A number of states have enacted laws prohibiting Chinese and others from “countries of concern” from purchasing homes or land.
U.S. Department of State, "2013 International Narcotics Control Strategy Report," March 2013
Drug and Chemical Control
China is a significant destination and transit country for drugs such as heroin and cocaine, as well as a major producer of drug precursor chemicals. Domestic abuse of heroin and cocaine continues to rise, and the consumption of synthetic drugs such as methamphetamine, ketamine, and MDMA (ecstasy) among the affluent and the middle class is emerging as a public health threat. Chinese organized crime groups (known as “triads”) based in southeast China control most large-scale drug and precursor chemical criminal activities in China. There are also a growing number of transnational criminal organizations from Colombia, West Africa, Iran, and Pakistan operating in China.
Heroin flowing into China from Burma, Laos, Afghanistan, Pakistan, and Tajikistan is smuggled in containerized cargo or fishing vessels to lucrative markets in other parts of Asia and Australia. Most synthetic drugs used in China originate from Southeast Asia, Latin America, and Europe. High grade methamphetamine is also known to have flowed into China from Burma and North Korea.
China is a major producer and exporter of precursor chemicals for legitimate industrial use. Many large chemical factories are located near coastal cities with modern port facilities, increasing the opportunity for criminal syndicates to divert legal shipments to illegal use. Most precursor chemicals seized in Mexico and Central America destined for illegal production of methamphetamine were legally exported from China and diverted en route.
China is also a significant producer and exporter of novel psychoactive substances, including synthetic cannabinoids (known by such names as “K2” and “spice”) and synthetic cathinones (stimulants sometimes called “bath salts”).
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Money Laundering and Financial Crimes
The development of China’s financial sector has required increased enforcement efforts to keep pace with the sophistication and reach of criminal and terrorist networks. The primary sources of criminal proceeds are corruption, narcotics and human trafficking, smuggling, economic crimes, intellectual property theft, counterfeit goods, crimes against property, and tax evasion. Criminal proceeds are generally laundered via methods that include: bulk cash smuggling; trade-based money laundering; manipulating the invoices for services and the shipment of goods; the purchase of valuable assets such as real estate; the investment of illicit funds in lawful sectors; gambling; and the exploitation of the formal and underground financial systems, in addition to third-party payment systems.
Most money laundering cases currently under investigation involve funds obtained from corruption, fraud, drug smuggling, and bribery. Chinese officials have noted that corruption in China often involves state-owned enterprises, including those in the financial sector.
While Chinese authorities continue to investigate cases involving traditional money laundering schemes, they have also identified the adoption of new money laundering methods, including illegal fund raising activity, cross-border telecommunications fraud, and corruption in the banking, securities, and transportation sectors. Chinese authorities have also observed that money laundering crimes are spreading from the developed coastal areas such as Guangdong and Fujian provinces to underdeveloped, inland regions.
China is not considered a major offshore financial center. However, China has multiple Special Economic Zones (SEZs) and other designated development zones at the national, provincial, and local levels. SEZs include Shenzhen, Shantou, Zhuhai, Xiamen, and Hainan, along with 14 coastal cities and over 100 designated development zones.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/
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