Episode 110 of the Public Key podcast is here and this is our “Live from Links” series, where we showcase our podcasts recorded live at the Chainalysis Links Conference in NYC. Trade Based Money Laundering (TBML) has evolved from suitcases to thumb drives and the utilization of crypto and we speak with Michael Firing (Assistant Director, Field Operations, Center for Intelligence, Targeting, and Enforcement (CITE), who discusses TBML, fentanyl trafficking and his department’s cross agency intelligence sharing.
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Public Key Episode 110: Crypto Fueling the Fentanyl Epidemic and Human Trafficking
In this episode, Ian Andrews (CMO, Chainalysis) speaks to Michael Firing (Assistant Director, Field Operations, Center for Intelligence, Targeting, and Enforcement (CITE), who is involved with investigations covering human and fentanyl trafficking, trade based money laundering and the movement of crypto in and out of the US.
They discuss the role of the newly created CITE agency in combating various threats, including terrorism, transnational organized crime, and illicit trade.
Michael also highlights the challenges of the increasing use of cryptocurrency in criminal activities such as drug trafficking and human trafficking and the importance of collaboration between public and private sectors in addressing these challenges.
Michael explains the importance of leveraging cryptocurrency analysis to support investigations and disrupt criminal networks by having a coordinated multi-agency approach.
Quote of the episode
“We want to keep bad people and bad things from entering the United States. That’s our main mission. And you’re going to do that by being a good partner. You’re going to do that by supporting these agencies.” – Michael Firing (Assistant Director, Field Operations, Center for Intelligence, Targeting, and Enforcement (CITE)
Minute-by-minute episode breakdown
2 | Introducing customs and border protection’s intelligence arm
4 | Combating transnational threats with intelligence and cryptocurrency analysis
7 | Trade Based Money Laundering (TBML): From suitcases to thumb drives
10 | The rise of crypto in illicit precursor chemical sales and drug trafficking
13 | Collection of vast amounts of data to support other agency’s investigative efforts
16 | Global collaboration for the fight against crypto related crimes
Related resources
Check out more resources provided by Chainalysis that perfectly complement this episode of the Public Key.
- Website: U.S. Customs and Border Protection (CBP): Enhancing the nation’s security through innovation, intelligence, collaboration and trust.
- Article: America’s Front Line Against Fentanyl
- Article: Increasing the Focus on Trade-Based Money Laundering
- Registration: Digital premiere of Links 2024 (NYC Main Stage Content and more – Register Now!)
- Blog: Crypto and the Opioid Crisis: What Blockchain Analysis Reveals About Global Fentanyl Sales [UPDATED 3/7/24]
- YouTube: Chainalysis YouTube page
- Twitter: Chainalysis Twitter: Building trust in blockchain
- TikTok: Building trust in #blockchains among people, businesses, and governments.
- Telegram: Chainalysis on Telegram
Speakers on today’s episode
- Ian Andrews * Host * (Chief Marketing Officer, Chainalysis)
- Michael Firing (Assistant Director, Field Operations, Center for Intelligence, Targeting, and Enforcement (CITE)
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Transcript
Ian:
Welcome to another episode of Public Key. We are live from LYNX. I am here with Michael Firing, who is the assistant director for Field Operations at the Center for Intelligence Targeting and Enforcement, part of the Customs and Border Protection Agency. Michael, welcome to the program.
Michael:
Thank you so much for having me. I appreciate it.
Ian:
Yeah.
Michael:
And thank you to the Chainalysis team. You put on quite a conference here. It’s been very informative, so very happy to be part of it and the podcast, and even on the panel later today.
Ian:
Yeah, we’ll get to the panel conversation, some of the topics you’re going to hit on later. Tell me about what the Center for Intelligence Targeting and Enforcement is all about.
Michael:
Sure, sure.
Ian:
Is it an acronym? Can I call it CITE? Can I do that? Or is that a-
Michael:
Well, yes, yes. I think originally it was supposed to be CITY-
Ian:
CITY?
Michael:
So there was an E at the end, but it just didn’t jive, so we say the CITE. But yes, we inaugurated it a few years back, and it’s a concept that’s been adapted by the other 19 field offices, the New York Field Office being one of those.
We also have an international footprint as well, and they’re their own field office, very similar in how we do business here. It’s to meld the concepts of connecting people, places and things in our analytical efforts.
We get a plethora of information. We have the largest repository of information. We see so much of the traveling public, which is such a great opportunity to collect intelligence at the New York Field Office, where the site is located up at One World Trade Center. We have the busiest international airport, JFK Airport. We see 18 million passengers a year.
Ian:
Wow.
Michael:
And Newark flirts with the fourth- or fifth-largest international airport; they see another 6 million. We see over $400 billion of imports coming into the New York Field Office, so it’s a huge, huge volume.
Geographically, we’re very small. We only have two ports of entry compared to field offices like, for example, Seattle. Seattle’s 2,000 square miles of 77 ports of entry. So totally different than New York. Geographically, we’re small, but we do the most volume here.
Ian:
Yeah.
Michael:
So the site really is there because the field office has such a huge seaport and huge airport to meld those concepts. Where there’s a box is a person behind it. And we were losing some of the battle, trying to disrupt and dismantle those transnational criminal organizations by not making those connections.
So what we did was we developed and we put those subject matter experts: whether it was in cargo, whether it was in passenger, agriculture. Taking partner agencies such as the FBI or the NYPD here and bringing them into the center. And so we can leverage everybody’s institutional knowledge when we’re trying to build those threat patterns that we are able to see.
One of the other things that we did, and one of the parts of it; it’s called intelligence, right? So we brought in our Regional Intelligence Center. They fall under what we call the Office of Intelligence. They work closely with the intelligence community and they sit hand-in-hand with us in there.
So basically, what am I trying to say? We brought in all those concepts, all those smart people into one room, and we develop this. Now it’s easier to flatten that information out. So all of our partner agencies, all of the people internally and externally have an opportunity to see that, and ultimately get that information to our frontline employees.
Ian:
Amazing. What are some of the threats that you’re most concerned with? I would have to imagine, perhaps it’s terrorists. You mentioned transnational organized crime. What do you spend your day worrying about the most?
Michael:
Yeah. I don’t know if he likes it as much anymore, but I’ll enter my director for field operations office and ask him what keeps him up at night. It’s that unknown threat; that’s what he constantly tells me.
But across that is our threat buckets. I mean, we’re out there. We have such a huge mission, whether it’s counterterrorism and counterintelligence, illicit trade migration, transnational organized crime, and now force protection.
So what crosses all those, quite often, is crypto.
Ian:
[inaudible 00:04:23]
Michael:
And we see that. And although we’re slow to the game, we’re quick to evolve to change. Change is undefeated: we always say that. And kudos to the agency and Customs and Border Protection, being able to adapt real quick and garner some of that expertise: whether it’s the analytical tools or those other agencies that we’re able to leverage to do some of those mission statements.
Ian:
Talk about the nexus with cryptocurrency. Because you started out by talking about, well, passengers coming through airports and shipments coming into port of entry. Where does crypto play into it? Because it sounded initially very physical-world things, not digital. So where do you encounter crypto?
Michael:
Yeah, I would say twofold. One of it is because of the work we do. We support so many investigative agencies, we’re kind of that downstream.
So when, for example, an agency comes to us for some analytical support, or they’re hitting that roadblock and they need someone to help identify that network, they’ll come to us.
Five years ago, we were never looking at the crypto side. We were just looking at that supply chain. We were seeing if we could identify the person or any shipments they may have had. But now we’re looking more at what kind of transactions have they made in the digital world as well.
Ian:
That’s interesting.
Michael:
And that’s part of some of these requests for information that we have. We average about four or five requests for information a day. And about 20% of those requests for information are crypto analysis that we’re doing. So to streamline the process with these analytical tools, like we see here, has just been instrumental for us.
For our frontline officers, they’re the first people that you would see when you’re applying for an application for a mission or inspection. And educating the frontline on some of the things that they should see when somebody may be doing something illicit with crypto.
Not just identifying private keys and wallets and seed phrases, but identifying some of the things that may make that illicit in nature. And that’s important; we’re constantly out there educating them as well.
Ian:
Amazing. You haven’t mentioned human trafficking, but I would have to guess that for CBP, this is a fairly significant topic. And we’ve picked up increasingly, a lot of the human trafficking is paid for in cryptocurrency. Is there anything maybe recently that you could talk about?
Michael:
Yeah, in addition to that is the sex abuse material as well. We see a lot of that going on. Some of the main things, especially when it comes to violent crime: let’s talk about drug trafficking organizations.
There’s just recently a couple from Guyana came in trying to smuggle cocaine. But we could see that the proceeds that were going to the other side to that network was crypto.
Ian:
Really?
Michael:
Yeah. And in addition to that, our most important mission is counter-terrorism, combating those foreign terrorist organizations. And we have seen Bitcoin wallets funding those groups such as Al-Shabaab. We also see those transnational criminal organization utilizing it, akin to what you’re talking about, whether it’s human trafficking. We even see these companies that claim to be legitimate, but they’re moving precursor chemicals into the United States.
Or even worse, I mean, the battle against fentanyl has been certainly challenging for us federal agencies. And we see them using and trying to move adulterants to it, such as xylazine and fentanyl itself. All of those threats have been a challenge to us, and we are realizing that cryptocurrency is how they’re moving the money.
If you go back five years ago, trade-based money laundering was a big thing, and it continues to be a big thing. But five years ago, they were doing it through, say, their suitcase. They had volumes of, say, cell phones they were shipping outside the country and trying to wash that money that way.
The days are over of folks trying to transport millions of dollars in a suitcase or on their person. It just doesn’t make sense anymore for a bad actor to do something like that.
Ian:
Yeah. Yeah. The old action movies where people are strapping bundles of dollars to their chest, you’re not catching people doing that anymore.
Michael:
I don’t know why they would do it. So it’s just so much easier with a digital asset.
Ian:
Yeah, yeah, absolutely. When you can put it on a thumb drive, it’s easy to conceal.
Michael:
Sure. Sure.
Ian:
Yeah. Now trade-based-
Michael:
Money laundering.
Ian:
… money laundering: this is something I’m not familiar with. People would actually buy large quantities of expensive electronics and then transport that, thinking that Border Patrol wouldn’t see something unusual or suspicious?
Michael:
Right. And the challenging thing with that certain instance, where there is bulk in there, is trying to avoid some of the regulations that we have for moving in and out of certain merchandise and all that. And at the same time, getting their proceeds outside of the United States as quick as possible and as efficient without being detected.
That was a challenge for both sides: for agents trying to make those interceptions, and for the bad actors trying to get that outside the United States. But now, like I said, with digital assets and cryptocurrency, it’s been a bit easier for them. And for us, it’s been a challenge to catch up to that.
Ian:
Yeah. You mentioned fentanyl a moment ago.
Michael:
Yeah.
Ian:
It’s at epidemic proportions. The number of deaths associated with, I think in many cases, unintentional fentanyl overdoses; the number’s mind-blowing. And it seems like most of that fentanyl is coming from outside the United States. These are particularly Mexican cartels, is what I understand. What’s to be done about that? How can we stop?
Michael:
You’re laying a big problem for me to solve. But no, I’ll zone in, I’ll regionalize it here.
Ian:
Perfect, thank you.
Michael:
We see a lot of the precursor chemicals coming in here, and then being traversed down to Mexico, synthesized and coming back.
Ian:
Oh, interesting. I didn’t realize that route of delivery. Okay.
Michael:
It’s such a serious topic for Customs and Border Protection, also for the private-public sector and for our community and families, it’s just such an epidemic here. It’s sad, and it’s such a challenge to stop.
And then you see, like I mentioned before, adulterants like xylazine coming straight into the United States. In this area, the Philadelphia area, we have an ambitious task to combat that. And I think when it comes to narcotics, this is probably one of the most dangerous.
I will say, though, that the work we do partnering up with agencies like the DEA, FBI, HSI, working with the private sector, the NGOs has been paramount to this. We’ve put together a lot of multi-faceted task forces to combat this, but we need to do better.
We need to understand how that movement is done, and no one’s better positioned to do it than us. I mean, we’re at the front line. So we’ll take on that challenge, but we’ll continue to look for support from our partner agencies.
Ian:
Yeah, it’s surprising to me to hear that the precursor chemicals, which I think are primarily manufactured in China.
Michael:
Yes.
Ian:
Why would they come into the US first, go to Mexico to be manufactured into fentanyl, and then be smuggled back in? That seems like an extra step.
Michael:
Yeah. Some of the routes have changed, some of the flight patterns have moved directly now, China to Mexico, so we see less and less. We see how it’s diverted a little bit. But yeah, I mean, they’re new to the game too, and they’re finding more efficient ways to do it as well.
Ian:
Okay. So sort of a short-term inefficiency now. And the nexus with crypto, I mean, we’ve done some research that I think we’ve partnered with your organization on.
Michael:
Yes.
Ian:
That was actually able to identify those precursor manufacturers were offering for sale these chemicals and being purchased in cryptocurrency. Which is an amazing thing, because it allowed the ability to map the payments going abroad, and then actually tying that back to seizures, I think, that CBP was doing at the border.
Michael:
Yeah. And we’ll keep that under the auspices of that. These bad actors feel that there’s anonymity with some of this stuff. It’s great to have the analytical tools to be able to trace that back so we could find where the stuff is going. It paints the picture for us. And we can build on that supply chain, and we can understand pieces of it: whether it’s the freight forwarders or the shippers or wherever it may be.
And so we can take that information, provide it to our partner agencies that hold these investigations, and to hopefully prosecute more of these folks here in the United States.
Ian:
Yeah. I know it’s never a job done, but it would be amazing to be able to turn off some of that spigot. I guess recently one of the big Mexican cartels made very public that they were getting out of fentanyl. But it was unclear to me at least whether that was a statement-
Michael:
A ruse?
Ian:
Yeah, a ruse. Exactly. Was that a-
Michael:
I think it’s too profitable right now. I think the cross-pollination between smuggling and trafficking and narcotics, these ETOs and working to be profitable in all facets of it: it’ll continue. It’ll continue.
Ian:
Yeah. [inaudible 00:14:54]
Michael:
And we don’t see a slowdown right now with that.
Ian:
Yeah. Amazing. Besides fentanyl, what other things are hot in terms of smuggling right now; I’m curious; that are on your radar?
Michael:
That being the priority? We do see, like I mentioned, some of the adulterants, some other chemicals, MDMA and ketamine, some of these things that we continue to see coming into the United States.
One of the big things that we do here, not just at CITE up at the New York Field Office and CBP, is collection. I mean, I mentioned before we have the greatest opportunity to collect on anything. And so that’s one of the things that we see. We’re constantly identifying not just the threats, but those trends and patterns that are coming in.
And we have such a good group of analysts that are able to connect those dots together, and they’ve leveraged these other agencies. But as much as they rely on us to collect information, we rely on them to give us the full circle of that investigation.
For example, quite often we get these requests for information. Say an agency is looking for some analytical help, I mentioned we have such a huge repository of information: gallery of photos, billions of phone numbers, just organically collected upon inspection. So we’re there to help that, but it’s important for us to be part of that investigation.
I always say we’re prosecution-agnostic, so I think that makes us a best partner. What I mean by that is that we are not fighting. We’re not in the investigative and prosecution sandbox. We don’t have a foot in that. We want to put bad people in cuffs. Right?
Ian:
Yeah.
Michael:
So we will do as much as we can with that information, package it up, and give it to that investigator or that partner agency.
Ian:
Yep.
Michael:
And that makes us a good partner. We’re not in that sandbox fighting for a statistic in an investigative sense. We’re there. We have our intelligence priorities, we have our mission statement, we have our ethos just like every other agency.
But I could put it simply: we want to keep bad people and bad things from entering the United States. That’s our main mission. And you’re going to do that by being a good partner. You’re going to do that by supporting these agencies.
Ian:
Yeah. What a terrific position to be in.
Michael:
Yeah.
Ian:
I’m curious on this collaboration topic, because crypto is so global in nature; it doesn’t respect jurisdiction or country borders; I can send some Bitcoin anywhere in the world in a few minutes. What does it look like collaborating with partners outside the United States?
Michael:
Yeah. CBP has such a huge international footprint; we’re in over 70 international locations.
Ian:
I didn’t realize that.
Michael:
Yeah, it’s unbelievable. We have an international directorate that melded some concepts and some other groups such as our Cargo Security Initiative; our IAP, which is our Immigration Advisory Program. And along with some of the people that we work with directly, like the police liaison Europol, we need to break those silos and those challenges with information intelligence sharing. And we did.
We have so many memorandums of understanding with these other agencies and our international partners to ensure that we’re doing what we want to do. That’s to flatten the information, get it out to these people as fast as possible. It’s not just affecting us here. It’s affecting everybody in the international community.
We often host a lot of our law enforcement international partners at the New York Field Office. And many of the trends that they’re seeing, we’re seeing the opposite side of the import. We’re seeing what happens on the export. We need to share that and vice versa. We’re seeing on the import we can help them on the export on that.
So as we continue to do that, as we build on our international directorate, I think that it’s just going to get better: putting more resources out there to help our international partners, putting more of our intelligence analysts out there is such an essential role right now for CBP.
Ian:
Yeah, amazing. Now you’re here at LYNX. You’re speaking this week at the conference. Tell us a little bit about what you’re going to be talking about.
Michael:
Yeah, I mean, I look forward to the panel; I get to sit with my law enforcement partners up there. And some of the things we want to speak on is what we’re seeing in the field. What are these bad actors doing, and what are we doing to combat that? Whether it’s violent crimes.
And one of the big things I want to get across is that we need to partner up the private and public sectors here. And we do. I always look forward not only to the opportunity to speak before both groups, but to shill the agency a little bit: let them know what we’re about.
Sometimes people don’t understand the difference between Customs and Border Protection. I still have great aunts asking me, “Why do I have to take my shoes off when I come into the airport?”
I’m like, “I’m not TSA. It’s a very important mission.” And then you just give up. You’re like, “I’m sorry. I’ll try my best so you don’t have to get shoes off anymore.”
But it’s important to educate the public and private sectors on who we are, what we do, what our capabilities are, and how we can help them as well.
Ian:
Amazing. Well, thank you for being here.
Michael:
I appreciate it.
Ian:
Thank you for joining us on the podcast. This was terrific.
Michael:
Thank you so much.
Ian:
All right.
Michael:
Bye.