Two Chinese nationals charged in US drug cartel money-laundering case

Two Chinese nationals were indicted on charges of conspiracy to launder money for drug cartels, the US Justice Department announced on Friday. Ruhuan Zhen and Hongce Wu allegedly hid the source of illegally obtained funds on behalf of various cross-border criminal groups, including the Sinaloa Cartel and the Cartel de Jalisco Nueva Generacion (CJNG). The two remain at large, the Justice Department said. According to material about the case filed in the Eastern District of Virginia, Zhen, Wu and their co-conspirators allegedly used a variety of “secretive and clandestine” tactics between November 2016 and April 2025 to “wash” huge volumes of cash that the drug operations threw off. Zhen and Wu’s alleged methods included mirror transfers, use of overseas bank accounts, encrypted communications apps presumably like Signal and WhatsApp, trade-based money laundering and efforts to circumvent serial-number verification systems, the Justice Department said. The agency said co-conspirators operated throughout the United States, Mexico, Latin America and China, laundering proceeds from the import and sale of illegal narcotics including cocaine and fentanyl. Zhen and Wu were indicted on April 24, 2025, by a federal grand jury empanelled in Alexandria, Virginia, and the indictment was released on Thursday, the Justice Department said on Friday. The offence carries a maximum penalty of 20 years in prison. The Justice Department did not immediately respond to questions about whether the pair fled to China, which does not have an extradition agreement with the US, where in China they were from or whether the two governments were cooperating. Earlier this week, the agency touted improved bilateral cooperation in the parallel indictment of a Chinese national wanted for allegedly smuggling illegal drugs through the Port of Savannah. The apparent scope of the alleged money-laundering operation by Zhen and Wu was seen in the number of offices involved in the investigation, part of what the Trump administration has dubbed Operation Take Back America. These included various branches of the Drug Enforcement Administration in New York; Washington; Atlanta, Georgia; Charleston, South Carolina; and Memphis, Tennessee; in addition to offices in Bogota, Colombia, and Dubai. Details released by the Justice Department are sparse, however, and it was not immediately clear why the agency was touting illegal activity that lasted nearly a decade without an arrest. “Prosecutors are among the best marketers,” said David Shapiro, a lecturer with John Jay College of Criminal Justice and himself a former assistant prosecutor. “You may not think so because they work for the government.” The alleged methods used by the defendants read like a how-to manual for money laundering, which has become more sophisticated in the wake of increasingly vigilant US Treasury Department scrutiny of illegal fund movements after the September 11 attack. How mirror transfers are used in money laundering Mirror transfers are one way to complicate the disclosure of funds moving through the global Society for Worldwide Interbank Financial Telecommunication, or Swift, network. Essentially, a money launderer has accounts in, for example, Mexico and the US or China and the US. Rather than move it across a border where it could be noticed, matching debits and credits are arranged in seemingly unconnected accounts in different countries, thereby breaking the paper trail and obscuring the actual origin of the funds. Washington has enormous control over the Swift system, which processes over 45 million payment and security messages a day, given the global primacy of the US dollar. China, Russia, North Korea and others bridle at Washington’s grip in part given the US ability to impose crippling financial sanctions. Trade-based money laundering is another financial sleight of hand in which the value of a legitimate import or export is inflated or deflated, its price, quantity or quality misrepresented, with the extra padding hidden in the customs documents enabling the transfer. This tactic is not limited to use by criminals. China, with its closed capital account, has long battled “phantom trading”, which is used by wealthy Chinese to get around the strict annual limit of US$50,000. And circumventing serial-number or identity verification involves fooling systems that safeguard accounts or that track the numbers on US banknotes, digital assets or official documents, which law enforcement uses to connect funds with criminal activities. Criminals might attempt to get around account verification by tricking biometric systems with pre-recorded videos or deepfakes; manipulating online cookies; or simulating different browser or device fingerprints to mask one’s identity. The Trump administration has increased pressure on Beijing to crack down on fentanyl, its chemical ingredients and related money laundering tied to shipments entering the United States, often via Mexico, and imposed tariffs of up to 20 per cent on Chinese goods over the issue before the measures were ruled unconstitutional. US fentanyl overdose deaths were down 35 per cent in 2024 over 2023 as potency decreased, before US President Donald Trump returned to office, and down around 14 per cent in 2025 over 2024. While clearly a serious problem, Shapiro said some of the headlines about fighting fentanyl appear to have a political element. “It’s a lot like closing the barn door after the horse escaped,” he said. “It’s trying to appear tough on fentanyl, which has genuine uses, after the opioid problem has abated.” Marcus Noland, executive vice-president of the Peterson Institute for International Economics, said it is difficult to evaluate the impact of Trump’s fentanyl tariffs on consumption with data still in short supply. “Variations in tariff levels in 2025 and 2026 cannot cause a decline that began in 2023,” he said. Noland added that diplomacy and diplomatic pressure on China to stem precursors may have some modest impact. “It is logically possible that the imposition of tariffs and the subsequent reduction have generated more cooperation from China than would have otherwise occurred, and further reduced overdose deaths, but there is no evidence of this at this time,” he said. “By the same token, it is possible that the imposition of the tariffs could have had a perverse effect of reducing Chinese cooperation. We simply don’t know.”

Two Chinese nationals charged in US drug cartel money-laundering case

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Prosecutors say pair used mirror transfers, encrypted apps and trade schemes to launder cartel drug profits globally

Prosecutors say pair used mirror transfers, encrypted apps and trade schemes to launder cartel drug profits globally