Remarks as prepared for delivery
It is a privilege to speak with you representing the U.S. Department of Justice. As the Acting Assistant Attorney General of the Department of Justice’s Criminal Division, I oversee approximately 700 attorneys spread across 17 sections and offices, mostly in Washington D.C., but also many stationed in offices around the world. Among other things, prosecutors in the Criminal Division investigate and prosecute transnational organized crime, large-scale international narcotics trafficking, international money laundering, and cyber-related crimes including the use of the dark web to engage in illegal activity. The Criminal Division also houses our Office of International Affairs, which handles all of our foreign legal assistance matters.
I am honored today to have the opportunity to speak with this assembly of proud, brave, and accomplished law enforcement officers. This is a critical conference, taking place at this critical time. Today more than ever, we must take stock of not only the successes we have achieved, but more importantly of the hard work that lies ahead of us, as we join together in the ongoing fight against international drug trafficking.
Our fight against drug cartels and transnational criminal organizations is the very definition of a fight that transcends borders. It is a shared fight. It is a fight against ever-evolving and innovating threats and methods. And it is a fight in which we as law enforcement collectively can, and must, do better.
The costs have never been higher. Today, in the United States, we are facing the deadliest drug crisis in our history. Approximately 64,000 Americans died from drug overdoses in 2016. That was the highest drug death toll – and the fastest increase in that death toll – in American history. One American dies of a drug overdose every nine minutes. Drug overdoses are now the leading cause of death for Americans under the age of 50.
These numbers are staggering, but their sheer scale can almost numb us to the reality of profound human loss that the drug crisis is causing. Each one of those deaths is a tragedy that reverberates through families and communities, multiplying its corrosive, debilitating effects. Effects that are borne by the dead, for sure, but also effects that are borne, perhaps more painfully, by the living whom they leave behind. These insidious effects are what make the scourge of opioids, including prescription drugs, heroin, and synthetic drugs like fentanyl, so dangerous and terrifying.
The traffickers who manufacture and distribute the destructive drugs that are ravaging our communities know precisely what they are doing, and they also are only too aware of our efforts to thwart them. That is why drug traffickers are forging underground marketplaces, exploiting the Internet and cryptocurrencies, and simultaneously challenging the stability and security of our financial institutions. Drug traffickers are moving money to the tune of hundreds of billions of dollars in ill-gotten profits. The task for those of us in law enforcement is to not only stanch the flow of drugs, but also the flow of illicit money.
Today, I want to talk about that specific problem: the flow of illicit money. Money is the lifeblood of any criminal organization, be it a pill mill, a transnational drug cartel, or a terrorist organization. Money is the very reason that criminal enterprises exist and persist. If we can map out, and stamp out, the financial networks through which the money is moving, we will go a long way in paralyzing these criminal organizations well before we have to endure, first-hand, the destructive effects of their poisons in our communities.
How do we stem the tide of illicit money?
First, we need to follow not just the money, but also the marketplaces. We need to stay one step ahead when it comes to identifying, regulating, tracking, and seizing the marketplaces that criminals are using for their illegal activities. In this day and age, sophisticated criminals are constantly forging and finding new platforms on which they can buy and sell, recruit, and launder. And naturally, markets that operate in the shadows, hidden from law enforcement, are those most appealing to criminals. We need to bring those shadowy markets into the light.
The so-called “dark web” is illustrative of this challenge. It is, by its nature, transnational. It relies on anonymity software that masks the true identities of visitors and their locations. It conceals IP addresses. And because of its hidden nature, the dark web is both a haven and a hub for some of the most prolific drug suppliers and criminal actors across the globe.
Dark web markets have been used to traffic in deadly drugs, illegal weapons, toxic chemicals, stolen identities, stolen credit cards, child pornography, and even people’s credentials for online accounts. With the click of a mouse, you can have synthetic opioids delivered right to your doorstep. And dark web markets have been used to launder hundreds of millions of dollars derived from illegal transactions. Illicit money flows are finding their way into new corners of the Internet each day.
The transnational economy of the dark web demands a transnational response. And we are delivering.
Working closely together with our international partners, we have shut down some of the worst offenders on the dark web. Last July, the U.S. Department of Justice executed the largest takedown of a dark web market in history when we seized AlphaBay. The AlphaBay site was the largest criminal marketplace on the Internet, at its peak hosting upwards of 40,000 vendors, 200,000 users, and 220,000 drug sale listings. We have tied purchases made on AlphaBay to multiple overdose deaths across the United States, including the tragic death of a 13-year-old boy whose classmate purchased a synthetic opioid on AlphaBay.
With the cooperation of Europol and our host country, the Netherlands, as well as our partners in Thailand, Lithuania, Canada, the United Kingdom, France, and Germany, we seized AlphaBay’s servers and infrastructure. We froze millions of dollars’ worth of cryptocurrencies that represented AlphaBay’s illicit proceeds. We arrested the site administrator in Thailand. And we are pursuing his and his wife’s assets throughout the world, from Thailand, Cyprus, and Lichtenstein to Antigua and Barbuda.
Shortly after the AlphaBay seizure, Dutch authorities, with support from Europol, took down the Hansa marketplace. Hansa was the third largest criminal marketplace on the dark web, also trading high volumes of illegal drugs and goods. The Hansa takedown also was a highly coordinated international operation – and it was an operation carefully designed to maximize impact by seizing and covertly taking over control of Hansa for about a month. This allowed law enforcement to monitor activities on the platform and collect valuable information on significant law enforcement targets who were using the market for criminal purposes.
In January of this year, U.S. Attorney General Jeff Sessions created the Joint Criminal Opioid Darknet Enforcement team, known as J-CODE. J-CODE reflects the United States’ recognition that a major driver of the increase in opioid overdose deaths is the growing black market trade of illicit fentanyl and fentanyl analogues on the Internet. J-CODE effectively doubles our investment in the fight against online drug trafficking on the dark web, dedicating dozens more FBI agents, intelligence analysts, and professional staff to this long-term effort. And J-CODE puts an emphasis on the need for international coordination and working with our overseas Drug Enforcement Administration and FBI offices to shut down the dark web markets peddling deadly drugs.
Just a few months into its creation, we already have seen successes from the work being done by the J-CODE team. Last week, the Attorney General announced initial results of Operation Disarray, which is the J-CODE’s first coordinated law enforcement operation targeting opioid trafficking on the dark web. During the week of March 27, U.S. law enforcement made eight arrests, conducted more than 160 interviews of people who had bought or sold opioids and other drugs online, identified 19 overdose deaths, and executed numerous search warrants, resulting in the seizure of weapons, drugs, and counterfeit currency.
Transnational criminals who wish to take advantage of the perceived secrecy of the dark web should beware: law enforcement is smart to your techniques, and we will labor tirelessly across borders, with the full support of our governments, to dismantle your operations.
Together, we are inflicting significant blows on dark web markets. And, if we continue to work collectively, we will do more. If we are to keep pace with illegal markets as they shift and grow and change platforms, we too will need to be nimble and adaptive.
We need to work together to follow the virtual money flows, while being vigilant as we monitor the ever-fluid landscape and features of cryptocurrencies. We need to ensure that we seize not just end products, but the markets themselves. We must target not just the market creator, but the creator’s assets, enablers, and financial network. The very features of markets on the dark web that make them so attractive to bad actors pose a challenge – but also an opportunity – for law enforcement to be smarter, probe deeper, and move faster.
How else can we stem the tide of illicit money?
We also need to aggressively combat money laundering, using all tools in our law enforcement toolbox – marrying traditional criminal prosecution with civil forfeiture, financial sanctions, and rigorous enforcement of compliance obligations on financial institutions.
As we all know, drug cartels are adept at filtering “dirty” money through various transactions until the funds appear to be “clean” proceeds from legitimate activities, rendering them available for use. This enables criminals to readily mask, move, and access their ill-gotten gains without jeopardizing their illegal activities. They do this through traditional money laundering methods, such as black market peso exchanges, cash couriers, and trade-based money laundering. But they also employ increasingly complex schemes – utilizing shell companies, or transfers through reputable financial institutions, lawyers, and other professionals that enshroud their illegal proceeds in a veneer of legitimacy.
At the U.S. Department of Justice, we seek to leverage the full panoply of tools at our disposal to combat the means and methods of money launderers. That, of course, includes criminal prosecutions of those who violate our money laundering laws.
One of our recent investigations, for example, targeted an alleged drug trafficking and money laundering organization largely based in Sinaloa, Mexico. Since at least 2012, the organization allegedly transported massive amounts of cocaine, heroin, and methamphetamine into the United States. But that was not all; the organization also allegedly smuggled their drug trafficking proceeds from the United States back into Mexico, laundering more than an estimated $100 million dollars. Some money allegedly was laundered through Mexican money exchange houses, while other money allegedly was deposited with U.S. banks and wire-transferred to Mexican accounts controlled by the organization.
Our prosecutors brought criminal charges against 15 defendants, including individuals responsible for the movement of the illicit proceeds. To date, eight of those defendants, including the owner of a currency exchange house in Sinaloa and a peso broker operating out of Sinaloa, have pleaded guilty and been sentenced to significant jail time.
But the law enforcement tools at our disposal are not limited to bringing criminal charges. Take, for example, the case of Jorge Cifuentes-Villa, who is facing criminal prosecution in the United States. Cifuentes-Villa led a drug trafficking and money laundering organization closely tied to the Sinaloa Cartel and he has been designated by the United States as a Consolidated Priority Organization Target, a designation reserved for the most dangerous and prolific narcotics traffickers.
In addition to the criminal charges against Cifuentes-Villa, our prosecutors also brought two multi-million dollar civil forfeiture actions against assets tied to Cifuentes-Villa’s drug trafficking activities. Meanwhile, the U.S. Department of Treasury levied financial sanctions against Cifuentes-Villa, identifying him as a Specially Designated Narcotics Trafficker, to effectively cut him off from transactions with any U.S. persons or businesses.
The path to civil forfeiture of Cifuentes-Villa’s assets began with a vehicle stop in 2009. A single money courier was found in possession of approximately $780,000 in drug proceeds. With that lead, investigators traced money through various companies’ bank accounts that were used to launder on the cartel’s behalf. They traced the money all the way back to transactions eight years before the vehicle stop. Investigators learned that in 2001, a shell company in the British Virgin Islands had received approximately $11 million in funds. And that $11 million subsequently was moved through eight brokerage accounts, before it finally landed in two accounts at Wells Fargo Advisors.
The tracing showed that the shell company had received the funds from yet another entity in the British Virgin Islands, an entity that was owned by a man who went by the name, Sergio Osuna-Villareal. We identified Sergio Osuna-Villareal as an alias of Jorge Cifuentes-Villa. The investigation revealed that Cifuentes-Villa had transferred more than $10 million in drug proceeds to the shell company as liquidation of the assets of his murdered drug partner. And in 2012, we sought forfeiture – successfully – of both the approximately $11 million from the Wells Fargo Advisors’ accounts and a $1.2 million condominium in Miami, Florida that we also traced to Cifuentes-Villa.
Those examples underscore the array of tools that we stand ready to deploy against money launderers for drug cartels. With the close cooperation of our international partners, we not only can bring wrongdoers to justice in our courts, but we also can trace where their money traveled and how and when. We can then reclaim their ill-gotten gains, block their assets, and prevent U.S. persons from dealing with them.
We also must be forward-leaning in holding accountable the enablers that move or legitimize the funds of drug traffickers. Just as cartels zero in on any weak link in the chain – by exploiting financial institutions with ineffective anti-money-laundering protocols – we too will continue to aggressively target financial institutions that turn a blind eye to the mass transit of illicit proceeds through their accounts.
To be sure, the examples I have mentioned over the past few minutes barely scratch the surface of the money flows that fuel and refuel the global drug trade. But as with the dark web, the very money laundering tactics that the criminals hope will throw us off should embolden us, focus us, and bring us together.
And it is by working together that we are able to most effectively target those illicit proceeds. Money laundering mechanisms are transnational by design. The painstaking work by our agents and prosecutors of mapping out those networks necessitates foreign wiretaps, foreign cooperating sources, and foreign law enforcement surveillance. It calls for timely sharing of international financial intelligence and prompt responses to mutual legal assistance requests. It requires foreign agents to authenticate photographs, wiretaps, and seizure evidence, and provide eyewitness testimony. On all these fronts and more, we can and must better synchronize our efforts.
Drug cartels count on our inability to connect the dots across borders and financial institutions. But with concerted international efforts to target illicit proceeds from every legal angle, we can more effectively connect those very dots and unravel the illicit networks driving the drug crisis.
Thank you, and I look forward to working with you all.
Official news published at https://www.justice.gov/opa/pr/acting-assistant-attorney-general-john-p-cronan-delivers-remarks-international-drug