US sanctions are typically political acts of the most hostile kind. Countries like Iran and Russia top the blacklists. And now, private Mexican companies are on them. By pointing the finger at CIBanco, Vector, and Intercam, the White House took a measure that affects the entire financial system of an entire country. Based on recently created and retroactively applied laws, it jeopardizes the solvency of institutions, currently appropriately intervened by Mexican regulators who effectively eliminated the risk of contagion and flight. Although the final implications remain to be seen, the damage has been done. By acting unilaterally and disproportionately, the United States creates systemic risk and confirms its disdain for the punishment that Trump’s ultranationalist agenda imposes on Mexico.
First, the facts. On June 25, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued orders identifying three financial institutions based in Mexico as a “primary source of money laundering concern related to illicit opioid trafficking.” The measures prohibit certain fund transfers involving the three named institutions. Abruptly, the institutions were cut off from the US banking system and, at least de facto, from the Mexican banking system.
These sanctions were quickly implemented. The Fentanyl Eradication and Narcotics Deterrence (FEND) Act is legislation signed into law by the Biden Administration in July 2024. It declares international trafficking of fentanyl a national emergency and establishes measures to disrupt illicit supply chains. Among its main enforcement tools, the Act mandates the President to impose sanctions on foreign persons engaged in significant trafficking of fentanyl, its precursors, or activities related to transnational criminal organizations. It also requires FinCEN to issue guidelines for financial institutions to report suspicious transactions. This last section would explain the situation of CIBanco, Intercam, and Vector.
History matters. FinCEN determined, based on transactions in the years prior to the FEND Act, that the three financial institutions “play vital roles in facilitating the money laundering activities of Mexico-based cartels involved in illicit opioid trafficking, including facilitating payments for the acquisition of precursor chemicals essential for the production of illicit opioids by drug trafficking organizations (DTOs), some of which were also designated in February as Foreign Terrorist Organizations (FTOs).” As a preamble, on January 20, 2025, Trump issued Executive Order (EO) 14157, “Designating Cartels and Other Organizations as Specially Designated Foreign Terrorist Organizations and Global Terrorists.” Subsequently, on February 20, 2025, the State Department designated eight criminal groups as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SGDs): Tren de Aragua, Mara Salvatrucha, the Sinaloa Cartel, the Jalisco New Generation Cartel, the Northwest Cartel (formerly the Zetas), the New Michoacan Family, the Gulf Cartel, and the United Cartels. These were the prelude to prosecuting armed groups.
The United States acted without opening a window for adjustment due to changing regulations. In all three cases, the Treasury cites transactions that occurred before Biden’s FEND Act and Trump’s counterterrorism measures as examples. Regarding CIBanco, it states that “in 2023, an employee knowingly facilitated the creation of an account to allegedly launder $10 million on behalf of a Gulf Cartel member. Between 2021 and 2024, CIBanco processed over $2.1 million in payments on behalf of Mexico-based companies to China-based companies that shipped precursor chemicals to Mexico for illicit purposes.” Regarding Intercam, it mentions that “in late 2022, Intercam executives met directly with alleged members of the CJNG to discuss money laundering schemes, including fund transfers from China. Between 2021 and 2024, a China-based company associated with an individual shipping precursor chemicals from China to Mexico for illicit purposes received over $1.5 million from Mexico-based companies through Intercam.” Finally, regarding Vector, the order reports that “from 2013 to 2021, a Sinaloa Cartel money mule employed various methods to launder $2 million from the United States to Mexico through Vector. The order further describes how, from 2018 to 2023, Vector was found to have completed payments totaling more than $1 million on behalf of Mexico-based companies to China-based companies known to have shipped precursor chemicals to Mexico for illicit purposes.”In aggregate, this is a mere $16.6 million over a 12-year period prior to the new legislation, always linked to China—with which trillions are traded.
The Mexican financial system must strengthen its anti-money laundering regulations, which can be improved in any country, but the United States sanctions did not provide an opportunity to review and modify compliance policies. Furthermore, they disproportionately and retroactively punish what could have been resolved with precautionary measures, targeted penalties, and criminal proceedings against implicated executives. A sensible act—today equivalent to praying for pears from an elm tree—would have been to recognize that the illegal economy operates by trickle-down and infiltration into the banking shadows on both sides of the border. Instead, sanctioning Mexico for ties to China is more than appropriate.
The sanctions against three recognized institutions undermine the entire national financial system. Even with a possible “negotiation”—a euphemism for hiding aggression—the reputational damage is complete. Abroad, it will cause international banks to reduce or completely eliminate their transactions with Mexican counterparties, including healthy ones, to prevent sanctions. Domestically, the disconnection with the United States within the stipulated 21 days after the announcement forces other Mexican financial institutions to abruptly cut all ties with the three sanctioned banks, inflicting losses that call into question the solvency of those targeted. For example, the risk of panic among clients and withdrawal requests skyrocketed due to the uncertainty, although the CNBV’s immediate intervention prevented runs and bought time.
Thus, the United States-Mexico relationship continues in a grim phase of unilateral aggression and abuses rooted in the asymmetry of power and the ultranationalist banner brandished by Trump. Those who celebrated the creation of an anti-terrorist blacklist should be reminded of the predictability of the outbreak of undesirable consequences. In this case, the entire financial sector in the country bears a new stigma. It is a systemic risk from a hostile and controlling neighbor, equivalent to cutting down a neighbor’s tree to prevent fires on the block. Thus, it crosses yet another red line.
Source: sinembargo
