FinCEN Alerts U.S. Banks to Crude Oil Smuggling Operation Backing Mexican Cartel Profits

The Financial Crimes Enforcement Network (FinCEN), the U.S. Treasury Department’s anti-money laundering bureau, has issued a formal warning to U.S. financial institutions that crude oil theft is now a major income stream for one of Mexico’s most dangerous drug cartels.

According to FinCEN’s alert, the Jalisco New Generation Cartel (CJNG) has made oil smuggling its second-largest revenue source, trailing only the drug trade. “The cartels are using complicit Mexican brokers to smuggle and sell crude oil stolen from Mexico to complicit, small U.S.-based oil and natural gas companies operating near the U.S. southwest border,” the agency stated.

FinCEN described how these criminal operations are responsible for the theft of billions of dollars in crude oil, a practice that is contributing to “rampant violence and corruption across Mexico.”

The alert detailed the mechanism of the illicit trade, revealing that once the stolen oil crosses into the U.S., “the U.S. importers invoice and sell it on behalf of the Cartels.” These importers, FinCEN added, “can make more than $5 million in profit for each oil tanker shipment of crude oil from the United States to foreign jurisdictions, with multiple tankers en route every month.”

FinCEN urged vigilance from financial institutions and energy firms, particularly small companies located near the southern border, warning them to be cautious of unusually cheap crude oil offers and large cross-border wire transfers.

In a related move, the U.S. Treasury Department announced sanctions against three individuals and two companies alleged to be directly involved in the oil smuggling network. The three men—Cesar Morfin Morfin, Alvaro Noe Morfin Morfin, and Remigio Morfin Morfin—have been identified as orchestrators of the scheme.

“Fuel theft and crude oil smuggling are cash cows for CJNG’s narco-terrorist enterprise,” said Treasury Secretary Scott Bessent in a statement accompanying the sanctions. “They provide a lucrative revenue stream for the group and enable it to wreak havoc in Mexico and the United States.”

The sanctions freeze all U.S.-connected assets owned by the three men and their associated companies, effectively cutting them off from the American financial system.

According to officials, CJNG’s operatives steal crude oil from Pemex, Mexico’s state-owned petroleum company, through a combination of bribing staff, tapping into pipelines, and raiding refineries. The stolen oil is then stored in tanks controlled by the cartel.

From there, smugglers distribute the oil across Mexico, Central America, and into the United States. To avoid detection and tax liabilities, they label the crude as “waste oil” at the border.

Importers in Texas and New Mexico reportedly accept the mislabeled oil and resell it at a discount to domestic brokers. These brokers then channel the product into the U.S. energy market. Treasury officials noted that “most end buyers do not realise the oil’s criminal origin.”

The final piece of the scheme involves the repatriation of funds: proceeds from the oil sales are sent back to Mexico, masked as payments for waste oil or hazardous materials—effectively funneling millions of dollars into CJNG’s coffers under the radar. 

By fLEXI tEAM