Mexican Narcotics Use Chinese Cryptocurrency Network Links to Transfer Laundered Money

hearing on Border Security and Immigration carried out by the U.S. Senate Judiciary Subcommittee reveals that Mexican narcotics are taking advantage of the cryptocurrency money laundering network created in China. The link is used to transfer illegally obtained funds to the U.S. using Bitcoin, Dash Monero, and other virtual assets, a media outlet reports on January 11.

The network link is made possible from a drug trade partnership that was established between Mexican drug lords and the Chinese years ago. The East Asian’s country part, is to supply chemicals such as fentanyl, ephedrine, and pseudoephedrine which are used to create Methamphetamine and mixed with cocaine to enhance its potency.

Mexican Drug Cartels Collaborate With China to Move Funds

Reports reveal that this network has now been taken advantage of to transfer illegally obtained money in and out of both countries. Mexico, in this case, has collaborated with China to use a channel called the Chinese Underground Banking Systems (CUBS). This is a large network that is said to have over 10,000 clients who can move about $100 billion each year.

Based on reports, the CUBS is made up of money and cryptocurrency brokers. They can bypass China’s traditional banking system which had set a yearly limitation of $50,000 for funds individuals can transfer out of the country. As such, a person who has laundered funds higher than that amount will need the help of the CUBS to move it without traces.

Bitcoin is the Major Currency Used to Transfer Laundered Funds

Bitcoin is reportedly the major digital currency that is used in this crime. It has been attributed to the fact that it is widely accepted in the global market. Moreover, the ease at which the virtual currency can be exchanged on cryptocurrency exchanges has brought about its popularity. The latter is said to be platforms that have not adhered to money laundering policies and Know Your Customer Procedures.

While this digital asset has been employed by criminals, reports say it is not the ideal currency to move these funds. That is why other virtual currencies like Monero, Dash, and Zcash are gaining massive adoption. The attention these assets have gotten has been linked to the level of anonymity that is created when they are used. This makes them less traceable in comparison with Bitcoin.

BTCNN has made several reports of cryptocurrency companies are facing legal actions for money laundering. Notable among them is Coinflux’s CEO and founder, Nistor Vlad Călin who was recently extradited to the U.S for allegedly being part of a scam that saw to the loss of funds by some people in the U.S.

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