This study focuses on organized crime ties between China and Latin America associated with expanding commercial and human contact between the PRC and the region. A review of open source data and interviews with subject matter experts in Latin America find evidence of such ties in four areas: (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 expatriates into the United States or Canada, (3) trafficking in narcotics and precursor chemicals, and (4) trafficking in contraband goods. It also finds evidence of modest levels of activities that could become significant in two other areas, arms trafficking and money laundering.
In June 2010, the sacking of Secretary of Justice Romeu Tuma Júnior for allegedly being an agent of the Chinese mafia rocked Brazilian politics.1 Three years earlier, in July 2007, the head of the Colombian national police, General Oscar Naranjo, made the striking proclamation that “the arrival of the Chinese and Russian mafias in Mexico and all of the countries in the Americas is more than just speculation.”2 Although, to date, the expansion of criminal ties between the People’s Republic of China (PRC) and Latin America has lagged behind the exponential growth of trade and investment between the two regions, the incidents mentioned above highlight that criminal ties between the regions are becoming an increasingly problematic by-product of expanding China–Latin America interactions, with troubling implications for both regions.
Although data to quantify the character and extent of such ties are lacking, public evidence suggests that criminal activity spanning the two regions is principally concentrated in four current domains and two potentially emerging areas. The four groupings of current criminal activity between China and Latin America are extortion of Chinese communities in Latin America by groups with ties to China, trafficking in persons from China through Latin America into the United States or Canada, trafficking in narcotics and precursor chemicals, and trafficking in contraband goods. The two emerging areas are arms trafficking and money laundering.
It is important to note that this analysis neither implicates the Chinese government in such ties nor absolves it, although a consideration of incentives suggests that it is highly unlikely that the government would be involved in any systematic fashion. This article also does not suggest that the criminal ties spanning both regions reflect a coordinated group of purpose-driven criminal organizations. Rather, it calls attention to a problem that is an unfortunate but natural artifact of the expansion of human and commercial contacts between Latin America and Asia, and for which Latin America may be frighteningly unprepared.
The “Chinese Mafia” in Latin America
As in other parts of the world, organized criminal groups with linkages to mainland China, Hong Kong, Taiwan, and Macau have long operated within the relatively closed ethnic Chinese communities of Latin America. Some but not all of these groups, referred to as the “triads,” had their origins as “secret societies” organizing Chinese diaspora communities, with respect to both their new countries and to political activities in mainland China and surrounding areas, but which evolved into criminal groups over time.
Because ethnic Chinese communities abroad have historically been reluctant to report problems among their own members to non-Chinese host nation authorities, the activities of Chinese mafias in Latin America have been almost invisible to date. Nonetheless, in recent years, stories have increasingly emerged regarding extortion and other criminal activity by such groups operating in the major urban centers. In Argentina, for example, where Chinese mafias with ties to Fujian Province have had a recognized presence since the 1990s, there have been increasing news accounts regarding extortion-related violence against Chinese shopkeepers.3 Indeed, accounts of such activities and related crimes against members of the Chinese business community have appeared in the press not only in metropolitan Buenos Aires, but also in other parts of the country, including Mar del Plata,4 Bahia Blanca,5 and Lomas de Zamora.6 Similar incidents have also been reported in the interior of Argentina, including the modest-sized provincial capital of Mendoza, where authorities reported 30 separate extortion threats in one 48-hour period in 2011.7
In metropolitan Lima, Peru, which is host to one of Latin America’s largest Chinese communities,8 similar accounts have emerged of “Chinese mafias” extorting ethnic Chinese owners of hotels, saunas, restaurants, discos, and other commercial establishments.9 Examples include an attack against a Peruvian Chinese restaurant in the neighborhood of Callao involving a Molotov cocktail (presumably for not paying “protection money”),10 and shopkeepers being extorted by members of the Red Dragon group from prisons in or near the capital.11
Authorities have detected Chinese mafias operating in Venezuela for at least the past 3 years.12 Accusations have also been made against Chinese mafias in Guayaquil and other parts of Ecuador since at least 2009.13
In Panama, whose Chinese population is arguably the largest in the region as a percentage of the population, comments from government officials appearing in the press refer to Chinese gangs involved in the extortion of members of the local Chinese community and other crimes.14 Publicly, the killing of five Chinese youths in the neighborhood of Chorea received national attention not only for its brutality, but also for the perceived lack of a substantial response by the national police.15 Members of Panama’s security forces, speaking off the record for this investigation, acknowledge that the Chinese mafia is very active in their country.
Violent assaults against Chinese communities in the Caribbean basin in recent months have highlighted the presence of Chinese mafia groups there as well, including a widely publicized double homicide in Trinidad in July 2012.16 In Paramaribo, Suriname, suspicious incidents in recent years have included a 14-year-old Chinese boy who was found chopped to pieces in front of a popular tourist hotel and, in a separate case, the beheading of a Chinese father and son.
Sometimes it is difficult to distinguish the Chinese mafia from the powerful but legitimate support structures of local Chinese communities. It is said that such mafias provide capital to help Chinese entrepreneurs establish businesses, a wholesale network for the goods sold in those stores, “organization of the market” assuring individual shopkeepers individual segments of the neighborhood, and, of course, protection services. On the other hand, in the case of Suriname, the official “club,” Kong Njie Tong Sang, and others representing the established Chinese community, are instrumental in providing revolving credit to the younger Chinese communities, while the hundreds of Chinese shops in the capital Paramaribo depend on a handful of Chinese wholesalers from the older generation Chinese-Surinamese community. Yet such structures do not make the established Chinese-Surinamese community a criminal mafia.
The activities of Chinese mafia groups create an inherent criminal link between China and Latin America, insofar as threats against families in China are often used as one of the tools for extorting Chinese individuals in Latin America.17 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, following trafficking routes up the Atlantic coast of Mexico that are currently controlled by Los Zetas.
Although such activities and ties are troubling in and of themselves, in the context of expanding flows of people, products, and money between China and Latin America, the risk is that these mafias, with their connections to Asia, will opportunistically expand into other types of activities associated with those flows. In Peru, for example, the group Red Dragon, whose activities were once principally confined to extorting local Chinese restaurant owners and shopkeepers, has diversified to include global human smuggling networks and, most recently, into trafficking cocaine and synthetic drugs from Asia.18
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. Illegal Chinese immigration into Latin America has been recognized as a significant problem by multiple organizations, including the United Nations Office on Drugs and Crimes.19 Such trafficking is highly lucrative, generating $70,000 or more per person and representing a $750 million per year business for the Chinese mafias alone, according to one estimate.20
Many of the routes used to move Chinese immigrants go through Europe, then to different parts of South America. In the case of Suriname, many of the immigrants come through the Netherlands, although Dutch authorities have recently taken steps to stop these flows.
Many immigrants begin their trip through South America in the Pacific coast nations of Colombia, Ecuador, or Peru,21 with patterns in such flows being strongly affected by changes in law enforcement patterns and policies in those countries. In 2007, for example, when Colombia ceased requiring visas for Chinese nationals to enter the country, the nation’s security service, the Departamento Administrativo de Seguridad, reported an increase in Chinese nationals transiting through the country, ultimately leading the government to reimpose the visa requirement.22
A similar dynamic occurred in neighboring Ecuador in February 2008 when that country dropped its own visa requirements for Chinese nationals entering the country, prompting an increase to almost 6,000 Chinese entering through official immigration channels that year and media coverage of the trafficking of Chinese as an issue.23 Associated with that event was a new wave of detentions as those individuals were moved overland through Colombia and then northward toward the United States by Chinese mafia groups such as Red Dragon.
Like Colombia and Ecuador, Peru has been beset by problems involving Chinese mafia groups such as Red Dragon illegally moving immigrants through the country, often across its border with Ecuador,24 and acquiring documents for them. In at least one case, government employees of the national document registry were implicated in providing false identity documents,25 including one case in which 22 members of the agency were accused of issuing false birth certificates.26
Beyond the Pacific coast countries that often serve as points of entry, other Chinese trafficked into the region travel overland through Bolivia and Paraguay,27 ultimately remaining in countries such as Argentina28 or later moving on toward the United States. In Bolivia, in particular, a number of detentions of Chinese nationals traveling through the country without proper documents have been reported in recent years.29 As with Peru and elsewhere, such activities have come to involve government workers in the process of obtaining false identity documents. In 2006, for example, 16 current and 12 former Bolivian congressmen were implicated in granting false visas to Chinese immigrants.30
Although a portion of those entering the region through such illegal networks remain in South America, the majority continue toward the United States and Canada, often traveling overland through Central America and Mexico.31 Anecdotal evidence of such flows includes the April 2011 implication of the head of the Panamanian immigration directorate in generating false documents for Chinese passing through the country.32 An expansion in the flow through Costa Rica has also been detected33 with a corresponding increase in detentions.34
Anecdotal public evidence also suggests a correlation between Chinese entering the Pacific coast of Latin America and illegal flows of Chinese migrants through Central America. Between January 2006 and 2007 alone, detentions of Chinese illegally passing through Costa Rica, Panama, and Colombia registered a 2,500-percent increase after the previously noted policy change in which the Colombian government temporarily suspended the visa requirement for Chinese nationals.35
Mexican authorities distinguish between two separate flows. As noted, Chinese nationals crossing through the southern border of Mexico enter principally at Frontera Corozal, in the state of Chiapas, into Tapachula, where there is a sizable ethnic Chinese community. They then journey by train to the Atlantic coast through territory controlled by Los Zetas. Separately, Chinese migrants enter directly from Asia, passing through ports on the Mexican Pacific coast, including Puerto Vallarta in Jalisco, Manzanillo in Colima, and Coyacan in Mazatlan. Still others come in by air directly to Mexico City, where the activity of Chinese trafficking networks has been publicly reported by the Attorney General’s office.
Part of the worrisome dynamic created by such flows is the opportunities for interaction they create between the mafias linked to China, such as Red Dragon, which ostensibly manage the journeys of these immigrants, and the Latin American–based criminal groups that control the territory through which they pass, such as Mexico-based transnational criminal organizations.36 Chinese immigrants illegally entering through the Pacific coast, for example, currently pass through areas in which illicit activities such as human trafficking are controlled and taxed by the Juarez and Gulf cartels. Chinese people entering Mexico from Central America reportedly follow routes currently controlled by Los Zetas. Among other risks, the interactions associated with the implied collaboration between Chinese groups and the Mexican cartels are its potential to diversify into other forms of collaboration, as well as competition.
Although the Central America–Mexico route is a major pathway for Chinese bound for the United States, it is also important to mention other routes, such as smuggling Chinese through Venezuela and the Caribbean.37 The use of Venezuela reflects both the sizable Chinese community there and the increasing corruption of authorities at all levels.38 On multiple occasions, authorities detected and acted against the Chinese trafficking network operating out of Puerto Ordaz, in northeast Venezuela, with one major case reported in 200739 and another in December 2011 in which the Venezuelan Intelligence Service found government equipment used for the production of documents in the hands of these criminal groups.40
In Trinidad and other parts of the Caribbean, authorities have registered an increase in the trafficking of Chinese people since 2006.41 Analysts in Trinidad and Tobago have expressed concern that the officially authorized entry of Chinese workers for the growing number of construction projects undertaken by Chinese firms may also facilitate human trafficking, with Chinese nationals overstaying their work permits and being smuggled by the Chinese triad-affiliated “snakehead gangs” into the United States.42
In Suriname, similar patterns are suspected of Chinese individuals entering the country on work permits, facilitated by the government’s revolving construction agreement with China Dalian, then overstaying their visas. In Guyana, undocumented Chinese workers were exposed in the nation’s gold-mining sector.43
Trafficking in Narcotics and Precursor Chemicals
Beyond human trafficking and extortion in Latin American Chinese communities, troubling new trans-Pacific ties 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.44
The Mexican cartel Jalisco Nueva Generation, for example, imports both cocaine from Colombia and ephedrine from China.45 Multiple seizures of such chemicals coming from China and India, and entering commercial ports such as Lazaro Cardenas and Michoacán, have been made in recent years by Mexican authorities.46 Although publicly available evidence does not make it clear whether Chinese organized crime groups are involved, or whether the Mexican cartels are simply buying precursor chemicals from Chinese companies with lax controls,47 anecdotal evidence such as the Zhenli Ye Gon case48 suggests that Chinese organized crime is likely participating.49
In addition to Mexican ports, shipments of precursor chemicals have been intercepted coming into other Latin American countries such as Peru, where both the Sinaloa and Tijuana cartels are believed to be operating.50 Moreover, the Peruvian connection suggests the possible emergence of a global narcotics supply chain, with precursor chemicals such as kerosene moving to “source zone” countries such as Peru, where the drugs are made and ultimately transshipped by Mexico-based cartels to the United States and elsewhere.
In addition to precursor chemicals, criminal groups are smuggling finished drugs between the two regions, with the growing potential for collaboration and competition between Chinese and Mexican criminal organizations. Recent cases suggest that the Sinaloa cartel, for example, is attempting to enter the Asian market,51 including a September 2011 incident involving a shipment of cocaine from Mexico to Hong Kong.52 Cocaine has also been intercepted following a southern route from Chile to Asia,53 and some interactions have been reported between Mexican drug cartels and Asian heroin-trafficking groups.54
Trafficking in Contraband Goods
In addition to people and narcotics, the flow of illicit merchandise from China to Latin America, including pirated software, music CDs, and brand-name clothes, presents an opportunity for collaboration between organized crime in the sending and receiving countries, particularly where Chinese merchants in Latin American are vendors of those goods, or where the territory in question is dominated by Latin American criminal organizations such as Mexican cartels or even street gangs.
The Chinese groups Fuk Ching, the Flying Dragons, and Tai Chen, for example, have been identified as importing contraband goods into the tri-border area.55 Chinese gangs in Venezuela reportedly rob merchandise and resell it to Chinese merchants in their protection network.56 Mexican groups such as Los Zetas appear to take a cut from groups distributing pirated Chinese software. Beyond just distribution, Mexican authorities interviewed for this study indicated that there are indeed emerging ties between the cartels and Chinese organized crime in the importation of contraband goods, including in the port of Veracruz, previously controlled by Los Zetas, as well as various Pacific coast ports. At the time this study was written, most of the retail sales of Chinese contraband goods, such as the market of Tepito in Mexico City, were still being run by Mexicans with the suggestion that Chinese merchants and associated criminal organizations were being kept out.
Interaction involving the flow of illegal commercial goods is not limited to the retail sector. In Michoacán, the La Familia cartel was identified as organizing and taxing the illegal extraction of ore from mines in the region and its sale to China.57 Chinese criminal groups are similarly reported to be engaged in illegal mining in the remote province of Madre de Dios in southeastern Peru.58 As the volume of contraband flows increases between the regions, as part of the expansion of all trade between the regions, the prospects seem high for organized crime on both sides to more actively seek to capture this revenue stream.
Although much attention is given to flows of firearms from the United States into Mexico, the PRC, through the black market, is one of the principal providers of military-grade munitions to the region.59 A particular problem is Chinese arms smuggled into Mexico, often through the United States.60 In 2008, for example, the commander of 8th Military Zone of Mexico, Luis Villegas, claimed that Chinese arms were being smuggled across the U.S. border into Tamaulipas, along with U.S. and Russian arms.61 Chinese-manufactured grenades and other military items have been seized in Puebla and elsewhere in Mexico, although it is not clear that the Mexican cartels are purchasing directly from Chinese criminal groups or arms companies.
Reports suggest that such arms are smuggled into the country in containers of Chinese merchandise through many of the same Pacific coast ports as ethnic Chinese people and contraband goods, including Manzanillo (which by coincidence is controlled by the Hong Kong–based logistics company Hutchison Whampoa).62
Although there is little evidence that the Chinese government is knowingly involved in the trade, the degree to which Chinese arms companies such as the Northern Industries Corporation ensure that their weapons are not sold or diverted into the black market is not clear. Recognizing such concerns, the Chinese government promulgated the Law on Control of Guns in July 1996, issued regulations on the Administration of Arms Export in October 1997, and started amending the regulations from October 2002, allowing sales only to licensed buyers.63
In arms trafficking, there are also troubling gray areas, as highlighted in a recent investigation by the Colombia prosecutor’s office implicating a Venezuelan government official for the purchase of Chinese weapons by the Revolutionary Armed Forces of Colombia.64
Finally, as banking and commercial ties expand between China and Latin America, and as options increase for converting Chinese currency into dollars or Latin American currencies, criminal groups on all sides may increasingly use trans-Pacific financial flows to hide income and protect illicitly gained wealth. There is evidence that such activities have already begun, taking advantage of the difficulty Latin American investigators have in following or scrutinizing transactions in Asia. In March 2010, for example, the Mexican Federal Police made public a case in which the Colombian Valle de Cauca cartels, in their dealings with the Mexican group La Familia, had sent part of their earnings to the PRC.65
Chinese-owned gambling operations in Latin America also present significant opportunities for money laundering, given the large cash flows involved with such establishments, just as the Russian mafias operating in Panama and Uruguay reportedly use casinos there to launder money.66 In a similar vein, as with all major gambling-oriented commercial establishments, new Chinese gambling facilities such as the $2.5 billion Baha Mar resort currently being built in the Bahamas could play such a role.
Finally, although there are currently few indications that flows of money by Chinese investors into the British Virgin Islands and Cayman Islands play a major role in money laundering by Chinese criminal groups,67 evidence suggests that a variety of Chinese entities already use these destinations for tax shelter purposes, implying that it is reasonable to expect that Chinese criminal entities will increasingly use them to hide their earnings as well.
Implications for Latin America
Latin American law enforcement is woefully unprepared to meet the challenge of increasing criminal ties between the two regions. In particular, police forces are already overwhelmed by a lack of resources, competing demands, corruption, and low levels of trust from the societies in which they operate. They thus have little ability to penetrate Chinese communities where the new criminal activities are taking place and conduct such basic activities as gathering evidence and obtaining witnesses.68 Authorities lack not only ethnic Chinese agents, but also reachback to technical contacts in Asia who can provide background information regarding the people and gangs they are investigating. Also absent is the basic language skill to interrogate suspects and witnesses in the communities in which the crimes occur.69
In some cases, the Chinese or Taiwanese embassies have provided assistance in operations involving Chinese communities, as was the case in Ciudad Guyana in December 2011, when the Chinese embassy helped local authorities analyze documents, computer records, and other seized assets.70 During a police investigation into the Chinese mafia in Mar del Plata, Argentina, in December 2011, for example, specialists had to be brought in from Buenos Aires because the authorities where the crime was committed were from Fujian and did not speak Mandarin Chinese, let alone Spanish.71 Nevertheless, anecdotal stories of technical assistance from Taiwan or the PRC only underscore the degree to which Latin American security forces lack the linguistic, human, and technical capabilities to follow the trail of criminality into Chinese communities or the contacts to follow it back to Asia itself.
A compounding problem in managing such criminal activities throughout the region is that the police have historically not made a significant effort to penetrate the Chinese communities in their jurisdictions, all too often allowing what happens in the Chinese barrios to be the business of the communities themselves. A senior officer from the Trinidad and Tobago Criminal Investigations Unit referred to the “culture of the Chinese . . . to ‘keep things to themselves.’”72 In some cases, authorities publicly deny that Chinese gangs even exist, including a case in Peru that was covered in the media.73
Although criminal ties with China are not one of the major problems currently facing Latin American governments, it is likely to increase with the expanding commerce and investment between the two regions. Based on historical precedents to date, activities by Chinese triads and tongs are likely to grow in Chinese communities in major Latin American cities, diversify into other activities, and forge new linkages with other criminal organizations, as happened when the Red Dragon organization in Peru evolved from extortion to human trafficking to narcotics and other activities.74
Human trafficking flows are likely to expand with the growing number of Chinese workers, including those used in the new influx of loan-backed Chinese construction projects in the Caribbean. Purchases of precursor chemicals from China and India by Mexican drug cartels are 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, increasing currency convertibility, and Chinese-owned casinos in Latin America will present new options for both Latin American and Chinese criminal organizations to launder money and protect assets that will be difficult to monitor.
Such concerns apply across a range of scenarios for the future of China–Latin America relations. If the Chinese economy slows, for example, floating urban populations in coastal urban areas are likely to expand the pool of U.S.-bound migrants for human trafficking organizations to move through Latin America. If Chinese economic growth remains strong, flows of people, container traffic, and financial transactions will proliferate the number of opportunities for organized crime on both sides to move merchandise.
Implications for the United States
Expanding China–Latin America criminal ties affect the United States in myriad ways. First, the majority of ethnic Chinese being smuggled through Latin America, and a good portion of the synthetic drugs produced from precursor chemicals originating in the PRC, are destined for the United States. Second, expanding money laundering options involving Chinese banks and companies benefit Latin America–based transnational criminal organizations (TCOs) such as the Mexican cartels and Colombian BACRIM (that is, criminal bands), which the United States is directly combating. Moreover, an increase in the power of Latin America–based TCOs, or alternatively, an increase in violence due to turf wars with Chinese mafias, would further destabilize countries such as Mexico and affect Central America and the Caribbean, both closely connected to the United States in economic and human terms, and whose most vulnerable and marginalized people historically seek refuge in the United States when conditions worsen.
Finally, although Chinese communities in Latin America are not a threat themselves, given evidence that they are the nexus for organized crime ties between the PRC and Latin America, it is a national security risk that U.S. and Latin American authorities have almost no visibility into.
The United States has a strategic interest in working with both the PRC and Latin American governments to manage the challenge posed by expanding China–Latin America criminal ties. Indeed, this area is arguably one of the most promising arenas in which the PRC, the United States, and Latin America can combine their efforts for the benefit of all, and in the process build confidence not only in the China-U.S. bilateral relationship, but also Latin America’s view of the United States as a partner. Washington already has programs for working with the Chinese on criminal issues in major cities with substantial Chinese populations, including San Francisco and Los Angeles. Through multilateral forums, and empowered by new trilateral agreements, U.S., Chinese, and Latin American authorities should set up multinational anticrime mobile assessment and training teams and eventually “fusion centers” in the region.
The Chinese government would provide translators with experience in Mandarin, Cantonese, Hakka, and other dialects, as well as access to Chinese police and other databases. The United States should involve agencies such as the Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Federal Bureau of Investigation; and select state and local police forces. It should use its own experiences in working with the Chinese on crime issues to help Latin American police forces combat crime effectively.
Collaboration on organized crime among the United States, China, and the countries of Latin America could be an important vehicle for building confidence and overcoming tension as China expands its presence in Latin America in the context of the dominant U.S. position there. Ironically, if such collaboration were channeled through multilateral American institutions such as the Organization of American States, it could show that continuing to include Washington in the region and its institutions is desirable as it reaches out to China and other actors. PRISM