United States, Mexico, and Canada Unite to Combat Opioid Epidemic

On May 24-25, 2023, Canada and the United States joined a trilateral workshop reviewing the opioid problem, including fentanyl, and its connection to money laundering. The workshop was hosted by Mexico’s Unidad de Inteligencia Financiera (UIF) in Mexico City. As a part of the North American Drug Dialogue (NADD), the event sought to focus cross-border efforts to curb the abuse of the financial system by drug traffickers, including through public-private initiatives.

The three countries’ financial intelligence units (FIUs) also established the NADD Illicit Finance Working Group, which will support international collaboration through the sharing of crucial information related to counter-narcotics, including red flags for money laundering, best practices for risk analysis, and investigations furthering NADD objectives.

The workshop came soon after the establishment of the North America Trilateral Fentanyl Committee in April. 

The North American Drug Dialogue

NADD originated in 2016 when the North American Leaders’ Summit announced its first incarnation as part of a focus on North American Security and Defense. The initiative meets annually to address critical issues related to drug trafficking in the Americas. Its goals are echoed in the Fiancial Crimes Enforcement Network’s (FinCEN’s)  Eight Priorities from June 2021. In this document, FinCEN includes an overview of the relationship between drug trafficking, especially fentanyl, and trade-based money laundering (TBML) between Mexican drug cartels and brokers in Asia, often involving Chinese nationals in the United States.

In further support of this international effort, the 2023 US-Canada Cross Border Crime Forum (CBCF) issued a joint statement committing to collaborating to fight significant criminal typologies, focusing on fentanyl and opioid trafficking and money laundering. In its efforts to combat the opioid crisis, the statement emphasized that the joint efforts will specifically seek to support the US-Canada Opioids Action Plan and the Trilateral Fentanyl Commission. Efforts will focus on disrupting the supply chain, sharing intelligence, and combatting illicit finance.

Fentanyl in the Americas

In the 12 months leading up to August 2022, more than 100,000 deaths in the United States alone were estimated to result from drug overdoses. Many of these overdoses involved fentanyl combined with other drugs, and the numbers are underestimated due to incomplete data. This is according to data cited by the Director of the White House Office of National Drug Control Policy (ONDCP), Dr. Rahul Gupta. Illustrating the significant impact fentanyl trafficking and abuse has had on the US, the White House issued a fact sheet in April 2023 highlighting the need for targeted efforts to tackle this issue. Specifically, the sheet listed five bullet points on decreasing deaths due to fentanyl overdose. These included:

• Tackling illicit finance.
• Cross-border intelligence.
• Information-sharing.
• Financial sanctions.
• International anti-money laundering (AML) initiatives.

Efforts to curb illegal fentanyl production must disrupt the whole supply chain, including precursor chemicals, whose manufacturers have been subjected to sanctions. Unlike cocaine, synthetic drugs like fentanyl do not need specific climates and can be manufactured virtually anywhere. This increases risks related to suppliers of chemical precursors to the drug. For example, in April 2021, enough chemical precursors to fentanyl were seized in Canada to produce 262 million deadly overdoses. Similarly, the owner of a Canadian chemical firm was charged in August 2020 with supplying precursor chemicals to fentanyl labs.

As international efforts to combat this epidemic continue, firms must ensure they are up-to-date on current risk factors and aware of current sanctions involving indirect contributors to synthetic opioid production.

Key Takeaways

In support of trilateral efforts to combat illicit finance and drug trafficking, firms should consult FinCEN’s 2019 Advisory to Financial Institutions on Illicit Financial Schemes and Methods Related to the Trafficking of Fentanyl and Other Synthetic Opioids. The document describes critical criminal methodologies before highlighting 20 red flags firms should be aware of. These include:

• Multiple low-value money transfers from a remitter to an individual in China or to several unrelated individuals without a clear legitimate purpose. These may range from $10 to $100 each and add up to around $600.
• Outgoing money transfer volumes inconsistent with typical US remitter activity.
• Multiple deposits into the same account from widely varying locations, combined with activity such as withdrawals in Mexico.

As the Financial Action Task Force (FATF) 2022 report on Money Laundering from Fentanyl and Synthetic Opioids highlights, the issue surrounding drug trafficking and its relationship to illicit finance is ultimately global. Firms operating in the United States should ensure they are up-to-date on global trends outlined in this report as they continue to refine their efforts to combat drug-related money laundering.