U.S. Takes Aim at Enablers of Mexican Cartel Oil Smuggling

U.S. law enforcement is cracking down on Mexican cartels — but not in the way you think. In late May, the United States charged members of a Utah family with 1) conspiracy to materially support Mexico’s Cartel Jalisco Nueva Generacion (CJNG), which was recently designated as a foreign terrorist organization; 2) conspiracy to commit money laundering; and 3) related smuggling charges. Through their refinery in Rio Hondo, Texas, a father and son allegedly supported cartel smuggling of almost 3,000 oil shipments from Mexico to the United States between May 2022 and April 2025. Theyface potential prison sentences of more than 30 years, hundreds of thousands of dollars in fines, and asset forfeitures valued at $300 million.

Oil Smuggling Provides Riches for Cartels, Risk for Enablers

Unbeknownst to many, cartel-backed fuel theft and oil smuggling revenue is second only to drug trafficking revenue for the groups. According to U.S. Treasury Secretary Scott Bessent, these schemes “are cash cows for CJNG’s narco-terrorist enterprise, providing a lucrative revenue stream for the group and enabling it to wreak havoc in Mexico and the United States.” Cartels bribe and extort Mexican officials and steal the crude drilled by the Mexican national oil company, Pemex, before it reaches the U.S. border, allowing them to sell it at steep discounts to small refiners and other processors.

Cartel smuggling operations appear to be expanding, requiring greater attention from U.S. law enforcement and increased due diligence from firms and financial institutions exposed to Mexico’s oil sector. Since September 10, Treasury has sanctioned at least 12 Mexican nationals and 28 Mexico-based entities linked to CJNG’s fuel theft activities. Exposure to cartel fuel theft and oil smuggling operations carries significant criminal, civil, and reputational risk, particularly following the U.S. Department of State’s designation of seven Mexican cartels as foreign terrorist organizations in February 2025.

U.S. Enablers Support Cartel Smuggling, Undercut Markets

Cartels routinely smuggle oil from Mexico to the United States via a web of largely opaque third-party intermediaries. According to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), “otherwise legitimate” U.S. importers, Mexican brokers, and anonymous front and shell companies “serve as middlemen” in illicit oil trafficking. Firms and financial institutions engaged in the broader hydrocarbon and shipping sectors also support these schemes.

These criminal networks deprive the Mexican government of billions of dollars in annual tax revenue and distort U.S. markets. According to FinCEN, cartel schemes are responsible for “fueling rampant violence and corruption across Mexico, and undercutting legitimate oil and natural gas companies in the United States.”

Follow the Money, Prosecute the Enablers

Law enforcement requires access to reliable beneficial ownership information to overcome the investigative challenges posed by cartels’ sophisticated use of opaque corporate structures and financial flows. This is one of the central reasons why Congress passed the Corporate Transparency Act (CTA) on a bipartisan basis during the first Trump administration. Now, however, the Trump administration is rolling back much of what the CTA required — most notably a beneficial ownership registry that would provide law enforcement with critical information about how companies have been established and who benefits from their operation. If the administration seeks to make a meaningful dent in the cartels’ fuel theft and oil smuggling schemes, it should rescind the interim final rule under consideration that would strip the beneficial ownership registry of its heft and focus on fully implementing the CTA as Congress intended.

Additionally, Treasury should consider imposing sanctions on the Mexican financial institutions that support cartel activity — particularly those that may be involved in the financing and operation of cartel-linked oil storage facilities and related enterprises. Sanctions targets should also include the web of transportation and logistics providers involved in the illicit flow of stolen oil from Mexico into the United States.

Max Meizlish is a senior research analyst for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD), where Angela Howard is a research analyst. For more analysis from Max, Angela, and CEFP, please subscribe HERE. Follow Max on X @maxmeizlish. Follow FDD on X @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.