Janet Yellen’s Mexico visit targets fentanyl, arms trafficking and money laundering

On her second and final work day in Mexico, Treasury Secretary Janet Yellen signed a memorandum of intent to focus a national security lens on foreign direct investment. The agreement was signed shortly after her private meeting with President Andrés Manuel López Obrador at the National Palace in Mexico City. Although the specifics of their conversation were not disclosed, the president later conveyed his satisfaction with the meeting on social media: “The good neighbor policy between Mexico and the United States is a tangible reality. Our relationships span various dimensions, from friendship to collaborative efforts in economic and financial affairs. As a result, my pleasant meeting with Janet Yellen, the Secretary of the Treasury of the United States, proved to be highly productive.”

The Biden administration is closely scrutinizing capital flows originating in Mexico to detect drug trafficking proceeds. According to the U.S. Treasury, illicit profits within its financial system exceed $100 billion annually. When asked if this new agreement would stop Chinese money flowing into the U.S. through Mexico, Yellen clarified that the U.S. government does not intend to obstruct the Asian giant. “We want to see further deepening of our economic relationship with respect to our supply chains, supply chain resilience,” said Yellen, “and we think it’s important to be somewhat more coordinated than we have been when it comes to investment screening.”

Mexico’s Finance Secretary Rogelio Ramírez de la O said that organized crime groups now have an entire network of illegal businesses that are not limited to fentanyl and weapons trafficking. “We face the reality of heavily armed criminal groups that are better equipped than our local police,” said Ramírez. “It’s challenging to confront these groups when they have access to weapons from the United States. On our side of the border, we are making every effort to detect and stop them.” The U.S. Treasury recently imposed sanctions on 15 individuals associated with the Beltrán Leyva Cartel, as well as two companies, for their alleged involvement in fentanyl trafficking.

During the bilateral meetings, Yellen and her Mexican counterparts discussed cooperative efforts to monitor cross-border money flows, and the potential for more nearshoring business. Yellen called it “friendshoring” — seeking to strengthen U.S. economic resilience through diversifying its supply chains across a wide range of trusted allies and partners like Mexico, Vietnam and India. Yellen also noted that Mexico has a natural advantage, given its proximity and the frequent interaction between American and Mexican businesses that create jobs on both sides of the shared border, as well as the need for lowering the cost of sending and receiving remittances.

In 2024, working groups from the United States and Mexico will hold quarterly meetings to review foreign investment projects for national security risks, and combat financial crimes, drug trafficking, arms trafficking, imports of illegal substances, and armed violence.

During her short but productive visit to Mexico City, Yellen enjoyed some tacos, met with Bank of Mexico officials, visited a crime lab, and socialized with diplomats, bankers and business leaders. Yellen’s friendliness with her Mexican counterparts was a refreshing change from all the finger-pointing about violent arms and drug trafficking on both sides of the border, and the scourge of fentanyl produced in Mexico with chemical precursors from China that causes over 100,000 deaths each year in the U.S.

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