic?
    Mr. Urben. China, in terms of the government or the 
country?
    Mr. Grothman. Yes.
    Mr. Urben. Again, the insight in terms of the investigative 
efforts we had, was not in Mainland China. It was outside of 
China. So, those efforts----
    Mr. Grothman. OK.
    Mr. Urben [continuing]. Clearly indicated----
    Mr. Grothman. Well, the money in winding up back in China. 
Correct?
    Mr. Urben. Absolutely.
    Mr. Grothman. And the ingredients in the fentanyl is 
produced in China, isn't it?
    Mr. Urben. Precursors are the ones--precursor suppliers 
supply the Mexican cartel; they are in China.
    Mr. Grothman. Right. Do you think China would be capable 
of--given that they have seen that they have a fentanyl problem 
in their own country, do you think China would be capable of 
stopping the flow of fentanyl to this country?
    Mr. Urben. I think they should be, yes.
    Mr. Grothman. OK. Do you think they could be?
    Mr. Urben. Yes. I think--I think we talked about draconian 
measures----
    Mr. Grothman. So, it is the will. It is the will. Does 
China know that over 100,000 Americans are dying every year of 
illegal drug overdoses?
    Mr. Urben. Yes.
    Mr. Grothman. OK. Does this bother them? Does anybody--has 
the Administration brought this up?
    Ms. Mavrellis. I mean, I do not know if they have brought 
it up with them, but like with any country, their priority, 
first and foremost, is domestic. So, they are going to focus 
on----
    Mr. Grothman. I would think that if we had an illegal drug 
and it was being shipped across the border, and every year, 
20,000 Canadians were dying, I think we would feel we had an 
obligation to do something about that.
    Ms. Mavrellis. That is correct. It is what makes China 
relatively unique in how they handle issues like this.
    Mr. Grothman. Then, in other words, they do not handle 
issues like this, right?
    Ms. Mavrellis. Correct.
    Mr. Grothman. That is what is unique. And I would think, 
given the relationship that we have with China, being a major 
trading partner, I would think that China over time likes to 
become more and more part of the developed world. I would think 
the Biden Administration should be doing the things or 
encouraging China to do the things that are necessary to save 
100,000 American lives a year.
    Now I know, you know, I have been down on the border. I 
know people are streaming across the border. I know if you just 
look at the border you feel the Biden Administration does not 
care that 100,000 people are dying. But I just wondered, what 
specific actions is the Biden Administration taking, if any, to 
make it clear to the Chinese how upset we are that 100,000 of 
our citizens are dying every year?
    Mr. Ruggiero, we will start with you.
    Mr. Ruggiero. Well, I think it has been mentioned before 
that the Biden Administration is using their sanctions 
authorities against----
    Mr. Grothman. Individual people. But I am saying with the 
government, with the government.
    Mr. Ruggiero. Sure. Yes, I think they have to incentivize 
the Chinese----
    Mr. Grothman. And they are not doing that right now, 
though, right?
    Mr. Ruggiero. They are not doing that. There--it is not a 
priority. I mean, your question about----
    Mr. Grothman. Only a 100,000 lives. Not a priority.
    Mr. Ruggiero. Right. Your question about whether China is 
complicit, I would just say they are clearly making a choice to 
not stop the precursors coming here and on the money.
    Mr. Grothman. OK. We will give you another quick question 
here. Does the Chinese Communist Party perceive a benefit from 
helping Americans become dependent on potentially fatal and 
addictive drugs like fentanyl? I mean, when they report this to 
the Chinese government, 107,000 Americans died last year, most 
from a drug the ingredients produced in China, do they do 
anything, or does the Biden Administration ask them to do 
anything?
    Mr. Ruggiero. Well, I would say that if there are no 
consequences for that action, I think for them, for the Chinese 
government, they would probably say that they have changed the 
rules----
    Mr. Grothman. Why do we care? It is just 100,000 American 
lives. They are kind of like why they do not enforce the 
border.
    OK, thank you.
    Mrs. McClain. Thank you. The Chair now recognizes Ms. 
Crockett.
    Ms. Crockett. Thank you so much, Madam Chair.
    And good afternoon to each of you. Thank you so much for 
being here.
    The issue of today's hearing is not simply a domestic 
problem. It is a global one. We need international cooperation 
with countries like China and Mexico to combat drugs and 
fentanyl coming into our country.
    Unfortunately, testimony provided at the House Financial 
Services Subcommittee hearing late last month showed that 
China's willingness to cooperate on drug enforcement efforts 
sharply declined following a period of short-lived 
collaboration with the last Administration, bringing bilateral 
relations to a standstill.
    It is no surprise then that China has tried every which way 
to get out of working with our country to address the fentanyl 
drug crisis that we are experiencing. Just last August, Speaker 
Pelosi visited Taiwan to applaud the island's governmental 
democracy. Yet following the visit, China retaliated by 
formally suspending its agreement with the United States that 
bans the export of fentanyl.
    But as Dr. Gupta, Director of the Office of National Drug 
Control Policy, explained, China used this visit to ``as a 
pretext to step back from its cooperation in an effort to 
counter crime and narcotics.''
    Ms. M--because I am not going to slaughter your name today. 
No, no, no. I do not want to do that to you, and yes, so I am 
not going to do that to you.
    How has China leveraged its geopolitical interests, 
including its interest in Taiwan, to no longer work in good 
faith to combat cross-border drug trafficking?
    Ms. Mavrellis. I cannot speak specifically to Taiwan, but I 
think it gives them a reason to say that they will pull back. 
They know that the U.S. does care about this issue of fentanyl 
trafficking, illicit financial flows, as evidenced by this 
hearing and other hearings that have been held. So, you know, 
if they want to have the U.S. take notice, that is one way to 
do so.
    Ms. Crockett. All right. Let me ask you then, in your 
opinion, what could the U.S. do to secure greater cooperation 
from China, if anything? I put the ``if'' for you.
    Ms. Mavrellis. I know. It is a big question. I am not 
saying that this cannot be achieved, but as I think a lot of us 
have said, China, first and foremost, focuses on the impact 
internally. Most other countries obviously do the same. They 
are going to put their internal domestic policy priorities 
first, but they are also going to try and if there is something 
internally that is happening that is impacting another country, 
they do make those efforts to address it. That is not happening 
as much from China.
    The collaboration, it can be hit or miss. Sometimes you get 
lucky. I will point to ivory trafficking. For a very, very long 
time, there was no advancement on getting China to stop ivory 
trafficking. And it was not until President Xi actually himself 
came in and kind of said this is ending, was the trade kind of 
shut down to a relatively good degree.
    Ms. Crockett. So, in short, we need a willingness on the 
part of China, obviously, right?
    Ms. Mavrellis. Yes.
    Ms. Crockett. And typically, we cannot necessarily make 
people wake up 1 day and decide to be willing. And, so, I know 
that there has been some conversations as it relates to 
sanctions, but there literally has to be a will. And sometimes 
that will come with force, and sometimes it comes with just 
because you happen to actually care.
    And unfortunately, we are not really seeing either one 
right now. But we are seeing good signs of cooperation from 
other international partners. About 2 weeks ago, members of the 
Mexican Security Cabinet visited D.C. and renewed Mexico's 
commitment under the U.S.-Mexico Bicentennial Framework to 
counter fentanyl trafficking.
    But we need to also fight these drugs here at home. You 
talked about kind of usually most people focus on the domestic 
side of things. And, so, President Biden's 2022 National Drug 
Control Strategy has bolstered international and domestic law 
enforcement operations to disrupt the international fentanyl 
supply chain and provided $275 million to dismantle illicit 
financial operations in high-intensity drug trafficking areas.
    The administration is also building cooperative frameworks 
between Federal and local law enforcement agencies and public 
health departments to ensure that people have access to 
treatment for opioid disorders, which obviously would hopefully 
decrease some of the demand.
    And you know, once again, I do want to thank all of you for 
being here. I am about out of time, but I want to be clear that 
right now I want to point out that rather than investing, 
helping to invest in these efforts such as the ones that I have 
mentioned, my colleagues on the right, through the debt ceiling 
fight that we are about to endure in 2 seconds, they have 
decided that they want to cut DEA funding by 22 percent.
    This would effectively undermine border management and drug 
interdiction efforts, and that would be a travesty. So, I hope 
that we can get somewhere on the debt ceiling and make sure 
that we do a good budget that funds everything to make sure 
that we can fight all the wars that we need to, domestically 
and internationally, especially when it comes to drugs.
    Thank you so much.
    Mrs. McClain. Thank you. The Chair now recognizes Mr. 
Langworthy.
    Mr. Langworthy. Thank you, Madam Chair.
    The opioid crisis is the leading cause of death of 
Americans age 18 to 45. Now just last Thursday, in my district, 
in my hometown of Jamestown, New York, law enforcement made an 
arrest and seized 40 grams of fentanyl. This has been something 
that has happened in this community time after time.
    But that is enough to kill 40,000 people. A single fentanyl 
overdose is absolutely one too many, and I have sat with the 
families and the victims of this terrible drug and have seen 
its impact firsthand. And it is a real scourge throughout 
upstate New York.
    But that seizure alone could have killed the entire 
population of two of the counties of the seven in my district. 
It is just unthinkable.
    And now extrapolate that across the context of the 
estimated 11,000 pounds of fentanyl that has come across the 
border since January of this year. We cannot afford to delay 
action in addressing this crisis. We have to get real about it. 
And as we continue to hear today, it is clear that the Chinese 
are a huge part of this crisis and contributing to the deaths 
in our country every single day, and we must find a solution to 
stop the spread of this scourge and the addiction and the death 
that it has brought our country.
    Mr. Urben, is China complicit in America's drug overdose 
epidemic?
    Mr. Urben. Again, you are talking about the country and the 
CCP? I did not have insight during the investigative efforts 
that I supervised up to a year and half ago.
    Mr. Langworthy. OK. So, there is not--is there evidence of 
the Chinese Communist Party being involved in money laundering 
operations around that?
    Mr. Urben. I did not have insight into that specific 
question in terms of the CCP or Mainland China.
    Mr. Langworthy. OK. Is there evidence that China is 
weaponizing or capitalizing the fentanyl crisis by supplying 
necessary precursor chemicals to produce the drugs?
    Mr. Urben. Again, insight within Mainland China we did not 
have. We have already discussed precursors come from China into 
Mexico for the cartels, and the moneys are laundered back.
    Mr. Langworthy. OK. Well, switching gears then.
    Mr. Urben. Yes, sir.
    Mr. Langworthy. Is there evidence that China is carrying 
out operations like this all over the world, or is this really 
targeting the United States?
    Mr. Urben. That is a very broad question. In terms of the 
investigative efforts that I was involved in, the Chinese money 
laundering model is around the world.
    Now, it is much different here in the United States because 
essentially the Mexican cartel funds, as we were discussing 
earlier, essentially put on steroids the funds and the moneys 
that were being laundered here. But in terms of the Chinese 
diaspora, the Chinese underground banking system, WeChat, 
whether it be in Africa or in other parts of the world--the Far 
East, obviously--that Chinese money laundering model exists 
there, too.
    Mr. Langworthy. OK. Is the United States currently working 
with any of these other affected countries to tackle China's 
threat in this same regard?
    Mr. Urben. So, again, this was an evolving threat, right? 
It was new intelligence that you had to fuse in terms of 
insight to action, but we are always working with our partners 
overseas and in countries that we could align with, whether it, 
again, be Africa, the Far East.
    You could take the Five Eyes. You could take Australia, for 
example, Canada, the UK, certainly partners that we have 
established relationships with in Europe. Always trying to 
synchronize their intelligence with ours and in investigative 
enforcement efforts.
    So, yes, that was happening while I was at DEA in terms of 
what we were trying to achieve.
    Mr. Langworthy. OK. And last, have we seen--you have talked 
a lot about the money laundering. Have we seen cryptocurrencies 
or other digital assets used in these Chinese operations?
    Mr. Urben. So that is a very good question. During my time 
at DEA, the crypto was a very limited component of the money 
laundering cycle or scheme that I described there. It was more 
used on an individual basis for whether it be a trafficker or a 
criminal network of some nature where they would use that as an 
asset that they can move from point A to point B.
    However, over the last year, there is new intelligence that 
crypto and digital money laundering is a greater component of, 
let us say, that it is offered as--whether it be cash, a 
cashier's check, or crypto.
    So that it is a greater involvement over the last 18 
months, whereas previous to 18 months, it really had a limited 
component of the money laundering cycle.
    Mr. Langworthy. Very good. Thank you very much for your 
testimony.
    And I yield back.
    Mrs. McClain. Thank you. I now recognize Ranking Member 
Porter for her closing statement.
    Ms. Porter. Thank you very much, Madam Chairwoman.
    Earlier, I showed everyone a graph with the trend line of 
deaths from synthetic opioids over the last couple of decades. 
But it is important to remember that that line represents 
people, real lives, too many people whose lives were lost too 
soon.
    We owe them and their families not only a careful 
examination of the true causes of the opioid crisis, but the 
action that addresses the roots of the problem. The United 
States needs to continue to address the opioid crisis from 
every possible angle. We need to cutoff the supply of fentanyl, 
including by sanctioning China-based suppliers and money 
launderers.
    To do that, though, we have to be able to engage with China 
and impose sanctions. I am confident that the Administration 
will continue to do that.
    At the same time, we also need to help those harmed by 
fentanyl by expanding drug treatment resources. There are 
Republicans and Democrats on record willing to work across the 
aisle to do those things, and count me as one of them.
    In fact, Madam Chairwoman, a few weeks ago, I sat down with 
my copy of the Director of National Intelligence 2023 Annual 
Threat Assessment. You know, just a little joyful reading. I 
later called my staff into my office to tell them which of the 
issues in that report most concerned me. And Madam Chairwoman, 
the topic of this hearing was one of them.
    So, I want to thank you for continuing to tackle issues of 
pressing importance to our country in this Subcommittee. I 
could not have picked a better topic myself.
    Now we are not going to agree on everything, but I think we 
have done a good job today of avoiding making this topic 
unnecessarily partisan, and I hope that this hearing is the 
beginning of some incredible progress.
    Thank you again to our witnesses for sharing your 
expertise. I know you are all technical experts on an 
incredibly complicated area of finance. I appreciate your 
patience as you explained, sometimes again and again, the flow 
of funds and the process for this harmful activity.
    Thank you again, and I yield back.
    Mrs. McClain. Thank you, Ranking Member Porter.
    And I, too, appreciate working with you on these issues. At 
some point in time, we have to figure out solutions to the 
issues, and these are very complicated, very complex issues, 
and if we truly care about the American people and a way to 
move our country forward is let us find something that we can 
agree on that we can move forward on.
    So, I appreciate you all being here, again, and taking the 
time out of your busy schedules to talk about this important 
issue. And really, starting with me, give me a better 
understanding of what the issue is because we have to 
understand, and we have to spend some time on problem 
identification before we can jump right to solutions.
    Republicans and Democrats both agree that our communities 
should be free from fentanyl and other illegal narcotics. As 
Members of Congress, we have an obligation, an obligation to do 
everything we can to ensure that our communities are safe.
    We know that Mexican cartels are responsible for smuggling 
fentanyl across our Southern border in record numbers. In 2020 
alone, over 107,000 Americans lost their lives to a drug 
overdose, and 67 percent of those Americans' drug overdoses 
were a result of fentanyl.
    The cartels cannot operate efficiently without the money 
laundering networks that they set up by these Chinese criminal 
organizations. The efficiencies and cost effectiveness of 
Chinese money laundering organizations have enriched the 
cartels and allowed their dangerous businesses to thrive.
    The Biden Administration and Congress must take action to 
cutoff these financial networks that these Chinese criminal 
organizations rely on to launder their money. Follow the money 
and choke the money off. I think we will get their attention.
    Today, we have heard from experts on the current obstacles 
to detecting these money laundering networks and possible 
policy actions that Congress and the Administration can take to 
crack down on the illicit businesses, and I look forward to 
talking to you more in depth about what some of those ideas and 
policies and actions, what we can do to correct this problem.
    We cannot continue to stay idle while more and more 
Americans are killed by fentanyl. I look forward to working 
with Ranking Member Porter as we search for bipartisan 
solutions to this issue.
    And without objection, the Members will have five 
legislative days to submit materials and to submit additional 
written questions for the witnesses, which will be forwarded to 
the witnesses for their response.
    If there is no further business, without objection, I want 
to thank you, again, for your time.
    The Subcommittee stands adjourned.
    [Whereupon, at 4 p.m., the Subcommittee was adjourned.]

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