WASHINGTON – The financial network behind the making and distribution of fentanyl continues to fuel trade of the synthetic opioid that has claimed over a quarter of a million lives in the U.S. since 2018, despite ongoing U.S. efforts, according to government officials.
North America is a central point in the manufacturing and trading of fentanyl, contributing to the global drug trafficking industry valued at $426 to $452 billion a year. Massive amounts of drug-related money pass through U.S. financial institutions, contributing to a money-laundering effort that helps fuel the manufacturing and distribution of fentanyl.
“The motive, of course, is always money,” said Senator Sheldon Whitehouse (D-RI), chairman of the Senate Caucus on International Narcotics Control during a Tuesday hearing on the trade, trafficking, and financing of synthetic opioids and the chemicals used to make them.
So far in 2023, the Drug Enforcement Administration has seized more than 65 million fake pills containing fentanyl and 10,000 pounds of fentanyl powder – approximately 300 million doses – as synthetic opioids funnel into the U.S., often made with chemicals procured from beyond its borders.
“Taking the profits out of synthetic opioid trafficking is one of the most effective ways to address a growing transnational crime and a public health emergency,” he continued, quoting a recent Financial Action Task Force Report.
The trafficking, production, and acquisition of opioids and precursor chemicals – the “building blocks” of synthetic opioids like fentanyl – results in large-scale money laundering. Financial institutions in the U.S. can become a means of hiding and “cleaning” money before it’s funneled back into bank accounts. The process of moving money through financial institutions makes it harder to track, while being filtered back into funding the movement and production of precursor chemicals and synthetic opioids.
“Dangerous and highly sophisticated cartels operating in Mexico and the United States have been and continue to be the most significant source of illicit narcotics trafficked into and throughout our country,” William F. Kimball, DEA chief of operations said at the hearing.
Precursor chemicals exported out of China and India make their way to Canada, the U.S., and Mexico where those chemicals are processed into fentanyl or other illicit drugs before being moved, often through cartel channels.
“The United States has to do a better job to prevent these transnational criminal organizations from using legitimate channels of commerce to transport their products and launder their profits,” said Sen. Ben Ray Luján, D-N.M. “These are businesses. They’re making money…that money doesn’t just disappear. It goes to the bad folks that are moving the product.”
For the DEA, efforts in countering the flow of drug trade money into U.S. banking systems and supply chains have largely focused on identifying the global flow of fentanyl and fentanyl-related chemicals, said Kimball. Following the supply chain of precursor chemicals from China and India, to illicit manufacturers in Mexico, the DEA has used their own exempted accounts to launder money, in order to find new networks working with cartels.
“It’s been very successful in identifying new networks, new players, and new businesses that are moving drug money,” Kimball said.
Deputy Assistant Director for International Operations of Homeland Security, Ricardo Mayoral, stated that the department’s focus has been on building a cross-border financial crime center, which he says will bring a “whole government” approach to addressing the financial side of the illicit drug trade. By partnering federal, local, and tribal law enforcement agencies with private sector financial and technological resources, the hope is to bring state and local law enforcement the skills and tools needed to conduct money laundering investigations.
Additionally, Mayoral noted open lines of communication with the U.S. financial sector, in order to give updates on new money laundering trends and enact stronger anti-money laundering techniques.
While both Kimball and Mayoral noted that individuals have gone to jail over cartel and drug-related money laundering during the last year, Sen. Luján expressed frustration over a lack of enforcement action for the financial institutions involved. He criticized enforcement rules that relied on penalties like fines and corrective planning but allowed banks to keep the charters needed to provide certain financial services.
“If my cost of doing business says you’re gonna slap me with a $50 million fine but I can make 100 million off the deal, I’ll take the deal,” said Luján. “It seems like that’s what they’re doing today.”
The New Mexico senator stated that he looked forward to learning more in order to shape legislation that would give departments the tools they need to go after the financial side of the drug trade.
“I remain frustrated that no charters are lost and the people that are laundering the money themselves, they don’t go to jail. If you’re rich enough in America, you can do whatever you want,” Luján added, “We all have friends, constituents, families, or loved ones…that are dying from all this stuff, but the folks making money off of it seem to be doing alright.”