OFAC Sanctions Cartel Members for Arms Trafficking, Fuel Theft, and Drug-Related Money Laundering

On June 6, 2023, the Office of Foreign Assets Control (OFAC) designated three individuals and one entity in connection with the notorious Jalisco New Generation Cartel (CJNG). Two senior members of the criminal group were sanctioned for arms trafficking and fuel theft, while the third individual was sanctioned for helping the CJNG move illicit funds between the United States and Mexico through a trade-based money laundering (TBML) scheme.

The Mexico-based drug trafficking organization is responsible for a large proportion of the fentanyl that is trafficked into the US. In 2022, overdoses related to fentanyl reached an all-time high in the US, with over 109,000 recorded deaths, according to the Centers for Disease Control and Prevention. 

The Jalisco New Generation Cartel

According to OFAC, one of the sanctioned individuals, Mary Cruz Rodriguez Aguirre, operates as a broker for the CJNG using her currency exchange house and a series of US-based businesses. Through the TBML scheme, Aguirre facilitated the collection and laundering of over $6 million between 2020 to 2022. 

Following OFAC’s designations, the criminal group made headlines on June 7 when it was discovered that eight people were killed after trying to leave their jobs at a call center operated by the cartel. According to reports, the CJNG operates multiple call centers throughout Jalisco state aimed at defrauding Americans and Canadians through real estate scams. In April 2023, OFAC sanctioned seven individuals and 19 entities in connection with the CJNG’s timeshare fraudulent activities.

FATF Guidance on Money Laundering from Fentanyl

In November 2022, the Financial Action Task Force (FATF) issued its inaugural report on ML from fentanyl and synthetic opioids. According to the report, criminal groups specializing in fentanyl and synthetic opioid trafficking often attempt to move their illicit proceeds using various channels and techniques including: :

• Bulk cash smuggling.
• Wire transfers (especially between front and shell companies).
• Cash couriers.
• Funnel accounts.
• Money brokers. 
• Anonymity-enhanced cryptocurrencies.

To mitigate the threat of these ML tactics, the FATF recommends law enforcement and other operational authorities implement the following practices:

• Ensure rigorous risk assessment practices are implemented to develop robust frameworks to combat drug-related ML. 
• Enhance the way information and intelligence is shared regarding the methods used to launder the illicit proceeds from the emerging drug trade.
• Provide prosecutors and law enforcement authorities with additional training on investigations into the financial elements of the precursor supply chain.

Concluding the report, the FATF notes that underlying predicate offenses – such as drug trafficking – can become difficult to ascertain after the placement stage of the ML process. To combat this, the global watchdog encourages compliance staff to ensure they understand the ecosystem’s broader risk indicators to help them identify ML schemes, including:

• When an individual receives multiple electronic funds transfers in small amounts or makes a significant number of small payments to the same accounts.
• When a customer has funds deposited into an account in amounts below the reporting threshold from what appear to be multiple third parties located in various parts of a city or region.
• If an account holder attempts to close an account to avoid due diligence questioning. 

Key Takeaways

In the Financial Crimes Enforcement Network’s (FinCEN’s) Advisory on Illicit Financial Methods Related to Synthetic Opioid Trafficking, compliance staff are reminded to conduct risk-based due diligence and implement enhanced policies, procedures, and controls into their compliance programs where necessary. Firms should also ensure risk assessments are regularly undertaken to establish whether their protocols effectively detect and report known or suspected ML activity. 

When filing suspicious activity reports (SARs) to indicate a possible connection between suspicious transactions and synthetic opioid trafficking, FinCEN instructs firms to provide all relevant information and reference the key term “FENTANYL FIN-2019-A006” in SAR field 2.