Grassley Highlights Nexus Between Chinese Money Laundering and State-Sanctioned Marijuana at Senate Drug Caucus Hearing

Grassley Highlights Nexus Between Chinese Money Laundering and State-Sanctioned Marijuana at Senate Drug Caucus Hearing

WASHINGTON - During a Senate Caucus on International Narcotics Control hearing, Co-Chair Chuck Grassley (R-Iowa) received confirmation from a top-ranking Drug Enforcement Administration (DEA) official that state-sanctioned marijuana operations controlled by Chinese Money Laundering Organizations are raking in significant amounts of illegal proceeds. Grassley also probed witnesses on Chinese fentanyl subsidies, trade-based money laundering and the Biden administration's pardoning and release of a prolific money launderer.

VIDEO

Read Grassley's opening remarks HERE. Excerpts from his questioning follow.

On State-Licensed Marijuana Farms' Generation of Illegal Proceeds:

"Mr. Kimbell, we just saw a video of sheriffs responding to a quadruple murder on an illegal marijuana farm. The State of Oklahoma had given the farm a medical marijuana license. The application for the license fraudulently stated that the operation was 75% owned by an Oklahoma resident, as required by state law. Instead, the marijuana farm was run by an ex-convict reportedly awaiting trial for a separate shooting incident. This isn't an isolated occurrence. Oklahoma law enforcement has shut down more than 800 marijuana farms in the last two years for operating illegally.

"Given this history, does the fact that a state licensed a marijuana farm mean that the farm isn't generating illegal proceeds?"

In response, William Kimbell, Chief of Operations for the DEA, affirmed that DEA has "identified in 23 states that the Chinese organizations have taken over the cultivation of marijuana. Some of those are legitimate, some of those are illegitimate. The vast majority that we find working with our state and local counterparts are illegitimate. That means that some of the properties are bought with third party actors, but the people working and cultivating in those facilities are controlled and work at the behest of Chinese money laundering organizations... We found this is a significant problem."

On Chinese Government Subsidies of Illicit Fentanyl:

"Mr. Chester, at an October Drug Caucus hearing I asked the State Department for a briefing before the U.S. lifted sanctions on China to secure fentanyl cooperation. I never got that briefing. In November, the Biden administration lifted sanctions. This month, the House China Select Committee issued a report finding the Chinese government publicly subsidizes the export of fentanyl and its knock-offs. This graphic is one of several subsidies they found. Given these findings, it seems irresponsible to appease China with relaxed sanctions.

"My staff received an email that you are at this hearing "representing the White House." Was the Biden administration aware of this illicit narcotics subsidy program before it made concessions to the Chinese government?"

Kemp Chester, Senior Advisor to the Director of the Office of National Drug Control Policy, responded that, "with the help of the Intelligence Community, the administration has a very good picture of what is and is not the role of the Chinese government in the flow of precursors and fentanyl into the United States."

On the Biden Admin's Release of Alex Saab:

"Mr. Kimbell, in December, President Biden released prolific money launderer Alex Saab to Venezuela as part of a deal cut with narco-terrorist Nicolas Maduro. Was the DEA consulted before the Biden Administration released Alexander Saab?

"The case against Saab is closed now that President Biden fully pardoned him. When will you release the investigative file?"

Kimbell made clear the DEA was not consulted prior to Saab's release and vowed to check the status of Saab's investigate file.

On the U.S.'s Working Relationship with China Regarding Illicit Narcotics:

"Mr. Nelson, after Secretary Yellen's meeting with Chinese officials in Beijing at the beginning of the month, she remarked that the U.S. and China will share best practices and information to clamp down on loopholes in our respective financial systems. What sort of information does the U.S. government plan to share with China?

"Did the Chinese government disclose its illicit narcotics subsidy program to any American official during discussions about enhanced cooperation?

"Does the Treasury Department plan to raise China's illicit narcotics subsidy program in future talks with China?"

Brian Nelson, Under Secretary for Terrorism and Financial Intelligence for the Treasury Department, offered Grassley a classified briefing to discuss the U.S.'s potential knowledge of China's illicit narcotics subsidy program.

On Trade-Based Money Laundering:

"Mr. Mayoral, since 2020, auditors have been calling on Homeland Security Investigations (HSI) to do more to counter money laundering. A 2020 Government Accountability Office report mentioned that HSI does not have a clear guide on how best to operate its Trade Transparency Unit, which counters trade-based money laundering. Further, an Office of Inspector General report said that HSI does not retain the expertise to combat these schemes.

"What is HSI doing to improve its trade-based money laundering operations?"

Ricardo Mayoral, HSI's Acting Assistant Director for Countering Transnational Organized Crime, stated that "trade-based money laundering is probably the most-used form of money laundering by transnational criminal organizations." HSI is addressing the GAO audit by automating their computer systems and requesting budgetary enhancements to increase its trade transparency unit staff.

-30-

• Print
• Email
• Like
• Tweet