In April 2012, authorities in the prosperous and generally peaceful Caribbean nation of Belize intercepted a shipment of precursor chemicals sent from China and apparently bound for representatives of the Mexican cartel “Los Zetas.” The shipment—sufficient to produce an estimated $10 billion in methamphetamines—highlights growing criminal ties between China and Latin America that have accompanied, but, to date, have lagged behind the exponential growth of trade and investment between the two regions (7 Belize News, April 11).
The limited amount of publicly available evidence suggests that criminal activity spanning the two regions is concentrated in five current or emerging domains: (1) extortion of Chinese communities in Latin America by groups with ties to China; (2) trafficking in persons from China, through Latin America, to ultimately smuggle Chinese into the United States or Canada; (3) trafficking in narcotics and precursor chemicals; (4) trafficking in contraband goods; and (5) money laundering.
The “Chinese Mafia” in Chinese Communities of Latin America
As in other parts of the world, organized criminal groups with linkages to China have long operated within the relatively closed ethnic Chinese communities of Latin America. Some, but not all, of these groups had their origins as “secret societies” organizing Chinese Diaspora communities, but evolving over time into criminal entities. Because Chinese communities have historically been reluctant to report problems among their own members to non-Chinese authorities, their activities in Latin America have received little attention so far. Nonetheless, accounts of their activities in the Latin American press have increased in recent years. This includes extortion-related violence against Chinese shopkeepers in Argentina, going beyond the greater metropolitan area of Buenos Aires to include Mar del Plata, Bahia Blanca, Lomas de Zamora and Mendoza (Diario Uno, December 24, 2011, August 21, 2011; La Nación, October 11, 2011; Clarin, October 2, 2011). It also includes similar accounts in Lima, Peru of “Chinese mafias” extorting ethnic Chinese businessmen and related incidents, such as the bombing of a Peruvian Chinese restaurant in the suburb of Callao presumably for not paying “protection money” (Trome, May 8, 2011; El Comercio, January 21, 2011, June 22, 2010). In Venezuela, authorities have detected Chinese mafias operating in the country for at least the past three years (La Prensa, April 10, 2010).
As more people and goods flow between China and Latin America, the risk is that these mafias will expand opportunistically into other types of activities taking advantage of these flows. In Peru, for example, “Red Dragon” has over time, expanded from extortion of local shopkeepers into human smuggling and, most recently, into the trafficking of narcotics and precursor chemicals from Asia (Peru 21, August 13, 2010).
Trafficking in Persons
Currently, smuggling of persons from Asia through Latin America to Canada and the United States is the largest visible transnational criminal linkage between the two regions. It is highly lucrative for the groups involved, generating $70,000 or more per smuggled person for the criminal organizers .
Smuggling groups use numerous routes. Much of this traffic so far has flowed through Colombia, Ecuador or Peru, but the traffic involves virtually all of the Americas as a function of where opportunities present themselves (Reforma, October 8, 2007). In 2007, when Colombia ceased requiring visas for Chinese nationals to enter the country, and in 2008, when Ecuador did the same, the number of Chinese transiting through the country jumped in both cases. The acquisition of documents for transiting Chinese spawns corruption at the highest levels. Last year in Peru, 22 members of the national document registry (RENIEC) were exposed for issuing false birth certificates to Chinese (La Gran Época, July 31, 2011; El Comercio, July 25, 2011). In April 2011, the head of the Panamanian immigration directorate was implicated in the generation of false immigration documents for Chinese passing through the country (La Estrella, April 26, 2011; April 25, 2011).
Many of the Chinese ultimately pass through Central America and Mexico on the way to the United States and Canada, following routes now controlled or taxed by the Mexican cartels, stimulating interactions between Chinese and Mexican groups that may diversify into other forms of collaboration and competition (Reforma, October 23, 2010). A particularly worrisome example of such ties is the presence of the Chinese mafia in Tapachula, in the state of Chiapas, which serves as a point of entry into Mexico for Chinese and others crossing at Frontera Corozal and following trafficking routes up the Atlantic coast of Mexico currently controlled by Los Zetas.
In addition, Chinese persons also are being smuggled through Venezuela and the Caribbean (El Nuevo Diario, March 22). Venezuelan authorities have detected Chinese trafficking networks operating out of Puerto Ordaz on multiple occasions (La Patilla, December 8, 2011; El Universal, April 20, 2007). In Trinidad, authorities have registered an increase in trafficking of Chinese since 2006 (Trinidad Guardian, May 17, 2011).
Trafficking in Narcotics and Precursor Chemicals
Troubling new trans-Pacific ties also appear to be forming in the domain of narcotrafficking. Mexican cartels, such as Sinaloa and Tijuana source many of their precursor chemicals from Asia, particularly those for methamphetamines, such as ephedrine and pseudoephedrine (El Universal, July 28, 2010; La Prensa, December 15, 2009). Multiple seizures of such chemicals coming from China and India and entering Mexican commercial ports, such as Lázaro Cárdenas and Michoacán, have been made in recent years by Mexican authorities. “Jalisco Nueva Generation,” a splinter of the Mexican Pacific cartel, imports both cocaine from Colombia and ephedrine from China (Noticias 24, March 12). The 2007 case of the Chinese group Zhenli Ye Gon manufacturing methamphetamines in Mexico suggest that such ties go beyond just purchases of chemicals from Chinese companies with lax controls (El Universal, August 1, 2007).
Shipments of precursor chemicals from China also have been intercepted coming into Peru, suggesting the emergence of narcotics supply chains with a disturbingly global character.
Finally, criminal groups also are smuggling finished drugs between the two regions, including attempts by the Sinaloa cartel to sell cocaine in the Asian market (Milenio, September 19, 2011; La Prensa, April 24, 2011).
Trafficking in Contraband Goods
The flow of illicit merchandise from China to Latin America—including pirated software, music CDs and brand name clothes—presents yet further opportunities between organized crime in the sending and receiving countries. The Chinese groups Fuk Ching, Flying Dragons and Tai Chen reportedly import contraband goods into the tri-border area, while Chinese gangs in Venezuela rob merchandise and resell it to merchants in their protection network (Diario de los Andes, April 11, 2010) . Mexican groups, such as Los Zetas, appear to take a cut from groups distributing pirated Chinese software. Nor is such interaction limited to retail goods. In Michoacán, the La Familia cartel is reportedly involved in illegal mining and exporting the proceeds to China, while ethnic Chinese groups are engaged in similar activities in the remote Peruvian province Madre de Dios (Reforma, October 14, 2010; Milenio, October 14, 2010) .
Finally, as financial transactions and ties between China and Latin America expand, criminal groups on all sides may increasingly use trans-Pacific financial flows to hide income and protect illicitly-gained wealth. In March 2010, for example, the Mexican Federal Police publicized a case in which Colombian cartels working with the Mexican group La Familia had sent part of their earnings to China (El Comercio, March 14, 2010).
The opportunities for money laundering have expanded even further by new Chinese-owned gambling facilities, such as the $2.5 billion Baha Mar resort currently being built in the Bahamas, given the large amounts of cash that can flow through such facilities.
Latin American law enforcement is woefully unprepared to meet the challenge of increasing criminal ties between the two regions. Already overwhelmed by a lack of resources, competing demands, corruption and low levels of trust from the societies in which they operate, police forces have little ability to penetrate Chinese communities where the new criminal activities are taking place (Reforma, October 8, 2007). Authorities not only lack ethnically Chinese agents and language skills (especially in non-Mandarin dialects), but also lack contacts in Asia to obtain background information on the entities they are investigating . While Chinese and Taiwanese embassies sometimes assist with such operations, this is more often the exception than the rule (La Patilla, December 8, 2011).
China-Latin America criminal ties are likely to become greater with the expanding commerce and investment between the two regions. Historical experience suggests that Chinese triads and tongs operating in Chinese communities in major Latin American cities will continue to diversify into human trafficking, narcotics and other lucrative criminal activities—as happened with the Red Dragon organization in Peru (Peru 21, August 13, 2010).
Human trafficking flows are likely to expand with the growing number of Chinese workers, including the new influx of loan-backed Chinese construction projects in the Caribbean. Purchases of precursor chemicals from China and India by Mexican drug cartels is likely to expand into other forms of collaboration as well as competition for “turf” in overlapping business areas such as Pacific maritime logistics. Mafias on both sides of the Pacific are likely to become increasingly involved in taxing, and perhaps controlling, the growing and highly lucrative contraband trade. New trans-Pacific banking ties and increasing currency convertibility will create new, difficult to monitor options for criminal organizations to cross the Pacific to hide earnings and protect assets.
If such ties are part of the downside of the new engagement between China and Latin America, it is also an opportunity for increased three-way collaboration between governments of the region, China and the United States, in the spirit of developing confidence and working toward “win-win” relationships.
Trafficking in Persons Report 2010. U.S. Department of State. http://www.state.gov/j/tip/rls/tiprpt/2010/index.htm.
Juan Gabriel Tokatlian, “A View from Latin America,” in Riordan Roett and Guadalupe Paz, eds., China’s Expansion into the Western Hemisphere, Washington DC: Brookings Institution Press, 2008, p. 88; Rex Hudson, “Terrorist and Organized Crime Groups in the Tri-Border Area (TBA) of South America,” Washington, DC: Federal Research Division, Library of Congress, 2003 (Revised 2010) http://www.loc.gov/rr/frd/pdf-files/TerrOrgCrime_TBA.pdf; Alejandro Kenny, “China’s Presence in Latin America: A View on Security from the Southern Cone,” Military Review, September-October 2006, pp. 60–66.