For years, rampant money laundering in the city of Vancouver has facilitated the production and trafficking of illegal drugs. Through this ongoing laundering of illicit funds, both Chinese organized crime and Mexican cartels continue to profit from the ongoing fentanyl crisis in North America.
The term “Vancouver Model” was coined by Australian international security professor John Langdale, an expert on Asian organized crime, to describe how the Canadian city has become a hub for money laundering, drug trafficking, and capital flight. Money is laundered to and from China, while high rollers use Canadian casinos to facilitate the flight of capital from the country. The same model is occurring in other parts of the economy, in particular real estate.
Since May 2019, expert witnesses during the Cullen Commission—initiated to investigate widespread claims of money laundering in British Columbia—have highlighted claims that Canadian authorities were reluctant to properly monitor and report suspicious cash transactions. Money laundering has facilitated the flooding of fentanyl into the province by criminal networks, including Chinese triads and the Chinese Big Circle Boys. This in turn contributes to the growing fentanyl overdose crisis in major cities across North America.
According to the Vancouver Police Department in a 2017 report, China is the main source of illicit fentanyl that flows into Canada, the United States, and Mexico. International drug cartels and underground banks enable the export of drugs and facilitate money laundering out of China.
The B.C. Coroners Service reports that 1,726 people died from illicit drug overdoses in the province in 2020 alone, the highest number of such deaths in a year based on annual data going back to 2011. This figure also establishes illicit drugs as the leading cause of unnatural deaths in B.C. from 2010 to 2020, compared with other common causes including suicide, car accidents, and homicides.
In a study published by the British Columbia Centre on Substance Use, over 80 percent of drugs sold as heroin on Vancouver streets contain no heroin at all, while nearly all of them contain fentanyl.
Given the differences in trafficking patterns, seizure amounts, seizure purities, and a lack of a distinct geographic forensic profile, the U.S. Drug Enforcement Administration (DEA) states that it has not been possible to identify whether China or Mexico is the primary fentanyl supplier to the United States. However, DEA Acting Administrator D. Christopher Evans said in his agency’s 2020 National Drug Threat Assessment that Mexican transnational criminal organizations supply most of the fentanyl, as well as most of the cocaine, methamphetamine, and heroin, smuggled into the United States.
Chinese organized crime has deep roots in Latin America. In June 2010, Brazil’s Secretary of Justice Romeu Tuma Júnior was fired for allegedly being an agent of the Chinese mafia, often referred to as the “triads.” Triads are reported to be operating in Peru, Venezuela, and Panama, extorting expatriate Chinese communities, which have historically been reluctant to report problems among their own members to non-Chinese host nation authorities.
In Mexico, cartels like Jalisco Nueva import ephedrine from China while precursor chemicals have been intercepted in Mexican ports. Illegal imports of fentanyl from Mexico involve Chinese-produced fentanyl or fentanyl precursors coming most often from China. According to a paper published in PRISM, a journal of the Washington-based National Defense University, Chinese-owned gambling operations in Latin America present a significant opportunity for money laundering because of the large cash flows involved in such establishments.
It’s no secret that Chinese organized crime covertly moves millions of dollars for Mexican cartels. In April, a Chicago federal judge sentenced Chinese national Gan Xianbing to 14 years in prison for facilitating a scheme where illegal narcotics proceeds from Mexican drug traffickers were picked up in Chicago, transferred to bank accounts in China, and then ultimately sent back to the criminal groups in Mexico.
One of Gan’s associates testified how the funds were laundered through underground channels. Once the money was in the hands of the launderers, they contacted one among a network of Chinese-owned businesses in the United States and Mexico asking for a transfer of a corresponding amount of money through Chinese banking apps. All this took place through Chinese banks and outside the purview of U.S. authorities.
Two other key figures, both Chinese citizens, have emerged since Gan’s arrest: Pan Haiping and Long Huanxin. They are believed to have handled the drug money received in Chicago and ensured its laundering through Chinese bank accounts. Pan was arrested in Mexico and is awaiting extradition to the United States, while Long was arrested in Vancouver in February 2020 and has already been extradited to the United States.
Last year, criminologist Stephen Schneider cited an example of China-linked money laundering operations during his testimony before the Cullen Commission. A Vancouver money service business called Silver International served as a “vortex” of casino and real-estate money laundering, he said. It is alleged that before the RCMP raided the China-linked enterprise in 2015, it was funnelling as much as $1.5 million a day through “underground banks,” which laundered the money via casinos, real estate buys, and exotic cars.
While triads have been instrumental in the laundering of money and facilitation of fentanyl trafficking into Canada, analysts in recent years have observed a growing tendency for these organized criminal groups to act as hired thugs on behalf of the Chinese Communist Party (CCP) to target perceived threats in Hong Kong, Taiwan, and even mainland China.
The CCP’s relationship with Chinese organized crime to advance its agenda is not without precedent. Triads are known to have attacked pro-democracy protesters in Hong Kong and may have been involved in a series of attacks on an Epoch Times printing facility in the city.
The full extent of Vancouver’s role in the financing and laundering of funds for fentanyl distribution by Chinese and Mexican organized crime will not be known until the release of the final Cullen Commission report in December.
