Canadian federal police recently busted a massive fentanyl lab with evident links to Mexico and Chinese crime networks in British Columbia.

Canada increasingly exploited by China for fentanyl production and export, with over 350 gang networks operating, Canadian Security Intelligence Service reports

As the Trump Administration gears up to launch a comprehensive war on fentanyl trafficking, production, and money laundering, the United States is setting its sights on three nations it holds accountable: China, Mexico, and Canada. In an exclusive investigation, The Bureau delves into the U.S. government’s case, tracking the history of fentanyl networks infiltrating North America since the early 1990s, with over 350 organized crime groups now using Canada as a fentanyl production, transshipment, and export powerhouse linked to China, according to Canadian intelligence.

Drawing on documents and senior Drug Enforcement Administration sources—including a confidential brief from an enforcement and intelligence expert who spoke on condition of anonymity due to the sensitivity of the matter—we unravel the evolution of this clandestine trade and its far-reaching implications, leading to the standoff that will ultimately pit President Donald Trump against China’s Xi Jinping.

In a post Tuesday morning that followed his stunning threat of 25 percent tariffs against Mexico and Canada, President Trump wrote:

“I have had many talks with China about the massive amounts of drugs, in particular fentanyl, being sent into the United States—but to no avail. Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through, and drugs are pouring into our country, mostly through Mexico, at levels never seen before.”

While Trump’s announcements are harsh and jarring, the sentiment that China is either lacking motivation to crack down on profitable chemical precursor sales—or even intentionally leveraging fentanyl against North America—extends throughout Washington today.

And there is no debate on where the opioid overdose crisis originates.

At a November 8 symposium hosted by Georgetown University’s Initiative for U.S.-China Dialogue on Global Issues, David Luckey, a defense researcher at RAND Corporation, said: “The production, distribution, and use of illegally manufactured fentanyl should be thought of as an ecosystem, and the People’s Republic of China is at the beginning of the global fentanyl supply chain.”

The Bureau’s sources come from the hardline geopolitical camp on this matter. They believe Beijing is attempting to destabilize the U.S. with fentanyl, in what is technically called hybrid warfare. They explained how Canada and Mexico support the networks emanating from China’s economy and political leadership. In Canada, the story is about financial and port infiltration and control of the money laundering networks Mexican cartels use to repatriate cash from fentanyl sales on American streets.

And this didn’t start with deadly synthetic opioids, either.

“Where the drugs come from dictates control. If marijuana is coming from Canada, then control lies there,” the source explained. “Some of the biggest black market marijuana organizations were Chinese organized crime groups based in Brooklyn and Flushing, Queens, supplied from Canada.

Canada’s legal framework currently contributes to its appeal for China-based criminal organizations. “Canada’s lenient laws make it an attractive market,” the expert explained. “If someone gets caught with a couple of kilos of fentanyl in Canada, the likelihood of facing a 25-year sentence is very low.”

The presence in Toronto and Vancouver of figures like Tse Chi Lop—a globally significant triad leader operating in Markham, Ontario, and with suspected links to Chinese Communist Party security networks—underscores the systemic gaps.

Tse Chi Lop was operating from Markham and locations across Asia prior to his arrest in the Netherlands and subsequent extradition to Australia. He is accused of being at the helm of a vast drug syndicate known as “The Company” or “Sam Gor,” which is alleged to have laundered billions of dollars through casinos, property investments, and front companies across the globe.

Reporting by The Bureau has found that British Columbia, and specifically Vancouver’s port, are critical transshipment and production hubs for Triad fentanyl producers and money launderers working in alignment with Mexican cartels and Iranian-state-linked criminals. Documents that surfaced in Ottawa’s Hogue Commission—mandated to investigate China’s interference in Canada’s recent federal elections—demonstrate that BC Premier David Eby flagged his government’s growing awareness of the national security threats related to fentanyl with Justin Trudeau’s former national security advisor.

A confidential federal document, released through access to information, states, according to the Canadian Security Intelligence Service (CSIS): “Synthetic drugs are increasingly being produced in Canada using precursor chemicals largely sourced from China.”

A sanitized summary on Eby’s concerns from the Hogue Commission adds: “On fentanyl specifically, Canada, the United States, and Mexico are working on supply reduction, including as it relates to precursor chemicals and the prevention of commercial shipping exploitation. BC would be a critical partner in any supply reduction measures given that the Port of Vancouver is Canada’s largest port.”

But before Beijing’s chemical narcotics kingpins took over fentanyl money laundering networks from Canada, the story begins in the early 1990s when fentanyl first appeared on American streets, according to a source with full access to DEA investigative files.

The initial appearance of fentanyl in the United States was linked to a chemist in Ohio during 1992 or 1993, they said. This illicit operation led to hundreds of overdose deaths in cities like Chicago and New York, as heroin laced with fentanyl—known as “Tango & Cash”—flooded the streets. The DEA identified and dismantled the source, temporarily removing fentanyl from the illicit market.

Fentanyl seemed to vanish from the illicit market, lying dormant.

The mid-2000s saw a resurgence, this time with Mexican cartels entering the methamphetamine and fentanyl distribution game, and individuals of Chinese origin taking up roles in Mexico City. “One major case was Zhenli Ye Gon in 2007, where Mexican authorities seized $207 million from his home in Mexico City,” The Bureau’s source said. “He was a businessman accused of being involved in the trafficking of precursor chemicals for methamphetamine production.”

Ye Gon, born in Shanghai and running a pharma-company in Mexico, was believed to be perhaps the largest methamphetamine trafficker in the Western Hemisphere. Educated at an elite university in China, he made headlines not only for his alleged narcotics activities but also for his lavish lifestyle. While denying drug charges in the U.S., he claimed he had received duffel bags filled with cash from members of President Felipe Calderón’s party—a claim that was denied by officials. His arrest also caused a stir in Las Vegas, where Ye Gon was a “VIP” high roller who reportedly gambled more than $125 million, with the Venetian casino gifting him a Rolls-Royce.

Despite high-profile crackdowns, the threat of fentanyl ebbed and flowed, never truly disappearing.

Meanwhile, in 2005 and 2006, over a thousand deaths on Chicago’s South Side were traced to a fentanyl lab in Toluca, Mexico, operated by the Sinaloa Cartel. After the DEA shut it down, fentanyl essentially went dormant again.

A new chapter unfolded in 2013 as precursor chemicals—mainly N-phenethyl-4-piperidone (NPP) and 4-anilinopiperidine (4-ANPP)—began arriving from China. This is when fentanyl overdoses started to rise exponentially in Vancouver, where triads linked to Beijing command money laundering in North America.

“These chemicals were entering Southern California, Texas, and Arizona, smuggled south into Mexico, processed into fentanyl, and then brought back into the U.S., often mixed with Mexican heroin,” the U.S. government source explained.

At the time, a kilo of pure fentanyl cost about $3,000. By 2014, it was called “China White” because heroin was being laced with fentanyl, making it far more potent. In February 2015, the DEA issued its first national alert on fentanyl and began analyzing the role of Chinese organized crime in the fentanyl trade and related money laundering.

The profitability and efficiency of fentanyl compared to traditional narcotics like heroin made it an attractive commodity for drug cartels.

By 2016, fentanyl was being pressed into counterfeit pills, disguised as OxyContin, Percocet, or other legitimate pharmaceuticals. Dark web marketplaces and social media platforms became conduits for its distribution.

The merging of hardcore heroin users and “pill shoppers”—individuals seeking diverted pharmaceuticals—into a single user population occurred due to the prevalence of fentanyl-laced pills. This convergence signified a dangerous shift in the opioid crisis, broadening the scope of those at risk of overdose.

The profitability for traffickers was staggering. One pill could sell for $30 in New England, and Mexican cartels could make 250,000 pills from one kilo of fentanyl, which cost around $3,000 to $5,000. This was far more lucrative and efficient than heroin, which takes months to cultivate and process.

This shift marked a significant turning point in the global drug trade, with synthetic opioids overtaking traditional narcotics.

By 2016, entities linked to the Chinese state were entrenched in Mexico’s drug trade. Chinese companies were setting up operations in cartel-heavy cities, including mining companies, import-export businesses, and restaurants.

“The growth of Chinese influence in Mexico’s drug trade was undeniable,” the source asserted.

Recognizing the escalating crisis, the DEA launched Project Sleeping Giant in 2018. The initiative highlighted the role of Chinese organized crime, particularly the triads, in supplying precursor chemicals, laundering money for cartels, and trafficking black market marijuana.

When the COVID-19 pandemic hit in 2020, drug trafficking organizations adapted swiftly. With borders closed and travel restricted, cartels started using express mail services like FedEx to ship fentanyl and methamphetamine.

This shift highlighted the cartels’ agility in exploiting vulnerabilities and adapting to global disruptions.

By 2022, the DEA intensified efforts to combat the fentanyl epidemic, initiating Operation Chem Kong to target Chinese chemical suppliers.

An often-overlooked aspect of the drug trade is the sophisticated money laundering operations that sustain it, fully integrated into China’s economy through triad money brokers. Chinese groups are now the largest money launderers in the U.S., outpacing even Colombian groups.

“We found Chinese networks picking up drug money in over 22 states,” the source explained. “They’d fly one-way to places like Georgia or Illinois, pick up cash, and drive it back to New York or the West Coast.”

Remarkably, these groups charged significantly lower fees than their Colombian counterparts, sometimes laundering money for free in exchange for access to U.S. dollars.

This strategy not only facilitated money laundering but also circumvented China’s strict currency controls, providing a dual benefit to the criminal organizations.

They used these drug-cash dollars to buy American goods, ship them to China, and resell them at massive markups. Chinese brokers weren’t just laundering fentanyl or meth money; they also laundered marijuana money and worked directly with triads. Operations like “Flush with Cash” in New York identified service providers moving over $1 billion annually to China.

But navigating the labyrinth of Chinese criminal organizations—and their connectivity with China’s economy and state actors—poses significant challenges for law enforcement.

“The challenge is the extreme compartmentalization in Chinese criminal groups,” the U.S. expert emphasized. “You might gain access to one part of the organization, but two levels up, everything is sealed off.”

High-level brokers operate multiple illicit enterprises simultaneously, making infiltration and dismantling exceedingly difficult.

The intricate tapestry of Chinese fentanyl trafficking highlights a convergence of international criminal enterprises exploiting systemic vulnerabilities across borders. The adaptability of these networks—in shifting trafficking methods, leveraging legal disparities, and innovating money laundering techniques—poses a formidable challenge to Western governments.

The leniency in certain jurisdictions including Canada not only hinders enforcement efforts but also incentivizes criminal activities by reducing risks and operational costs.

As the United States prepares to intensify its crackdown on fentanyl networks, having not only politicians and bureaucrats—but also the citizens they are serving—understand the importance of a multifaceted and multinational counter strategy is critical, because voters will drive the political will needed.

And this report, sourced from U.S. experts, provides a blueprint for other public interest journalists to follow.

“This briefing will help you paint the picture regarding Chinese organized crime, the triads, CCP, or PRC involvement with the drug trade and money laundering—particularly with precursor chemicals and black market marijuana,” the primary source explained.