US Sanctions Mexican Cartel Fuel Smugglers, Issues Red Flag Guidance
The Office of Foreign Assets Control this week sanctioned three people and two entities in Mexico for their ties to a drug trafficking and fuel theft network linked to the Mexico-based Cartel Jalisco Nueva Generacion. The Treasury Department also published a new alert with red flags that could signal a company is using a U.S. bank as part of a fuel smuggling scheme on the U.S. southwest border.
The designations target Cesar Morfin Morfin, also known as Primito, the cartel's cell leader for Tamaulipas, Mexico, and his brothers, Alvaro Noe Morfin Morfin and Remigio Morfin Morfin. OFAC also sanctioned two hazardous materials transportation companies, SLA. Servicios Logisticos Ambientales, S.A. de C.V. and Grupo Jala Logistica, S.A. de C.V., for being run by Cesar Morfin Morfin and for moving fuel and crude oil between Mexico and the U.S.
Treasury said this cartel's network generates hundreds of millions of dollars annually, including by fentanyl trafficking, fuel theft, and smuggling stolen crude oil from Mexico across the border.
The alert, issued by the Financial Crimes Enforcement Network, urges banks and other financial institutions to submit suspicious activity reports to FinCEN if they think a transaction may be connected to illegal fuel smuggling. Banks should be suspicious of several red flags, including:
- a customer that is a small U.S.-based energy company or freight company operating on the southwest border with "transactional activity and profit margins that exceed the typical business profile of similar companies in their industries"
- a customer selling crude oil "for significantly less" than the market rate
- a small U.S.-based oil company selling millions of dollars of crude oil per month but has no online presence or is using a basic website that resembles major U.S. gas companies’ websites
- a small U.S.-based oil company that suddenly buys waste oil or other hazardous materials from a small number of Mexican and U.S. companies
- a small U.S.-based oil company sending wire transfers to Mexican or U.S. companies for waste oil or other hazardous materials "without possessing the appropriate registrations" with the EPA
- a customer that is a U.S. company and is the ultimate consignee of purchases of waste oil or other hazardous materials but is registered to a residential address.
Banks should include the term “FIN-2025-OILSMUGGLING” in their suspicious activity reports if they think a transaction is connected to illegal fuel smuggling.