Focus on Transnational Cartels Continues: FinCEN Targets Three Mexican Financial Institutions with Special Measures, Restricting Their Access to U.S. Financial System

The Orders represent FinCEN’s first actions using new special measures authority under the Fentanyl Sanctions Act and FEND Off Fentanyl Act of 2024 (codified at 21 U.S.C. § 2313a) (the “Fentanyl Act”) and continue the Trump Administration’s broader efforts against transnational cartels and narcotics trafficking.

On June 26, 2025, media reported that Mexico’s Banking and Securities Commission had temporarily taken over management of the three Identified Financial Institutions to protect their depositors and creditors.

Background on Section 2313a Authority

Section 2313a authorizes the Secretary of the Treasury to determine that “reasonable grounds exist” to conclude that one or more (a) financial institutions operating outside the United States, (b) classes of transactions within or involving a jurisdiction outside the United States, or (c) types of accounts within or involving a jurisdiction outside the United States, are of “primary money laundering concern in connection with illicit opioid trafficking.”

Upon such a determination, Section 2313a authorizes the Secretary of the Treasury to impose one of six “special measures” on the identified financial institution, class of transactions, or type of accounts. Special measures one through five are the same as those provided under Section 311 of the USA PATRIOT Act (31 U.S.C. § 5318A(b)) (“Section 311”). Special measure six authorizes the Secretary of the Treasury to prohibit, or impose conditions upon, “certain transmittals of funds” involving the identified financial institutions, transactions, or accounts, by any “domestic financial institution” or “domestic financial agency.” Unlike Section 311, which requires notice-and-comment rulemaking, Section 2313a authorizes the Secretary of the Treasury to impose special measures immediately through an order. The Secretary of the Treasury has delegated authority to administer these authorities to FinCEN.  

The Three Identified Financial Institutions

In the Orders, FinCEN determined that CIBanco, Intercam, and Vector each facilitated illegal opioid trafficking by processing transactions and payments for Mexico-based cartels, including for the import of precursor chemicals from China to Mexico for use in illicit drug manufacturing. FinCEN highlighted examples of the evidence it relied on in making this determination for each Order:

• CIBanco, which is the 20th largest financial institution in Mexico with roughly US $7 billion in assets, processed hundreds of funds transfers involving more than US $100 million that FinCEN assessed to be “in tandem with illicit opioid trafficking operations,” was used by an employee who created an account connected to laundering US $10 million for a Gulf Cartel member, and received US $26,000 in illicit funds connected to the Beltran-Leyva Organization Cartel (BLO Cartel) and Cartel Jalisco Nueva Generacion (CJNG);
• Intercam, which is the 25th largest financial institution in Mexico with roughly US $4 billion in assets, processed over 1,000 funds transfers involving millions of U.S. dollars in connection with exports of precursor chemicals from China to Mexico, received more than 200 wire transfers from suspected drug mules in the United States involving US $3.1 million, and facilitated funds transfers for CJNG, including Intercam executives meeting with suspected CJNG members to “discuss money laundering schemes”; and
• Vector, which is Mexico’s ninth largest brokerage firm with more than US $10 billion in assets under custody, processed over 40 funds transfers involving more than US $1 million in connection with exports of precursor chemicals from China to Mexico, received over US $2 million in wire transfers from suspected drug mules working for the Sinaloa Cartel, processed transactions involving more than US $40 million in suspected proceeds of bribes by the Sinaloa Cartel, and served as a reliable mechanism for the Gulf Cartel to transfer illicit funds.

FinCEN’s Orders

As a result of these determinations, FinCEN imposed the sixth special measure on each of the Identified Financial Institutions, prohibiting “covered financial institution[s]” from “engaging in any transmittal of funds from or to” the three entities. The prohibition applies to each Identified Financial Institution’s “subsidiaries, branches, and offices located in Mexico,” but, notably, not to any of its “branches, subsidiaries, and offices … operating outside Mexico.”

A covered financial institution is any “agent, agency, branch, or office within the United States of any person doing business” in a range of capacities, including as a bank, broker dealer (including an introducing broker), money services business (including payments companies and digital asset companies who engage in money transmission), casino, mutual fund, futures commission merchant, introducing broker in commodities, or any person subject to supervision by any state or Federal bank supervisory authority.

Notably, investment advisers are not currently “covered financial institutions,” but for certain investment advisers, they will be covered as of January 1, 2026, the current effective date for FinCEN’s requirement that certain registered investment advisers and exempt reporting companies implement anti-money laundering programs.

For covered financial institutions, penalties for violating the Orders can include civil monetary penalties of not less than twice the value of the transaction, up to $1,776,364, and for willful violations, criminal fines of not less than twice the value of the transaction, up to $1,000,000. For individuals responsible for violations, penalties can include fines of up to $500,000 and imprisonment for up to 10 years.

The Orders are more expansive than the special measures that FinCEN previously imposed under Section 311 authorities. First, they apply to a broader group of financial institutions, including, for example, money services businesses and casinos. Second, they go beyond prohibiting the establishment or maintenance of correspondent accounts for foreign banks that involve the listed parties — the frequently used fifth special measure under Section 311 — to prohibit all transmittals of funds (including convertible virtual currency) involving them. FinCEN justifies this by explaining that a mere prohibition on correspondent accounts would be inadequate because it “would not address the movement of funds outside of a strict correspondent or payable-through relationship.”

Stepping Back: The Trump Administration’s Focus on Cartels

The June 25 Orders by FinCEN represent the next step in the Administration’s fight against cartels and transnational narcotics trafficking. In addition to the Orders, the Administration has taken several actions in a whole-of-government approach to disrupting and deterring cartel and fentanyl trafficking-related activities, including:

• FTO/SDGT Designations: In February, the U.S. State Department designated eight international cartels (including six based in Mexico) as Foreign Terrorist Organizations (FTOs), which significantly escalates potential criminal and civil liability for businesses, as it triggers a robust set of anti-terrorism laws that go beyond traditional anti-money laundering (AML) and anti-narcotics frameworks.
• DOJ Prioritization of Cartels: The DOJ has repeatedly signaled a significant shift in enforcement priorities, with a renewed focus on combating transnational criminal organizations and cartels, as outlined in the Attorney General’s February 5, 2025 memorandum.
• Geographic Targeting Order: Further, in March, FinCEN implemented a new Geographic Targeting Order (GTO) lowering money services businesses’ reporting threshold for cash transfers from $10,000 to $200 in certain ZIP codes on the U.S.-Mexico border with the aim of disrupting illicit finance linked to cartels.^[1]
• FinCEN Guidance: FinCEN has also issued a series of alerts and analyses highlighting the growing risks of financial crime along the U.S.-Mexico border, including bulk cash smuggling, oil smuggling schemes, and related money laundering activities.
• Information Sharing: Most recently, FinCEN launched its COMMAND information sharing initiative to facilitate collaboration among financial institutions, law enforcement, and regulators in identifying and responding to threats related to cartel activity and cross-border financial crime.
• Ongoing Sanctions Designations: In addition to the above measures, the U.S. Treasury and State Departments have continued to expand sanctions targeting cartel leaders, associates, and affiliated entities under the Kingpin Act and other authorities (see here, here, here, and here).

Potential Effects on the Identified Financial Institutions

Beyond Section 2313a, the Identified Financial Institutions may face other litigation and enforcement risks. Because the Orders explicitly detail ways in which each of the three Identified Financial Institutions assisted drug cartels, including cartels that are also designated FTOs, these three Identified Financial Institutions may face scrutiny by the U.S. Department of Justice under the criminal statutes prohibiting material support to FTOs (18 U.S.C. 2339D), and may also be vulnerable to claims by private litigants under the Anti-Terrorism Act’s cause of action against persons who aid and abet FTOs (18 U.S.C. 2333(d)(2)).

In addition to the legal risks facing these three Identified Financial Institutions, the Orders may create several practical difficulties. Covered financial institutions may restrict transactions prior to the Orders’ effective date. Non-covered financial institutions may decline to engage in business or transactions with the Identified Financial Institutions. Finally, the inability to access the U.S. financial system under the Orders may result in customers and counterparties transferring assets from these Identified Financial Institutions, which could result in a so-called “run on the bank” or other negative financial effects.

Implications for U.S. and Foreign Financial Institutions

As a result of the Orders, any covered financial institution in the United States (including banks and money services business) will be prohibited from engaging in any transmittal of funds involving the Identified Financial Institutions in Mexico beginning on July 21, 2025. This prohibition is not limited to situations in which one of the Identified Financial Institutions is a customer of the covered U.S. financial institution but would also cover transmittals involving the Identified Financial Institutions that come via other, non-prohibited financial institutions.

Non-U.S. financial institutions not formally restricted under the terms of the Orders may also be impacted. In practical terms, non-U.S. financial institutions will be unable to conduct U.S. dollar transactions involving CIBanco, Intercam, and Vector located in Mexico, given the need for those transactions to route through a U.S. financial institution. Additionally, even for transactions with no U.S. touchpoint, there are potential financial crime, legal risks, and reputational hazards for non-U.S. financial institutions continuing to conduct business with entities identified by the United States as being involved in cartel activity and as high-risk for money laundering, including with alleged connections to drug cartels and at least one FTO.

Next Steps and Recommendations

• U.S. financial institutions engaging in transactions with the Identified Financial Institutions should assess their exposure and the nature of these relationships, including identifying any accounts or transactions with the three Identified Financial Institutions covered by the Orders, and taking steps to prevent prohibited transactions before the Orders’ effective date of July 21, 2025. Specifically, U.S. financial institutions will be required to “reject” – not freeze or block – prohibited transactions, as of July 21, 2025.
• U.S. financial institutions should also update screening lists and other know-your-customer (KYC) procedures to reflect the prohibitions on these Identified Financial Institutions and ensure any attempted future transactions are detected and rejected. FinCEN also recommends that U.S. financial institutions “consider the finding of primary money laundering concern” with respect to the Identified Financial Institutions when complying with other Bank Secrecy Act (BSA) obligations, including with respect to filing suspicious activity reports (SARs).
• U.S. and non-U.S. financial institutions with exposure to Mexico, especially Mexican financial institutions, should consider revisiting their financial crime risk assessments relating to Mexico, and the efficacy of their AML compliance programs, to identify and mitigate any customer relationships or activities that may make them vulnerable to a Section 2313a action, or other similar actions, in the future. In particular, the Orders draw attention to the risks of transactions relating to the export of precursor chemicals to Mexico, especially from China.

The U.S. government’s enhanced focus on cartels and their affiliates have intensified the legal and compliance risks facing companies operating in or with Mexico, including Mexican financial institutions. In addition to long-standing risks associated with cartel activity, including financial crime risks and sanctions designations under counter-narcotics authorities, companies and individuals must now also consider the risks of providing material support to FTOs or otherwise engaging in prohibited transactions with an ever-increasing universe of off-limits persons, including the Identified Financial Institutions. The consequences of disregarding these risks may be significant, including civil and criminal penalties for individuals and entities that are subject to U.S. jurisdiction, as well as sanctions designations, Section 2313a identifications, or other similar measures for those outside U.S. jurisdiction. The potential consequences are notable for foreign entities and individuals, who could face increased risk of prosecution for material support of terrorism, which can be used to charge activity occurring outside the United States.

Crowell & Moring is ready to assist businesses in assessing their exposure, developing risk-mitigation plans, and implementing robust compliance programs tailored to the unique challenges presented by cross-border operations and heightened regulatory scrutiny.