January 11, 2024
Fraternal Order of Police President, Former DEA Official, Speak About Crypto’s Role in Fentanyl Trade
Warren’s Bipartisan Digital Asset Anti-Money Laundering Act Would Close Loopholes in Anti-Money Laundering Rules to Help Prevent Crypto-Facilitated Fentanyl Trade
Washington, D.C. – At a hearing of the Senate Banking, Housing, and Urban Affairs Committee, U.S. Senator Elizabeth Warren (D-Mass.) called for action to address crypto’s role in facilitating the illicit fentanyl trade. Holes in anti-money laundering laws have given drug cartels and traffickers a backdoor to move their drug money around, helping to worsen the opioid crisis.
In questioning, Fraternal Order of Police President Patrick Yoes explained that fentanyl criminals will continue using crypto to exploit holes in anti-money laundering laws “until we find ways to close those gaps.” Christopher Urben, a former Drug Enforcement Agency Official, explained that crypto has allowed bad actors to “take advantage of the lack of compliance and oversight in the crypto industry.”
Senator Warren called for action on her Digital Asset Anti-Money Laundering Act, which would close loopholes in our anti-money laundering rules to crack down on crypto’s use by drug traffickers, terrorists, ransomware gangs, and rogue nations.
Transcript: Stopping the Flow of Fentanyl: Public Awareness and Legislative Solutions
U.S. Senate Committee on Banking, Housing, and Urban Affairs
Thursday, January 11, 2024
Senator Elizabeth Warren: So fentanyl killed more than 78,000 Americans last year, including more than 2300 people in Massachusetts. And crypto helps fund that death toll.
Crypto plays a role at every stage in the illicit fentanyl trade. Chinese companies sell the chemical ingredients used to make fentanyl to drug cartels and they get paid in crypto. The drug cartels and the traffickers sell their deadly drugs in the darkest marketplaces, and they get paid in crypto to the tune of about one and a half billion dollars in 2022. And drug kingpins buy weapons and cars and make payoffs, again, using crypto.
Now the Trump administration's DEA spotted this problem five years ago. In their 2018 threat assessment they said that cryptocurrencies “offer traffickers a relatively secure method for moving illicit proceeds around the world with much less risk compared to traditional methods.” And since then, the problem has only gotten worse.
Take one case. Last year, the Department of Justice indicted a Sinaloa cartel member who laundered nearly $900,000 in crypto by directing their US-based drug couriers to deposit cash straight into the cartel's crypto accounts. And what did they then turn around and use that crypto for? They reinvested in the cartel's fentanyl factory, so that they could pump more fentanyl into the United States.
Mr. Yoes, Thank you for your work, and for the work of hundreds of thousands of police officers in the United States who are on the frontlines in the opioid crisis. You've seen the various tricks that drug traffickers use to move their drug money around. So if I can, let me ask you, why do you think cartel members find crypto such an attractive option?
Patrick Yoes, National President, Fraternal Order of Police: Well senator, thank you. Thank you for these comments. And I don't, I don't portray myself to be an expert on crypto. But I will say that, I think what we see is an evolution. That evolution is crypto today, it's going to be something later. I think it's just that the next thing that we have not, it's in law enforcement, we follow the money. It just makes it harder to follow the money. So I think, I think the fact that it's a, you know, emerging, there are a lot of things that we still need to figure out about this. And I think that's what the appeal is to it. We’re a little behind in truly understanding how to use it in a way that helps us combat crime.
Senator Warren: All right, so, Mr. Urben, you have decades of experience at DEA following illicit fentanyl funds. Why do you think crypto has become so attractive?
Christopher J. Urben, Managing Director, And Assistant Special Agent In Charge (Retired), Special Operations Division, Nardello & Co, and U.S. Drug Enforcement Administration: It allows for speed.
Senator Warren: So you can move it fast.
Mr. Urben: Yes senator.
Senator Warren: Unlike cash, which you've actually got to physically carry.
Mr. Urben: It’s larger, you’ve physically got to carry it, it's much more difficult to conceal. So there’s speed, there's to some degree anonymity, and then they can hold that asset and transfer and move that asset easily.
So they're exploiting, the organized crime, the Mexican cartels, the lack of compliance and oversight within the crypto industry.
Senator Warren: It's just a lot easier to hide it, is that basically what you're saying here?
Mr. Urben: It's easier to hide. Yeah, correct.
Senator Warren: Yeah, So, you know, make no mistake. Drug traffickers, they’re also still moving cash the old fashioned way. But crypto has changed the game by allowing criminals to move boatloads of money instantaneously and nearly anonymously. You know, no need to try to stuff $900,000 in cold hard cash into a suitcase and worry about whether some customs agent will spot it. Now, cartel members can move as much money as they want using a handful of crypto wallets.
Holes in our anti-money laundering laws have given drug dealers a back door to move their dirty fentanyl money around. And that back door is wide open, and it's helping fuel the opioid crisis at home.
Mr. Yoes, if cartels and drug dealers and Chinese chemical companies can keep exploiting the holes in our anti-money laundering rules and keep funding the fentanyl business with crypto, what's that going to mean both for law enforcement and for families across this country?
Mr. Yoes: Senator, it's not a matter of can, they will.
Senator Warren: They will.
Mr. Yoes: It will, and they do, and they will continue to do it until we find ways to close those gaps.
Senator Warren: Well, it is about closing the doors and that's why 20 senators, including seven right here on the Banking Committee, are working to pass the Digital Asset Anti-Money Laundering Act that closes these loopholes in our money laundering rules.
Crypto shouldn't get a free pass and I look forward to working with all of my colleagues to finally fix that. Thank you all.
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