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Treasury Uses New Sanctions Authority to Combat Global Illicit Drug Trade

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President’s Executive Order Modernizes Sanctions to Counter Evolving Drug Threats

Today, President Biden signed a new Executive Order (E.O.) to modernize the U.S. Department of the Treasury’s sanctions authorities used to combat the illicit drug trade. This E.O. will provide the Treasury Department with new tools to tackle changes in the global illicit drug trade that substantially contributed to over 100,000 American overdose deaths in the 12-month period ending in April 2021.

This E.O. enhances the Department of Treasury’s authorities to target any foreign person engaged in drug trafficking activities, regardless of whether they are linked to a specific kingpin or cartel. It further enables Treasury to sanction foreign persons who knowingly receive property that constitutes, or is derived from, proceeds of illicit drug trafficking activities.

Under the new E.O., “Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade,” the Office of Foreign Assets Control (OFAC) today designated 25 actors (10 individuals and 15 entities) in four countries for having engaged in, or attempted to engage in, activities or transactions that have materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production.

“The illicit drug trade threatens our national security, economy, communities, and families,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson. “More than 100,000 Americans died in just twelve months from a drug overdose, a record 28 percent increase that was driven largely by synthetic opioids, particularly fentanyl. Using President Biden’s new E.O., Treasury will deploy its sanctions authority with greater speed, power, and effect across the entire illicit drug ecosystem, especially those who profit from the death and misery of the opioid epidemic. We will continue working closely with our partners to reduce threats from these groups and disrupt their business models, including by stopping them from using the U.S. financial system.”

Today’s action targets individuals and drug trafficking organizations (DTO) based in Brazil, China, Colombia, and Mexico. Those sanctioned include individuals who traffic fentanyl, and its precursor chemicals, methamphetamine, cocaine, and heroin, as well as organizations that pose the greatest drug threat to the United States.

The new E.O. builds upon Treasury’s previous narcotics sanctions authorities, specifically E.O. 12978 (1995) and the Foreign Narcotics Kingpin Designation Act (Kingpin Act) (1999). Treasury designated eight individuals and entities under the new E.O. and is also applying the expanded tools of this authority to designate 17 individuals and entities previously sanctioned under other authorities.

NEW INDIVIDUALS AND ENTITIES DESIGNATED

Brazil

Primeiro Comando Da Capital (a.k.a. “PCC,” “First Capital Command”) is the most powerful organized crime group in Brazil and among the most powerful in the world. PCC arose in Sao Paulo in the 1990s and has forged a bloody path to dominance through drug trafficking, as well as money laundering, extortion, murder-for-hire, and drug debt collection. PCC operates throughout South America, Paraguay, and Bolivia, and its operations reach the United States, Europe, Africa, and Asia.

China

Chuen Fat Yip and Wuhan Yuancheng Gongchuang Technology Co. Ltd.: Chuen Fat Yip, a Chinese national, leads a DTO that operates in mainland China and Hong Kong. He traffics fentanyl, anabolic steroids, and other synthetic drugs to the United States and controls a group of companies that sell compounds and fentanyl precursor chemicals to the public and to private businesses, one of which is Wuhan Yuancheng Gongchuang Technology Co. Ltd. Chuen Fat Yip’s business receives internet orders for precursors and compounds, which are then shipped worldwide, including to the United States. Chuen Fat Yip was also considered one of, if not the largest, producer of anabolic steroids in the world, much of which ended up the in the United States. Chuen Fat Yip utilizes virtual currency, such as Bitcoin, and funds transfers through money services businesses and banks to receive payment. The U.S. Department of State is issuing a reward offer, under its Transnational Organized Crime Rewards Program, of up to $5 million for information leading to the arrest and/or conviction of Chuen Fat Yip.

Shanghai Fast-Fine Chemicals Co., LTD.: Since 2019, Shanghai Fast-Fine Chemicals Co., LTD., a Chinese chemical transportation company, has shipped various precursor chemicals, often falsely labeled, to DTOs in Mexico for illicit fentanyl production and intended for U.S. markets for sale and consumption.

Hebei Huanhao Biotechnology Co., Ltd. and Hebei Atun Trading Co., Ltd.: China-based Hebei Huanhao Biotechnology Co., Ltd. imports and exports chemical and pharmaceutical products used to in produce opioids. The company has advertised or supplied fentanyl precursor chemicals using business-to-business chemical marketplaces and has been involved in producing fentanyl precursors. Hebei Atun Trading Co., Ltd., also located in China, is also involved in fentanyl precursor chemical sales and falsifying chemical shipment details.

Mexico

Los Rojos DTO is a splinter group of the Beltran Leyva Organization (BLO), which in recent years has risen to become one Mexico’s most powerful criminal organizations. In addition to driving violence in Mexico, the Los Rojos DTO is responsible for trafficking numerous illicit drugs, including heroin, into the United States.

Guerreros Unidos (GU), a DTO based in Guerrero, Mexico, was originally a splinter group from BLO and through violence expanded its role in the heroin trade. GU collaborates with the Mexican narcotics trafficking organization, Cartel de Jalisco Nueva Generacion, and shares the same transportation networks to move drug shipments into the United States and to return drug proceeds to Mexico.

PREVIOUS DESIGNATIONS UNDER THE KINGPIN ACT AND/OR E.O 13581

Cartel de Jalisco Nueva Generacion (CJNG) is one of the most powerful cartels in Mexico and one of the five most dangerous transnational criminal organizations in the world, according to the U.S. Department of Justice. The United States Drug Enforcement Administration (DEA) reports that CJNG traffics a significant proportion of the fentanyl and other deadly drugs that enter the United States. CJNG uses extreme violence against rivals and Mexican authorities to expand and maintain territory in strategic drug trafficking corridors. In 2015, OFAC designated CJNG pursuant to the Kingpin Act. Today’s designation pursuant to the new E.O. will enhance Treasury’s ability to target the full range of actors linked to this brutal organization.
Nemesio Oseguera Cervantes (a.k.a. Ruben Oseguera Cervantes; a.k.a. “El Mencho”) is the leader of CJNG and among the world’s most powerful narcotics traffickers. Oseguera Cervantes has been involved in drug trafficking since the 1990s. After serving nearly three years in a U.S. prison for conspiracy to distribute heroin, Oseguera Cervantes returned to Mexico, resumed drug trafficking, and co-founded CJNG. In 2014, following a DEA investigation, a federal grand jury in the District of Columbia indicted Oseguera Cervantes on multiple charges, including being the principal leader of a Continuing Criminal Enterprise. In 2015, OFAC designated Oseguera Cervantes pursuant to the Kingpin Act. He remains one of the DEA’s most wanted fugitives. Through its Narcotics Rewards Program, the U.S. Department of State offers a reward of up to $10 million for information leading to his arrest and/or conviction.

The Sinaloa Cartel: Founded in the 1980s, the Sinaloa Cartel initially operated as a coalition of Mexico’s most powerful drug traffickers. In the early 2000s, Ismael Zambada Garcia (a.k.a. “El Mayo”) and Joaquin Guzman Loera (a.k.a. “El Chapo”) consolidated their power, which led to the Sinaloa Cartel’s ascent into one of the largest and most notorious DTOs in Mexico. The Sinaloa Cartel controls drug trafficking activity in key regions throughout Mexico, especially along the Pacific Coast. From these strategic points, the Sinaloa Cartel traffics multi-ton quantities of illicit drugs, including fentanyl and heroin, into the United States. In 2009, the President identified the Sinaloa Cartel as a significant foreign narcotics trafficker pursuant to the Kingpin Act.

Ismael Zambada Garcia (a.k.a. “El Mayo”) is one of Mexico’s most notorious drug traffickers. In the 1990s, Zambada Garcia began accumulating power and rose through the ranks of what is now known as the Sinaloa Cartel, of which he is now the leader. In 2014, Zambada Garcia was charged in California with continuing criminal enterprise and drug trafficking, among other charges. Zambada Garcia has also been charged in several jurisdictions across the United States for a variety of drug trafficking offenses. The DEA has identified Zambada Garcia as one of its most wanted fugitives. Through its Narcotics Rewards Program, the U.S. Department of State offers a reward of up to $15 million dollars for information leading to his arrest and/or conviction. The Mexican government is also offering a reward for his capture. In 2002, the President identified Zambada Garcia as a significant foreign narcotics trafficker pursuant to the Kingpin Act.

Leaders of a Faction of the Sinaloa Cartel: Brothers Ivan Archivaldo Guzman Salazar (a.k.a. “Chapito”) and Jesus Alfredo Guzman Salazar (a.k.a. “El Alfredillo”), and their stepbrother, Ovidio Guzman Lopez (a.k.a. “El Raton”), lead a faction of the Sinaloa Cartel. Ivan and Jesus are the sons of Sinaloa leader Joaquin “El Chapo” Guzman Loera, who is now imprisoned in the United States. Following their father’s arrest, the brothers carried on the business. Ivan Archivaldo, Jesus Alfredo, and Ovidio are all indicted on U.S. federal drug-related charges. All three are also designated by OFAC as specially designated narcotics traffickers pursuant to the Kingpin Act. Through its Narcotics Rewards Program, the U.S. Department of State offers a reward of up to $5 million each for information leading to the arrest and/or conviction of Ivan Archivaldo Guzman Salazar, Jesus Alfredo Guzman Salazar, Ovidio Guzman Lopez, and Ovidio’s brother, Joaquin Guzman Lopez.

Beltran Leyva Organization (BLO): Identified by the DEA as one of Mexico’s most powerful and cohesive criminal organizations, BLO once saw the death or arrest of much of its leadership but is now regaining strength and influence throughout Mexico. Though less structured, BLO relies on its loose alliances with larger cartels for access to drug smuggling corridors along the U.S. southwest border. Its members primarily traffic heroin, methamphetamine, cocaine, and marijuana. The President originally identified BLO as a significant foreign narcotics trafficker pursuant to the Kingpin Act in 2009.

Fausto Isidro Meza Flores (a.k.a. “Chapito Isidro,” a.k.a. “Chapo Isidro”), a Mexican national, is a BLO operator out of northern Sinaloa. Meza Flores has been the leader of the Meza Flores DTO since at least 2005. In 2021, the U.S. Attorney’s Office for the District of Columbia charged Meza Flores with multiple drug trafficking offenses. According to the indictment, Meza conspired to distribute cocaine, methamphetamine, and heroin to the United States. In 2013, Treasury designated Meza Flores pursuant to the Kingpin Act. Through its Narcotics Rewards Program, the U.S. Department of State offers a reward of up to $5 million for information leading to his arrest and/or conviction.

The Gulf Cartel is one of Mexico’s oldest and most powerful DTOs. The U.S. Department of Justice and the DEA identified the Gulf Cartel as one of Mexico’s nine major transnational criminal organizations and “engaged in the manufacture, distribution, and importation of ton quantities of cocaine and marijuana into the United States.” The cartel primarily traffics heroin and cocaine and transports its loads into the United States near McAllen and Brownsville, Texas. The President identified the Gulf Cartel as a significant foreign narcotics trafficker pursuant to the Kingpin Act in 2007.

The Juarez Cartel and its faction unit, La Linea, continue to pose a significant threat to the United States through its drug trafficking activities along the U.S. southwest border. According to the DEA, this organization is one of nine significant Mexican criminal organizations that pose the greatest drug threat to the United States. The DTO primarily smuggles heroin, methamphetamine, cocaine, and marijuana from Mexico via the profitable El Paso, Texas corridor. The organization and its leaders have been the subject of multiple U.S. indictments. In addition, in 2004, the President identified the Juarez Cartel as a significant foreign narcotics trafficker pursuant to the Kingpin Act.

Los Zetas: Los Zetas (a.k.a. “Cartel del Noreste”) is one of nine Mexican transnational criminal organizations that pose the greatest drug threat to the United States, according to the DEA. It relies on extreme violence, often displayed through social media, to exert control over territory and to intimidate and terrorize local citizens, Mexican security forces, and rival organizations. Los Zetas smuggles most of its illicit drugs through the U.S. southwest border near Laredo and Eagle Pass, Texas. The President originally identified Los Zetas as a significant foreign narcotics trafficker pursuant to the Kingpin Act in 2009 and again in 2011 as a significant transnational criminal organization pursuant to E.O. 13581.

Miguel Trevino Morales is considered the “head of the notoriously violent and vicious Los Zetas cartel” by the DEA. He occupied a supervisory and management position within Los Zetas and was the principal administrator, organizer, and leader of its continuing criminal enterprise. Trevino Morales generated more than $10 million in illicit income in a 12-month period for the manufacture, importation, and distribution of cocaine. Miguel Trevino Morales has been charged with multiple drug counts in the U.S. District Court for the Eastern District of New York, in the U.S. District Court in Eastern District of Texas, as well as in the U.S. District Court in Western District of Texas and U.S. District Court for the District of Columbia. In 2009, OFAC designated Trevino Morales pursuant to the Kingpin Act. Trevino Morales is currently in the custody of Mexican authorities. The U.S. Department of State has a reward offer through the Narcotics Rewards Program of up to $5 million for information leading to his arrest and/or conviction.

Omar Trevino Morales is a leader of Los Zetas who oversaw and facilitated drug shipments into the United States and elsewhere,” according to the DEA. Omar Trevino Morales was indicted on multiple drug-related and money laundering charges and identified as a leader of Los Zetas by the U.S. District Court in Western District of Texas, the U.S. District Court for the Southern District of Texas, and the U.S. District Court for the District of Columbia. He was actively involved in the coordination of cocaine and marijuana shipments into the United States, as well as the receipt of bulk currency shipments from the United States to Mexico. He was actively involved in the coordination of cocaine and marijuana shipments into the United States, as well as the receipt of bulk currency shipments from the United States to Mexico. In 2010, OFAC designated Trevino Morales pursuant to the Kingpin Act. Mexican authorities arrested Trevino Morales in 2015. The U.S. Department of State has a reward offer through the Narcotics Rewards Program of up to $5 million for information leading to the arrest and/or conviction of Omar Trevino Morales, also known as Alejandro Trevino Morales.

La Familia Michoacana (LFM) has been identified as one of the major DTOs in Mexico. LFM, which operates primarily in the states of Michoacán and Guerrero, allegedly specializes in methamphetamine production, while also trafficking in marijuana and cocaine. It is believed to be taxing other groups producing heroin in territory it controls. In 2009, the President identified LFM as a significant foreign narcotics trafficker pursuant to the Kingpin Act.

Colombia

Clan del Golfo (CDG): The DEA has identified CDG as a major illicit DTO based in Colombia with links to drug cartels in Costa Rica, Honduras, Panama, Guatemala, and Mexico. The organization functions as a highly structured and centralized criminal enterprise that has evolved into the largest “Armed Criminal Organization” (Grupo Armado Organizado) in Colombia, with a cohesive national presence. According to the DEA, CDG relies on drug trafficking activities and a military-style framework to maintain operability. CDG’s power base lies in its birthplace region of Urabá in northwest Colombia, a strategic location from which CDG sends multi-ton quantities of cocaine, destined for the United States, via maritime conveyances to Central America on a regular basis. Following attacks by CDG on community leaders in Colombia, the U.S. Attorney General established a Transnational Crime Task Force to target CDG for its threats to the safety and prosperity of the United States and its allies. The President originally identified CDG as a significant foreign narcotics trafficker pursuant to the Kingpin Act in 2013.

Dairo Antonio Usuga David (a.k.a. “Otoniel”) headed CDG since 2012 until his capture in Colombia in October 2021. In 2010, OFAC designated Usuga David pursuant to the Kingpin Act. In 2015, a superseding indictment filed in the U.S. District Court for the Eastern District of New York charged him with multiple counts, including being involved in an international cocaine manufacturing and distribution conspiracy, as well as 31 separate incidents of international cocaine distribution between 2003 and 2012, totaling approximately 75,000 kilograms of cocaine for importation into the United States. The Colombian government had offered a reward for whoever provided information leading to the capture of Usuga David. Additionally, the U.S. Department of State has a reward offer through the Narcotics Rewards Program of up to $5 million for information leading to the arrest and/or conviction of Usuga David.

Sanctions Implications

As a result of today’s action, all property and interests in property of the designated individuals that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.

Unless authorized by a general or specific license issued by OFAC, or otherwise exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or persons within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods, or services from any such person. Violations of IEEPA sanctions may result in the imposition of civil or criminal penalties.

For information concerning the process for seeking removal from any OFAC list, including the Specially Designated Nationals and Blocked Persons List (SDN List), please refer to OFAC’s Frequently Asked Question 897. Additional information regarding sanctions programs administered by OFAC can be found here.

View more information on the entities designated today.

This news item was originally published by the US Department of the Treasury (UST US). For more information, please see the Source Link.

Regulator Information

Abbreviation: UST
Jurisdiction: United States

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