The Trump administration remains focused on countering Mexican cartels and other Latin American transnational criminal organizations (TCOs). Since designating eight TCOs as foreign terrorist organizations (FTOs), the Financial Crimes Enforcement Network (FinCEN) and Department of Justice (DOJ) have issued alerts and prosecutorial guidance respectively reinforcing the administration’s whole-of-government approach to countering this threat. As with the FTO designations, these latest pronouncements reinforce that financial institutions are the pointed end of the spear of the government’s strategy. Banks should take heed and use these statements to guide their approaches to risk assessment, Bank Secrecy Act (BSA) compliance requirements, and ensuring they do not run afoul of their regulators.
In March 2025, FinCEN issued a comprehensive alert outlining common bulk cash smuggling tactics cartels are using to move money between the United States and Mexico. On May 1, 2025, FinCEN sounded the alarm on illicit crude oil smuggling from Mexico into the United States — the cartels’ most lucrative, illicit, non-narcotics enterprise. Most recently, on May 12, 2025, the DOJ issued long-awaited guidance on the new administration’s white-collar enforcement priorities that highlights several typologies connected to cartels’ exploitation of the U.S. financial system. Collectively, these pronouncements provide financial institutions a road map for financial crime and sanctions compliance regarding exposure to the Mexican market.
We will address each in turn.
The Cartels’ Bulk Cash Smuggling Playbook
On March 31, 2025, in the first FinCEN alert of the new administration, the Treasury Department outlined how Mexican TCOs use bulk cash smuggling and repatriation schemes to launder illicit proceeds that allow the cartels to “place, layer, and integrate their illicit proceeds into the United States and Mexican financial systems.” TCOs begin by smuggling U.S. currency into Mexico concealed on one’s person, in privately owned vehicles, or in trucks from shipping and logistics companies complicit with the cartels. The U.S. currency is delivered to Mexican “businesses,” often no more than shell corporations, along the Mexican border.
Once in Mexico, the cartels work to repatriate the funds through purported “legitimate” Mexican businesses seeking to deposit dollars in the U.S. financial system. According to FinCEN, these businesses will present fraudulent currency declarations claiming the cash originated from import and export business profits when in fact the cash originated from drug sales in the United States previously smuggled south into Mexico. TCOs utilize both air- and land-based transport from Mexico into the United States, including Mexican and U.S.-based armored car services (ACS). The ACSs may further obfuscate the source of the cash by moving the funds through several locations or purchase the bulk cash and credit the value into a TCO’s U.S. account.
Once the smuggled and repatriated funds are deposited in the United States, the customer can then wire the funds back to Mexico, transfer the funds to other U.S.-based front businesses, purchase U.S. assets, or even purchase U.S. goods resold overseas in a trade-based money-laundering scheme to further launder the funds. The options are limitless.
FinCEN identified several red flags for depository institutions, a handful of which we highlight below:
- A large volume of cash is delivered to a U.S.-based financial institution via an ACS on behalf of a customer who operates a Mexico-based business, a business located near the U.S. Southwest border, or a U.S.-based company with an affiliated Mexico-based business. Following the delivery, the customer then rapidly moves the funds to a financial institution based in Mexico, makes transfers to another business in the United States they own and operate, or purchases a large volume of goods.
- A customer that owns a Mexico-based business, or a customer with an affiliated Mexico-based business, receives a large credit from a U.S.-based ACS into their account at a U.S.-based financial institution.
- A customer that owns a Mexico-based business receives a large credit into their account at a U.S.-based financial institution after depositing bulk cash into the U.S.-based financial institution’s vault at a U.S.-based ACS secure storage facility.
Oil-Smuggling Schemes at a Glance
On May 1, 2025, in its second alert of the year, FinCEN described how cartels are stealing billions in crude oil from Pemex, Mexico’s state-owned oil company, and funneling it into the U.S. energy market. The cartels mislabel the crude oil (often as “waste oil”) and smuggle it through complicit Mexican brokers and small U.S.-based importers along the southwestern border. Once sold at below-market rates, the profits are laundered back to cartel networks using false invoices and complex wire transfers.
Petrol theft and illicit oil smuggling have become a significant revenue source for TCOs fueling rampant corruption and violence across Mexico. FinCEN identified specific red flags to help financial institutions spot potential links to oil smuggling and related money laundering, including:
Anomalous Business Activity
- Customers (especially small oil, gas, or freight companies) located near the U.S.–Mexico border exhibiting unusual volume or profits.
- Entities with no or limited online presence handling large-scale crude oil trades.
- Websites that mimic major oil companies but lack verifiable credentials.
Suspicious Payment Behavior
- Payments referencing “waste oil” or “hazardous materials” by companies not registered with the EPA.
- Wire transfers to/from Mexican companies with no obvious oil/gas industry ties.
- Roundabout payment structures, e.g., multiple layers of U.S. and foreign entities funneling funds to mask their source or destination.
Shell and Front Company Usage
- Companies registered to residential addresses listed as consignees or buyers in oil trades.
- Oil trading firms showing patterns of behavior typical of shell companies, such as rapid formation, no physical operations, or a singular transaction partner.
Market-Defying Sales
- Crude oil sold well below West Texas intermediate market price.
- Customers who claim to trade hazardous materials but appear to only engage in crude oil sales.
The DOJ’s New White-Collar Priorities Target Cartel Activity
On the heels of FinCEN’s alerts regarding bulk cash and oil-smuggling activity, the U.S. Department of Justice unveiled a new white-collar crime enforcement plan emphasizing the prosecution of financial and logistical enablers of cartels and TCOs. The third sentence of the May 12, 2025, memorandum states that “[p]rosecutors and investigators in the Criminal Division are currently working tirelessly to, among other things, pursue the Total Elimination of Cartels and TCOs…” The DOJ is prioritizing prosecuting white-collar crime in 10 “high-impact areas,” three of which focus explicitly on cartel and TCO activity:
- “Conduct that threatens the country’s national security, including threats to the U.S. financial system by gatekeepers, such as financial institutions and their insiders that commit sanctions violations or enable transactions by Cartels, TCOs, hostile nation-states, and/or foreign terrorist organizations;”
- “Material support by corporations to foreign terrorist organizations, including recently designated Cartels and TCOs;” and,
- “Complex money laundering, including Chinese Money Laundering Organizations, and other organizations involved in laundering funds used in the manufacturing of illegal drugs.”
The memo makes clear that cartel-related financial crime is now a top focus of DOJ white-collar enforcement. Financial institutions, corporations, and professional service organizations with exposure to the Mexican market should be prepared for increased scrutiny.
Key Takeaways for Financial Institutions
From oil smuggling to trade-based money laundering, cartels are diversifying their financial strategies. As these threats evolve, so too must the compliance frameworks of financial institutions. FinCEN’s alerts are not simply informative — they’re playbooks for identifying illicit financial behavior in a landscape where the line between legal and illegal trade is increasingly blurred. The Trump administration’s renewed focus on cartel-related activity makes these playbooks too costly to ignore.
Financial institutions should adopt a proactive compliance posture by conducting routine risk assessments, strengthening transaction monitoring to flag suspicious activity, and conducting enhanced due diligence on account relationships with potential exposure to cartel and TCO activity. FinCEN has repeatedly emphasized how financial institutions are the first line of defense against cartel-related financial crime. Coordinated efforts across the banking sector, law enforcement, and regulators are essential to dismantling the financial infrastructure supporting TCOs.