The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a sweeping alert to financial institutions nationwide, warning of sophisticated oil smuggling operations tied to powerful Mexican cartels. The alert, designated “FIN-2025-OILSMUGGLING,” outlines how cartels are exploiting the U.S. oil supply chain to launder billions in illicit revenue derived from stolen crude oil.
The advisory urges financial institutions to closely monitor and report suspicious activities connected to oil smuggling, particularly transactions that may involve theft, fraud, or other forms of money laundering. Institutions are required to file Suspicious Activity Reports (SARs) with the specific term “FIN-2025-OILSMUGGLING” to ensure timely identification and intervention.
Cartels Turn to Crude Oil as Lucrative Revenue Stream
According to FinCEN, organized crime groups including the Jalisco New Generation Cartel (CJNG), Sinaloa Cartel, and Gulf Cartel have developed elaborate methods for smuggling stolen Mexican crude into the U.S. Once across the border, the oil is sold—often at significant discounts—to legitimate-seeming U.S. importers and then re-sold in domestic and international markets. The profits are funneled back to the cartels through intricate financial schemes involving shell companies and wire transfers disguised as payments for “waste oil.”
Each shipment can reportedly generate more than $5 million in profits, with multiple shipments occurring monthly. Investigators say these proceeds fuel cartel operations, finance violent turf wars, and deepen corruption in both Mexico and the U.S.
Fuel Theft Undermines Mexican Economy
Fuel theft, known locally as huachicol, has long been a scourge in Mexico. Criminal groups routinely tap pipelines owned by Pemex, the state-run oil company, siphoning off billions of dollars in crude oil annually. The stolen product is then introduced into both legal and underground markets, depriving the Mexican government of critical revenue and reinforcing the power of organized crime.
Mexican authorities have responded by sanctioning numerous individuals and entities tied to these networks. However, FinCEN warns that international cooperation is essential given the cross-border nature of the trade and the financial transactions that support it.
Financial Institutions at the Front Lines
The FinCEN alert places financial institutions at the center of efforts to disrupt cartel operations. Banks are advised to be on alert for specific red flags, including:
-
Crude oil purchases at prices well below market value.
-
Import-export companies with no online presence or lacking EPA registrations.
-
Sudden changes in transactional behavior, especially involving shell or front companies.
Institutions are also reminded of their obligations under the Bank Secrecy Act (BSA), including the filing of SARs and Currency Transaction Reports (CTRs) for activities that may involve more than $10,000 in cash or appear suspicious. For cash transactions received in trade or business, Form 8300 must be used—with Box 1b marked for “suspicious transaction” and the comment “FIN-2025-OILSMUGGLING” included.
Calls for Greater Collaboration and Due Diligence
FinCEN’s alert underscores the need for proactive collaboration among financial institutions. Under the safe harbor provisions of the USA PATRIOT Act, banks are encouraged to share information internally and with one another to detect patterns of suspicious activity. Cross-border data sharing is especially critical in tracking illicit flows tied to Mexican cartels.
The alert also reinforces requirements for risk-based Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) programs. Institutions must maintain procedures for identifying beneficial owners of legal entity customers and perform enhanced due diligence for politically exposed persons (PEPs) and high-risk accounts, including those associated with foreign agents and correspondent banking.
A Wake-Up Call for the Industry
With cartel oil smuggling now representing a major threat to both economic integrity and public safety, U.S. authorities are placing unprecedented responsibility on the financial sector to act as a first line of defense. The FinCEN alert offers both a warning and a roadmap—urging vigilance, transparency, and cooperation as key tools in dismantling criminal enterprises operating across borders.
For further updates and compliance resources, financial institutions are advised to visit FinCEN’s official website.
Read the FinCEN alert below
By FCCT Editorial Team
