How CCP-Backed Money Launderers Exploit Canada’s Loopholes for Cartel Operations

Sep 5, 2025 - 09:54 Updated: Sep 4, 2025 - 23:43

How CCP-Backed Money Launderers Exploit Canada’s Loopholes for Cartel Operations

News Analysis

Last week, the U.S. Treasury Department issued an advisory that described Chinese money launderers as “vital” to cartel fentanyl trafficking, saying that from 2020 to 2024 US$312 billion was found to be linked to such activities.

Although the advisory makes no specific mention of Canada, RCMP and Canadian Armed Forces intelligence veteran Scott McGregor says it’s clear that Canada’s lax laws and enforcement when it comes to such issues make it a “permissive financial junction” enabling the transnational illegal activities.

“Chinese underground bankers provide the circulatory system and our weak anti-money laundering posture supplies the oxygen,” McGregor said in an interview.

“The Chinese and the cartels all conduct operations together, also by themselves and with other entities,” he said, adding that Iranian groups also play a role in the fentanyl trafficking network.

He describes Canada as the “centre of gravity” for transnational organized crime in North America, where major criminal networks, including Chinese regime-backed money laundering groups, concentrate their operations by exploiting loopholes in the country’s legal and judicial systems.

Canada last year was identified as a major money laundering jurisdiction by a U.S. government report. The report said major money laundering activities in Canada involve the proceeds of crime such as drug trafficking, counterfeiting, piracy, and tobacco smuggling.

FBI Director Kash Patel and the White House have expressed concerns over drug manufacturing and cartel operations in Canada, with Patel saying in May that the Chinese Communist Party (CCP) and the regimes in Russia and Iran are partnering with cartels to smuggle fentanyl into the United States through Vancouver.

The Aug. 28 Treasury Department advisory says that major cartels prefer Chinese money laundering networks because of their speed, effectiveness, and willingness to absorb financial losses or assume risks for the cartels and other clients.

Two factors make the Chinese key actors in money laundering operations, says McGregor. One is that China acts as a “black hole” for information traceability, with financial movements and related operations often concealed through tactics like document falsification.

The second factor is the Chinese regime’s war against the West, with its aim of undermining Western societies driving its involvement in the fentanyl crisis beyond mere profit, McGregor says.

Firearms and illicit drugs are displayed as RCMP officers hold a news conference at RCMP headquarters, in Surrey, B.C., on Oct. 31, 2024. The Canadian Press/Darryl Dyck

“The Chinese are known within the illicit world as the gatekeepers in terms of money movement and trade-based and service-based money laundering because of how affordable they make it for everyone else, and so they become the dominant factor,” he said.

“It’s part of China’s hybrid warfare strategy for global domination by 2050,” he added. “China is a communist country, and basically they can make as much money as they want.”

And much of the money laundering by Chinese criminal groups is centred in Vancouver, McGregor says, where the influence of the Chinese regime, due in part to the city’s large Chinese diaspora, makes it easier for these groups to operate.

‘The Vancouver Model’

Garry Clement, former national director for the RCMP’s Proceeds of Crime program and a money laundering expert, describes Vancouver as “ground zero” for drug-related crime, serving as a key transshipment point for narcotics from China into North America.

The Chinese criminal groups involved in fentanyl trafficking and money laundering are the Chinese triads, which work in partnership with cartels and with the support of the People’s Republic of China (PRC), Clement says.

Peter German, former deputy commissioner of the RCMP, speaks about his review of anti-money laundering practices in the province, during a news conference in Vancouver, on June 27, 2018. The Canadian Press/Darryl Dyck

“When it comes to fentanyl, I think what people have to realize is that this is really a disruptive war tactic by China,” Clement told The Epoch Times. “I firmly believe that China could shut down their precursors that go into the manufacturing of fentanyl if they wanted to.”

Communist China is considered a key contributor to the fentanyl crisis because the majority of chemicals used to assemble illicit fentanyl are known to originate in Chinese chemical companies.

A recent report by the U.S. Drug Enforcement Administration said Canada is a destination point for shipments of precursor chemicals. It noted the recent busts of “Super Laboratories” in Canada, saying that they pose “a growing concern for the United States.”

It added that while drug seizures at the Canadian border are much smaller in scale than those caught at the U.S.-Mexico border, the Canadian operations “have the potential to expand and fill any supply void created by disruptions to Mexico-sourced fentanyl production and trafficking.”

The report also noted the difficulty in detecting precursor chemical shipments, saying they arrive in mislabelled packages to avoid detection and mask the country of origin.

Tablets suspected to be fentanyl are placed on a graph to measure their size at the DEA Northeast Regional, in New York, on Oct. 8, 2019. (Don Emmert/AFP via Getty Images)

One of the primary money laundering methods used by Chinese criminal groups is the so-called Vancouver Model, in which illicit money, often from drug sales, is gambled and cashed out of casinos as clean cash. That money is then used to purchase assets like real estate.

The model drew significant attention in 2022 when the Cullen Commission revealed an “unprecedented volume” of illicit cash laundered through B.C. casinos. The public inquiry, ordered by the provincial government, was launched in response to concerns about money laundering and its impact on B.C.’s drug crisis and housing market.

“Between 2008 and 2018, Lower Mainland casinos accepted hundreds of millions of dollars in cash that was the proceeds of crime,” reads the final report, released in June 2022. “These transactions were an integral part of a money laundering typology known as the ‘Vancouver model.’”

The report notes that the operation often involves Chinese casino patrons with significant wealth in China but limited access to it in Canada due to Chinese currency export restrictions. Criminally affiliated “cash facilitators” provide them with large sums of illicit cash, which they use to gamble, thereby laundering the money for the criminal groups.

According to the report, B.C. casinos accepted nearly $1.2 billion in cash transactions of $10,000 or more in 2014 alone.

Clement says Canada has admitted “many” known Chinese triad members through immigration, many of whom are well-established, sophisticated, and exert influence over the diaspora community.

Commissioner Austin Cullen listens to introductions before opening statements at the Cullen Commission of Inquiry into Money Laundering in British Columbia, in Vancouver on Feb. 24, 2020. The Canadian Press/Darryl Dyck

In addition, Canada has “fallen behind” from a legislative point of view, as its laws are “inadequate” to tackle transnational organized crime, he said.

“Canada is a fairly integral part of what’s occurring in the fentanyl trade,” Clement said.

McGregor says Canada can adopt several measures to address criminal activity on its soil, including money laundering.

“Ottawa must treat laundering as a national security threat, build a unified financial crimes agency, and deliver visible prosecutions of cartel [transnational narcoterrorism] proxies and PRC linked networks,” he said.

Catherine Yang contributed to this report.