Lawmakers from both parties are warning that Chinese criminal groups have helped build what officials call a “Silk Road of crime”, a global network that launders Latin American cartel profits and supplies the chemicals used to make fentanyl bound for the United States.
At a Senate hearing on Tuesday, members of the Caucus on International Narcotics Control said Chinese money brokers and Latin American cartels have merged their operations into a system that blurs the line between trade and trafficking.
The hearing followed a string of cases that US officials say expose how Chinese brokers and companies have moved into the Western Hemisphere’s drug and money-laundering trades.
In 2023, the Justice Department charged executives at Hubei Amarvel Biotech with disguising shipments of fentanyl precursors as dog food and other products. Prosecutors said the company marketed the chemicals directly to Mexican cartels, offering “stealth shipping” and advice on dodging customs checks.
A separate investigation by the Drug Enforcement Administration (DEA), known as Operation Fortune Runner, uncovered a California-based network that laundered tens of millions of dollars in cartel profits through Chinese underground banks.
Agents said the scheme relied on “mirror swap” transfers among accounts in the United States, Mexico and China to move money out of regulators’ reach.
Regional police have also traced Chinese networks into other illicit trades. Earlier this year, Operation Green Shield led to 94 arrests in Brazil, Peru and Colombia. Investigators said Chinese nationals were involved in illegal gold mining, wildlife smuggling and the trafficking of Chinese migrants through Central America.
Witnesses told senators that the pattern shows a broader criminal ecosystem using Chinese trade, financial and migration networks to move money, chemicals and people with little oversight.
“Chinese criminal organisations have become the go-to money launderers for the Mexican drug cartels,” said Senator John Cornyn, a Republican from Texas who chairs the panel.
“They haven’t stopped there. They’ve also brokered the sale of fentanyl precursors, facilitated illegal immigration and even used poached wildlife as currency.”
Cornyn said Chinese-backed firms now operate or control dozens of ports in Latin America, including Peru’s new Chancay megaport, offering traffickers more routes to conceal shipments of chemicals and contraband.
Senator Sheldon Whitehouse, a Democrat from Rhode Island and the caucus co-chair, said cartels depend on outside networks to move and spend their money.
“That’s where Chinese credit organisations come in,” he said. “They wash cartel cash quicker and cheaper than competitors, often with a money-back guarantee.”
Whitehouse urged the Treasury Department to fully enforce the Corporate Transparency Act, which requires companies to disclose their actual owners. He cited former Treasury Secretary Janet Yellen’s 2021 remark that “there’s a good argument that the best place to hide and launder ill-gotten gains is actually the United States”.
The Chinese Embassy in Washington did not immediately respond to a request for comment.
Leland Lazarus, a former US diplomat and Southern Command official, said Chinese criminal groups have spread worldwide, forming what he calls a “Silk Road of crime” across the Americas. Treasury data, he told lawmakers, show Chinese money-laundering networks moved about US$312 billion through the US financial system from 2020 to 2024.
“These networks are involved in a whole host of crimes,” Lazarus said. “They traffic fentanyl, launder billions of dollars, mine gold illegally, trade in wildlife and sex, and run digital ‘pig-butchering’ scams.”
He said many of those behind the operations come from China’s Fujian province and often lead local chambers of commerce or hometown associations that blur the line between legal trade and organised crime. Some maintain contact with Chinese embassies or the Communist Party’s United Front Work Department.
Lazarus said there is no direct evidence that the Communist Party directs the networks, but argued that Beijing has not done enough to stop them. “The CCP has the surveillance tools to crack down,” he said. “It just hasn’t done so.”
Ray Donovan, a former DEA chief of operations, told the panel that China’s government has targeted financial networks while contributing to the synthetic drug epidemic.
He said congressional findings show that China subsidises most fentanyl precursor exports to Mexico and that Communist Party officials hold stakes in some of the companies receiving tax rebates for those shipments.
“What these findings prove is that the Chinese government’s lack of enforcement is intentional,” Donovan said.
He said China’s limits on moving money abroad have created an underground dollar market that links wealthy Chinese clients to cartel cash.
“This relationship is simple economics,” he said. “The policies create demand, and Chinese criminal groups meet it.”
Both witnesses urged tighter financial oversight. Lazarus called for a US inter-agency task force to track Chinese criminal networks and new tools to follow illicit finance. Donovan said banks remain the key point of vulnerability. “They’re the one part criminal organisations can’t avoid,” he said.
Lazarus warned that the system is already entrenched across the region, exploiting weak oversight and fuelling corruption.
“The Silk Road of crime is already running through our hemisphere,” he said. “It’s poisoning our citizens, corrupting partner nations and advancing the interests of our strategic competitor, whether by design or by default.”
