Coronavirus slows money laundering in Los Angeles, causing foreclosures

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Dirty money is piling up in Los Angeles. In the past three weeks, federal agents have made three seizures, each of which has brought in over $ 1 million in suspected drug products.

The reason, according to the city’s top drug enforcement official: The coronavirus pandemic has slowed down the trade-based money-laundering systems that drug trafficking groups use to repatriate profits and move people around. Chinese capital in Southern California.

With storefronts closed, messy supply chains and the global economy at risk, these complex regimes are hampered and cash is saved in Los Angeles, Bill Bodner, special agent in charge of the Los Angeles division of Drug Enforcement Administration, said in an interview. .

Recent million dollar interceptions are reminiscent of the DEA’s seizures before drug traffickers adopted commercial-based money laundering, said 28-year-old agent Bodner.

The closure of non-core businesses has had a “huge impact” on a money laundering system dubbed the black market peso exchange, he said. In downtown Los Angeles fashion district – the epicenter of the purse – groups of drug traffickers across the country use wholesalers to make profits in Mexico, according to cases before federal courts in Los Angeles and elsewhere.

DEA Seizes Bulk Money Amid Coronavirus Pandemic

The DEA seizes bulk money amid the coronavirus pandemic, which has hampered money laundering schemes and created a backlog of pharmaceuticals in Los Angeles.

(DEA)

Steven Mygrant, an Oregon federal prosecutor who has charged six people with heroin laundering through Los Angeles businesses, said two main factors drive the exchange: drug trafficking groups must convert dollars into pesos , which is expensive to do legitimately, and they have to move money from the United States to Mexico, which is risky for cash transportation.

To do this, said Mygrant, a broker pays pesos for drug traffickers’ dollars. The traffickers deliver money to a Los Angeles exporter, who ships goods – usually clothing, cosmetics, jewelry, or sportswear – to a retailer in Mexico. The retailer sells the goods in pesos and pays the broker.

Developed by Colombian cocaine traffickers, Mexican cartels did not initially adopt the black market peso exchange, said Bodner, finding it easier to smuggle bulk money across the border and smuggle it in. bleach in Mexico. That changed about 10 years ago, he said, when the Mexican government tightened financial regulations and restricted the flow of dollars into its banks.

Recently, with the storefronts closed and agents seizing millions of cash conditioned for transportation, it appears that drug trafficking groups are using older, riskier means to repatriate profits, said Bodner.

The coronavirus has also cooled the flight of Chinese capital, he said, which, before the pandemic, was the main driver of international money laundering.

The Chinese government is reducing the amount of money its citizens can transfer abroad, drug traffickers and money brokers have implemented the following system, said Bodner: A Chinese national who wants to convert yuan into dollars and hiding them in the United States will contact a broker. The broker asks this person to pay a factory that produces chemicals used to make methamphetamine or fentanyl.

The factory ships the precursors to Mexico, where they are converted into narcotics, smuggled into the United States and sold for dollars. The broker orders the group of drug traffickers to hand over money to a relative or associate of the Chinese national, whose money started the whole sequence.

The money is now in the United States and in dollars, never entering the global financial system. “The more money that wants to leave China, the more chemicals go to Mexico and the more synthetic drugs end up in Los Angeles,” said Bodner.

But the pandemic has slowed the cycle considerably, he said. Most narcotic precursors from China are manufactured in Wuhan, the epicenter of the coronavirus epidemic, and factories are closed or operating at reduced capacity.

“When the chemicals don’t leave China, there is no churn in the money laundering system,” said Bodner. In addition, with global markets in turmoil, many Chinese nationals who transferred money into the system are now reluctant to hide funds overseas, he said.

The slowdown in money laundering systems in Los Angeles comes at a time when drug prices are rising in the city. With supply chains in disarray, said Bodner, the wholesale price of methamphetamine rose to about $ 1,800 a pound, up from about $ 900 a pound five months ago.



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