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Financial Services Law Insights and Observations

OFAC sanctions chemical suppliers tied to Mexican drug cartel

Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury OFAC Sanctions OFAC Designations SDN List China Guatemala Mexico Drug Enforcement Administration DOJ

Financial Crimes

On April 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 14059, against two Chinese entities and five individuals based in China and Guatemala for their roles in supplying precursor chemicals to Mexican drug cartels for the production of illicit fentanyl intended for U.S. markets. OFAC coordinated with the DEA and the DOJ to take this action. “Treasury, as part of the whole-of-government effort to respond to [the fentanyl] crisis, will continue to vigorously apply our tools to prevent the transfer of precursor chemicals and machinery necessary to produce this drug,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson said in the announcement. The sanctions block all property and interests in property subject to U.S. jurisdiction belonging to the sanctioned persons and require such property, as well as “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons,” to be reported to OFAC. U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. OFAC warned that “persons that engage in certain transactions with the individuals and entities designated today may themselves be exposed to sanctions or subject to an enforcement action.”