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Editor’s Note: The ACAMS moneylaundering.com legal team examines the U.S. efforts to disrupt the financial networks linked to fentanyl production and trafficking.

President Joe Biden signed the Fentanyl Eradication and Narcotics Deterrence (FEND) Off Fentanyl Act into law on April 24, authorizing asset freezes and other restrictions against groups and individuals who traffic drugs into the U.S.

Prior to the bill’s ratification, the Financial Action Task Force outlined several methods used to move and launder proceeds from fentanyl, and the Congressional Research Service reported that traffickers typically use one or a combination of strategies to move illicit proceeds through banks, money services businesses, online payment processors and cryptocurrency platforms.

Seeking to address a crisis that now claims more than 70,000 U.S. victims annually, the White House blacklisted “key global enablers and facilitators” of Mexico’s Sinaloa and Jalisco New Generation cartels, and regeared federal counternarcotics strategy towards eliminating synthetic production of fentanyl and collapsing the financial channels associated with the trade.

Pursuant to the strategy, Treasury Assistant Secretary Elizabeth Rosenberg met with her counterparts in Colombia and Mexico in April and July 2023 to discuss disrupting fentanyl-related transnational criminal organizations, or TCOs, including by strengthening anti-money laundering requirements.

Senior officials with Treasury’s Financial Crimes Enforcement Network, or FinCEN, have regularly traveled to Mexico City over the past year to meet with representatives of local financial institutions and Mexico’s financial intelligence unit. The bureau also launched a new series of “FinCEN Exchange” sessions in cities “highly impacted by the opioid epidemic.”

Treasury Secretary Janet Yellen traveled to Mexico in December to discuss bilateral efforts against fentanyl and fentanyl-related money laundering schemes, and disclose new designations from the Office of Foreign Assets Control, also known as OFAC, against 17 entities and individuals affiliated with the Beltran Leyva cartel.

Those designations together comprise one of several rounds of banking-related restrictions that OFAC has imposed against TCOs linked to the fentanyl crisis, with the most recent tranche arriving in March, and targeting the Sinaloa cartel. Biden also extended the drug-related national emergency he first declared in December 2021.

In light of the clear nexus between fentanyl and financial crime, the Treasury Department launched a new “Counter-Fentanyl Strike Force” in December.

Jointly led by the Office of Terrorism and Financial Intelligence and IRS Criminal Investigation, also known as IRS-CI, the strike force, which consists of FinCEN, OFAC and other agencies within Treasury, aims to streamline the financial dimension of U.S. counternarcotics strategy and optimize the use of financial intelligence pursuant thereto.

In September, three months prior to Treasury’s launch of the new strike force, federal prosecutors in Chicago secured the extradition of Sinaloa cartel kingpin Ovidio Guzman from Mexico to face charges of fentanyl importation and money laundering.

During the U.S.-Mexico High-Level Security Dialogue in October, officials from both countries highlighted increased cooperation and arrests of fentanyl traffickers, and the Justice Department’s pursuit of individuals suspected of orchestrating and leading the synthetic drug trade.

Prosecutors in the Eastern District of New York unveiled a fifth superseding indictment against Sinaloa cartel co-founder Ismael Zambada in February, building on previous charges against Joaquin “El Chapo” Guzman’s sons in April of last year and five suspected members of the Malas Manas cartel in December.

The Fend OFF Fentanyl Act, the latest culmination of congressional efforts to clamp down on opioids, empowers the Justice Department to redirect assets seized from traffickers towards investigations, and separately extends the statute of limitations for breaches of the International Emergency Economic Powers Act and Trading with the Enemy Act from five to 10 years.

The legislation further empowers the Treasury Department to unilaterally designate foreign banks, accounts and transactions as a “primary money laundering concern” upon linking them to fentanyl trafficking.

On May 16, Treasury outlined plans in the 2024 National Strategy for Combating Terrorist and Other Illicit Financing to issue new guidance to financial institutions on detecting funds linked to fentanyl precursors and manufacturing equipment.

OFAC, FinCEN and IRS-CI have also acted against overseas suspects, including by blacklisting 28 individuals and entities in China and Canada involved in manufacturing and distributing precursor chemicals for fentanyl, methamphetamine and ecstasy.

Yellen welcomed a counternarcotics agreement between Biden and Chinese President Xi Jinping in December, and a bilateral commitment in April to share financial intelligence linked to fentanyl trafficking and other illicit substances.

But the Brookings Institute, Council on Foreign Relations and federal lawmakers argue that the federal government has yet to meaningfully address China’s prominent role in the fentanyl crisis, including its financial component.

Contact Leily Faridzadeh at lfaridzadeh@acams.org