On June 20, 2024, FinCEN issued an advisory to alert U.S. financial institutions to new trends in the illicit fentanyl supply chain and urge vigilance in identifying and reporting suspicious activity associated with Mexico-based transnational criminal organizations and their illicit procurement of fentanyl precursor chemicals and manufacturing equipment from People’s Republic of China-based suppliers. The advisory is supplementary to the 2019 Advisory on Illicit Financial Schemes and Methods Related to the Trafficking of Fentanyl and Other Synthetic Opioids.
While the 2019 Fentanyl Advisory and the typologies and red flags therein remain valid, the supplemental advisory highlights how Mexico-based transnational criminal organizations (TCOs) purchase fentanyl precursor chemicals, pill presses, die molds, and other manufacturing equipment primarily originating from companies located in China. FinCEN has identified the following additional red flags to help financial institutions detect, prevent, and report suspicious activity connected to the procurement of precursor chemicals and manufacturing equipment for the synthesis of illicit fentanyl and other synthetic opioids:
A customer or counterparty has previous drug-related convictions or open-source reporting indicates connections to clandestine lab operations.
A customer or counterparty is a chemical or pharmaceutical company in the PRC, Hong Kong, or another jurisdiction with a residential address or a business address shared with other similar businesses or that has no physical presence or shows other indicators of possible illicit shell company activity.
A counterparty, with no supposed affiliation with the PRC, uses a PRC-based phone number or Internet Protocol (IP) address that is affiliated with the website of a Chinese chemical or pharmaceutical company.
A customer or counterparty is a vendor on an e-commerce or Darknet marketplace that advertises the sale of precursor chemicals (using chemical names, abbreviations, or CAS numbers in the advertisement) and manufacturing equipment used for the synthesis of illicit fentanyl and other synthetic opioids.
A customer is a Mexican company that, according to open-source and commercially available reporting, is importing shipments of fentanyl precursor chemicals and manufacturing equipment without appropriate importing licenses and registrations in Mexico.
A customer is a Mexican company with little or no online presence and is involved in the import of the same precursor chemicals and manufacturing equipment used in the synthesis of fentanyl.
Multiple, seemingly unrelated Mexican importing companies share phone numbers, email addresses, or physical addresses and transact with the same PRC-based chemical manufacturing and pharmaceutical companies.
A customer is a Mexican importing company that predominantly transacts only with chemical or pharmaceutical companies in the PRC or Hong Kong for no apparent legitimate reason as compared to similar importers that transact with foreign chemical manufacturing and pharmaceutical suppliers in multiple jurisdictions.
A customer sends low-dollar or virtual currency payments for no apparent legitimate purpose to beneficiaries involved in the chemical manufacturing and pharmaceutical industries in the PRC, Hong Kong, or another jurisdiction.
Multiple customers send funds for no apparent legitimate purpose to the same beneficiary involved in the chemical manufacturing and pharmaceutical industries in the PRC, Hong Kong, or another jurisdiction (i.e., many-to-one).
A Mexico-based entity from an unrelated industry transacts with a PRC-based chemical or pharmaceutical company. Alternatively, a PRC-based entity from an unrelated industry transacts with a Mexico-based chemical or pharmaceutical company.
A customer engages in behavior that suggests efforts to evade the Currency Transaction Report (CTR) filing requirement (e.g., the customer alters or cancels a transaction when advised a CTR would be filed or engages in structuring with multiple cash transactions for under $10,000), as well as avoiding recordkeeping requirements.
A customer sends virtual currency payments to an address that is linked through blockchain analytics to beneficiaries associated with the PRC-based chemical manufacturing and pharmaceutical industries or to individuals or entities listed in DOJ indictments and OFAC designations.
A customer is a Mexican company that does not appear to be involved in the chemical manufacturing and pharmaceutical industries despite transactional activity indicating the procurement of fentanyl precursor chemicals and associated manufacturing equipment.
FinCEN’s press release can be found here.
The Advisory can be found here.
