United States pressures Mexican banks to curb cartel money laundering

The U.S. Treasury Department has laid its cards on the table in a quick, closed-door visit with Mexican bankers and authorities to strengthen the anti-money laundering measures between the two countries. Emilio Romano, the new president of the Mexican Banking Association (ABM), stated after the meeting — held during the recent Banking Convention in Nayarit — that Mexican banks are ready to cooperate with the White House. This first meeting comes amid Donald Trump’s tariff war, the tightening of U.S. policy against Mexican cartels, and the Republican’s ongoing criticism of Mexico’s lack of action in combating organized crime.

The clampdown on Mexican drug traffickers has intensified under Trump’s administration. One month after taking office, the Republican designated six Mexican cartels and two South American gangs as international terrorist organizations. The Sinaloa Cartel, Jalisco New Generation Cartel (CJNG), Cárteles Unidos, Cartel del Noroeste, Gulf Cartel, and the New Michoacan Family are included on the list, as well as the Venezuela-based Tren de Aragua gang and Mara Salvatrucha from El Salvador.

The terrorist designation puts the cartels in the spotlight while also isolating the groups and their members, denying them access to the U.S. financial system. As a result, one of the first implications has been the freezing of all assets belonging to members of those cartels in the U.S., and U.S. citizens are generally prohibited from conducting transactions with them.

In the same vein, the U.S. Treasury Department has already dealt financial blows to Mexican cartels. Earlier this month, the agency sanctioned three drug traffickers and two companies linked to fuel theft. The sanctioned individuals are allegedly associated with the CJNG. Months earlier, in September, nine Mexican citizens and 26 entities based in Mexico were sanctioned for being directly or indirectly linked to CJNG’s fuel theft activities.

The U.S. Drug Enforcement Administration (DEA) published a report on Thursday about these criminal groups. The document details drug trafficking activities, what is produced, how they operate, and how they finance themselves. The Sinaloa and CJNG cartels, the U.S. agency notes, have an extensive distribution and financial support network in Latin America and China. In fact, the DEA claims that one of their main sources of income currently comes from gasoline and gas smuggling, which they resell in the U.S. This practice — known as huachicol in Mexico — fuels money laundering: “Mexico loses tens of billions of dollars in tax revenue annually, while simultaneously costing U.S. oil and gas companies billions of dollars annually,” the report states.

Gasoline and gas smuggling is one of the Mexican cartels’ sources of financing, but not the only one. According to the DEA report, organizations such as the CJNG launder millions of dollars in illicit profits through Chinese companies, cryptocurrencies, international trade networks, and large-scale cash movements. In 2024 alone, the United States carried out more than 300 large-scale cash seizures worth $30 million. Most of the seizures took place in California, Texas, Arizona, and New Mexico.

The Trump administration is now focusing its sights on Mexico’s financial system, which consists of 52 banks. The U.S. president discreetly sent Scott Rembrandt, Deputy Assistant Secretary for Strategic Policy at the Treasury Department, to discuss money laundering controls with bankers gathered for their most important annual summit on Mexico’s Pacific coast.

“It was a very good meeting, where it became clear that the future of the financial system lies in ensuring that both authorities and banks have timely information to act efficiently and protect banking systems from the possible inflow of illicit funds,” said ABM President Emilio Romano after the brief meeting.

Faced with a tough trade partner like Trump, Romano has proposed creating a working group with the U.S. to strengthen the standardization of financial transactions between the two countries.

“We must be more agile in information exchange, and create proactive detection mechanisms. We will seek to continue closing spaces for illicit activities to protect the integrity of the system and build greater confidence in our users,” Romano said in Nayarit.

Drug trafficking finances strain US-Mexico relationship

Cooperation with the U.S. financial system will require Mexico to conduct an internal review of its own safeguards. In Mexico, the Anti-Money Laundering Law was enacted in 2012, but has not been reformed, despite some attempts by the legislature. Additionally, public data on this crime is scarce and outdated. In 2023, Mexico’s Financial Intelligence Unit (UIF) reported that illicit resources identified from 2019 to 2021 amounted to just over 43.9 billion pesos. The agency acknowledged that this figure is just the tip of the iceberg in terms of money laundering, since the percentage of reported crimes is very low.

Rogelio Madrueño, a researcher at Mexico’s Center for Advanced Studies in Security, Strategy, and Integration, explains that the growing expansion and presence of organized crime in Mexico is due to traditional money laundering mechanisms involving corruption, bribery, institutional and judicial weakness, and collusion with other criminal groups, such as those from China. He notes that in recent months, international media have leaked information about the triangulation between Chinese gangs, Mexican cartels, and China’s underground banking system in the U.S. to launder millions of dollars globally.

“This demands not only stronger financial safeguards, but also institutional and judicial protection, and political commitment at the highest levels in Mexico,” he said.

Madrueño, who is also a professor at the University of Bonn, Germany, adds that according to some expert estimates, the drug trafficking cartel business is worth at least $500 billion.

“The implications for Mexico are no small matter,” he explained. “The United States has a very powerful institutional framework to create incentives and enforce the protection of the financial system, along with the actions of the Financial Intelligence Unit and other Mexican government departments. Cooperation will enter a new phase of tension, which will put additional pressure on the bilateral relationship between Mexico and the United States.”

Victoria Dittmar, a researcher at InSight Crime, says that following the designation of Mexican drug trafficking groups as terrorist organizations, companies and individuals now face higher risks of being charged with providing material support to terrorism if any connection with these cartels is discovered. “Of course, large companies can be involved in money laundering, but what we have identified in our fieldwork is that much of this laundering is carried out through small companies, shell companies, or cryptocurrencies — that is, through channels that are outside the financial system,” she said.

Gustavo del Ángel, an expert on the financial system at Mexico’s CIDE research center, points out that illicit operations have diversified and are constantly seeking ways to bypass the system’s safeguards. Criminal groups use banks, cash, or other intermediaries. Regarding the financial system, the CIDE expert affirms that Mexico complies with international anti-money laundering laws. However, he also warns that the more controls are imposed on banks, the greater the risk that many legal or illegal transactions will exit the banking system and shift to the cash economy.

Experts agree that the growing U.S. pressure on the finances of drug cartels is forcing both the Mexican government and the country’s financial system to make decisions and strengthen protections against potential illicit transactions. Thus, in addition to the dozens of Mexican cartel leaders extradited to the U.S. at the start of this year, and the “historic” fentanyl and cocaine seizures, more blows are now expected from both Mexican and U.S. authorities against the finances of organized crime.

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