Big Beautiful Designations

Have you read/watched ZeroZeroZero?

It tells a story of modern cocaine trade. Chances are, you have heard about cocaine. I first heard about it aged 5 or so, when my mom advised me not to talk with strangers, if those ever approached me on the street. She feared I would be offered a candy with some drugs in it, put in a car and never to be seen again. I asked what drugs? She said cocaine. Not sure if she knew exactly how it all works but things we tell our kids, right? Did the trick.

What about fentanyl?

It feels like it is not as well-known of a drug. I first heard about it during the US-China rout earlier this year. As it turns out, Mexican cartels source precursor chemicals from China, produce them in Mexico, and subsequently sell the drug throughout the United States. In summary, drug cartels getting richer, people are dying. The question is what can be done about it?

Like other predicate offences, drug trade is executed via financial institutions that facilitate such trade.

Enter Section 2313a.

In 2024, the US Congress enacted the FEND Off Fentanyl Act, which allows the US Treasury to sanction financial intermediaries if “reasonable grounds exist for concluding” that they are facilitating such trade.

What happened on 25 June 2025?

The US deemed that three Mexican banks are “of primary money laundering concern in connection with illicit opioid trafficking through its provision of financial services that facilitate illicit opioid trafficking”.

Why is it important?

“FinCEN has not independently examined the banks’ AML policies or programs or otherwise corroborated the existence or efficacy of such programs. Regardless, even if the banks have some AML policies and programs, given the evidence described in this Order and the totality of the circumstances, this does not alter FinCEN’s overall determination that the banks are of primary money laundering concern.”

“Totality of the circumstances”?

Based on non-public information available to FinCEN, the banks were deemed instrumental in facilitating payments on behalf of Mexico-based companies involved in the procurement of precursor chemicals for illicit purposes, with range of examples cited throughout the documents.

Notably, “transactional activity indicated that the banks lacked effective AML/CFT oversight or have chosen not to take action to impede illicit finance”.

What’s next?

Financial intermediaries (banks, MSBs, online payment processors, etc) are likely to step up with enforcement of their own AML measures. Going forward, it will not matter how good of an AML program the FI claims to have. Such matters will not even be considered, as along as there is totality of evidence suggesting otherwise.

Source: FinCEN

Thanks for reading, and let me know if any thoughts on the matter.

Alexey