From Fentanyl to Fuel Theft: America’s War on Mexican Cartels Expands Beyond Narcotics
For years, the United States’ battle against Mexican cartels has centered almost exclusively on drugs: cocaine in the 1980’s, methamphetamine in the 90’s and 2000’s, and, most recently, fentanyl; the synthetic opioid responsible for tens of thousands of American overdose deaths on an annual basis. Yet a recent series of actions announced by the U.S. Treasury Department last week have revealed an important evolution in Washington’s strategy on our neighbors to the south when it comes to illicit financial activity. It appears that U.S. officials are no longer targeting merely the narcotics themselves, but the entire criminal ecosystems that have sustained cartel power over the past several decades, while identifying novel sources of funds that allow the destabilizing activities of these organizations to continue unabated.
The Treasury’s latest sanctions seek to combat fuel smuggling schemes orchestrated in part by an all-too-familiar foe: the infamous Jalisco New Generation Cartel (CJNG), as well as its facilitators. On June 30th, the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. financial intelligence agency that enforces economic and trade sanctions in support of both national security and foreign policy objectives, sanctioned two Mexican nationals and nine entities tied to a transnational CJNG-linked fuel theft scheme. This illicit operation reportedly involved cross-border smuggling, falsified customs documents, and the misuse of shell companies each used to evade Mexican taxes while generating tens of millions of dollars annually for the cartel.1 In addition to these actions, the Treasury’s Financial Crimes Enforcement Network (FinCEN) also issued a supplemental alert providing additional guidance on financial typologies and red flags indicative of CJNG and other Mexico-based transnational criminal organizations (TCOs) smuggling fuel from the United States into Mexico in schemes involving Mexican tax evasion to assist U.S. financial institutions from facilitating the influx of dirty money into the American financial system.
Exacerbated by recent geopolitical conflict in the Middle East which has placed fuel and oil access at a premium across the globe, CJNG has capitalized on the theft, adulteration, and smuggling of hydrocarbons of this variety in schemes that have successfully generated billions of dollars’ worth of funds which have further contributed to the growth of their primary money-maker: illicit narcotics trafficking into the United States. These schemes, coined Huachicol by Mexican natives, have now developed into the most significant non-drug revenue source for Mexican cartels and other illicit actors in this region. According to the Treasury, thieves in Mexico (known as huachicoleros) use a variety of means to steal fuel and crude oil from Mexico’s state-owned energy company, Petróleos Mexicanos (Pemex), including bribing corrupt Pemex employees, illegally drilling taps into pipelines, stealing from refineries, hijacking tanker trucks, and threatening Pemex employees.1 Stolen crude oil is then smuggled into the United States through complicit Mexican brokers and often mislabeled as “waste oil” or other hazardous material to avoid scrutiny and evade taxes and regulations. The oil is then delivered to complicit U.S. importers in the oil and natural gas industry operating near the U.S. southwest border, who sell it at a steep discount on the U.S. and global energy markets before repatriating the significant illicit profits back to the cartels in Mexico.1
In response to growing threats, OFAC has taken a series of actions targeting Mexican drug cartels over the past two years and have expanded their actions to target this practice in particular given its rampant growth. This shift however marks a new milestone in a broader foreign policy transformation related to our southwest border that has unfolded over the past several months, one that has fundamentally redefined how the United States confronts cartel violence and the fentanyl epidemic. These actions also demonstrate the impressive growth of traditional drug cartels into more diversified transnational criminal enterprises whose activities have grown to encompass a number of varying avenues to generate revenue in spite of a widening sanctions net seen internationally. In a statement released following the announcement of the new sanctions, Treasury Secretary Scott Bessent emphasized that modern cartels have continued to evolve beyond traditional drug trafficking operations, developing multiple revenue streams that strengthen their influence across Mexico, the United States, and beyond. This new approach reflects an important strategic realization: dismantling cartel power requires attacking any and all sources of financial capital available to them, with the practice of intercepting narcotics shipments simply not cutting it in today’s day and age. This expanded model has also drawn similarities to counter-terrorism campaigns against extremist organizations (i.e. those in the Middle East), where targeting funding mechanisms often has proven more effective than direct confrontation alone.
All told, the latest Treasury actions expand upon some of the most consequential foreign policy developments seen in the U.S. this decade: the designation of several Mexican cartels as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorist (SDGT) groups in February of 2025. The CJNG, alongside other regional power-players such as the Sinaloa Cartel, now occupy a legal category traditionally reserved overseas militant and radical groups. As such, this designation allowed for an expansion of the tools available to federal agencies in combatting their illicit activities. Coupled with the FEND Off Fentanyl Act and the Fentanyl Sanctions Act, which dramatically expanded the Treasury’s powers to combat money laundering tied to synthetic opioid trafficking, the FTO designations granted American officials new power to pursue the key cogs in cartel infrastructure that now include the financial networks, facilitators, and front companies allowing their operations to flourish with greater flexibility, treating cartel financing as both a criminal and national security threat. The FTO designation also formally reflects the reality that many of these named organizations do in fact possess military-grade weapons, hold territorial control, and carry heavy economic influence comparable to insurgent movements and must be acknowledged as legitimate threats to U.S. national security.
The new legislative and regulatory strategies taken against these Mexican entities also reflects a broader recognition that modern narcotics trafficking depends heavily on international relationships, global banking systems and commercial logistics, and it has become the mission of the Trump Administration to disrupt these growing ties. This movement has included targeting the international origins of fentanyl precursor chemicals, largely originating in Asia. Federal authorities continue to emphasize that Mexican cartels rely heavily on chemical imports from China and India to sustain large-scale fentanyl production. Other recent sanctions levied by U.S. government agencies have targeted Indian pharmaceutical suppliers, chemical brokers, and intermediary companies accused of facilitating precursor shipments to Mexico and Central America. U.S. officials have also pursued Mexican chemists, laboratory operators, and procurement specialists tied to the Sinaloa Cartel. These developments have transformed what was once viewed strictly as a border security issue into an international supply chain challenge that has grown to span multiple continents.
All told, the Treasury Department’s latest actions suggest that the future of America’s war against Mexican cartels will extend far beyond traditional drug interdiction. Fuel theft, money laundering, chemical procurement, logistics, and financial facilitators are increasingly viewed as equally important battlefields in the broader campaign against transnational criminal organizations. As policymakers continue to deal with the growing human toll of the illicit fentanyl trade, the consensus amongst current U.S. government officials appears to favor comprehensive economic disruption rather than isolated narcotics enforcement alone. Only time will tell whether this shift will ultimately weaken cartel power. However, it is undeniable that this current approach is by far the most expansive and financially sophisticated campaign the United States has ever undertaken against Mexican organized crime.
FinCEN’s alert on financial typologies and red flags indicative of CJNG and other Mexico-based transnational criminal organizations activity for domestic financial service providers can be found in its entirety here.
Citations
1. U.S. Department of the Treasury. Treasury Targets Criminal Facilitators Behind CJNG’s Cross-Border Fuel Smuggling Schemes. June 30, 2026.