China police probe drug-related money laundering operation after US tip

FILE PHOTO: Interagency U.S. delegation visits China to launch the U.S.-China Counternarcotics Working Group

By Antoni Slodkowski

BEIJING (Reuters) - Chinese police are investigating a case of illegal foreign exchange activity and money laundering after tip-offs from the United States, state media said on Wednesday, in a rare instance of collaboration on narcotics between the two superpowers.

The U.S. and China restarted talks on counter-narcotics and law enforcement cooperation at the start of the year and China's public security department lauded the case as a successful example of Sino-U.S. anti-drug cooperation.

The news appeared to corroborate information released by the U.S. Justice Department on Tuesday, alleging that Mexico's Sinaloa Cartel conspired with groups based in California and tied to Chinese underground banking to launder drug-trafficking proceeds of over $50 million.

The Justice Department said it closely coordinated with law enforcement in Mexico and China.

Chinese state media said in a brief dispatch that, following U.S. tip-offs, an investigation found that since 2017 a man surnamed Tong started a car dealership in the U.S. to sell vehicles and offer Chinese yuan and U.S. dollar exchange services for car-buying customers.

The operation later evolved into criminal activities including the illegal trading of foreign exchange, Xinhua and CCTV news outlets said, citing the public security department.

The suspect was arrested and the case is under further investigation, state media said. The superseding indictment names a man named Peiji Tong as one of the defendants.

When asked about the case at the regular news conference, China's foreign affairs ministry said, "we refer you to the competent authorities".

The United States, where fentanyl abuse has been a major cause of death, has pushed for deeper law enforcement cooperation, including on tackling illicit finance, and further controls on the chemicals that can be used to make fentanyl.

State broadcaster CCTV said China's National Health Commission has decided to include 46 substances in the "supplementary list of controlled non-pharmaceutical narcotic drugs and psychotropic drugs" from July 1.

These developments come as Rahul Gupta, director of the White House Office of National Drug Control Policy, was expected to arrive in Beijing to meet high level Chinese officials this week.

Also on Wednesday, the National Drug Control Office released its annual drug situation report, saying that the authorities solved a total of 42,000 drug-related cases, arrested 65,000 criminal suspects and seized 25.9 tons of various drugs.

(Reporting by Bernard Orr and Shanghai newsroom; Editing by Raju Gopalakrishnan and Christina Fincher)