Treasury flags cartel-linked fuel smuggling via U.S. firms

Tanker trucks wait at a storage and dispatch terminal of Petroleos Mexicanos. (Felix Marquez/Associated Press)

The Treasury Department is teaching financial institutions how to identify suspicious transactions by U.S. freight and logistics companies potentially tied to drug cartel-backed fuel sales to Mexico.

The department’s Financial Crimes Enforcement Network issued a June 30 alert about Mexican cartel fuel smuggling and tax evasion schemes along the U.S. southern border involving U.S. companies exporting fuel.

The notice cited three Mexico-based drug cartels and other transnational criminal organizations involved in fuel-related tax theft from illicit imports of U.S. fuel.

Tanker trucks, railcars and shadow fleets of maritime vessels are being used to smuggle diesel, gasoline and naphtha from the U.S. to Mexico, mostly into the states of Tamaulipas, Nuevo Leon and Coahuila, for sale on the black market to gas stations.

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Cartels are buying U.S. fuel through complicit Mexican trading companies that avoid selling it through legitimate, permitted companies to escape paying Mexican import taxes.

According to FinCEN, most of these U.S. fuel traders operate in Texas, where there are numerous oil and natural gas companies in close proximity to Mexico, with more activity concentrated in Houston, San Antonio, other South Texas regions and along the Lower Rio Grande Valley.

Complicit U.S. fuel traders typically have legitimate businesses and long-standing relationships with major U.S. refineries and fuel distributors.

FinCEN alert for June 30, 2026

“As part of the scheme, the U.S. fuel traders leverage these relationships to purchase fuel from a terminal in the United States specifically meant for export to Mexico before diverting it to interconnected networks of U.S. and Mexican front and shell companies in the oil and natural gas, freight, logistics and other industries under the control of the cartels and their [fuel smugglers],” FinCEN noted.

The cartels have Mexican brokers pay the U.S. fuel traders through banks and crypto service providers using international wire transfers and digital asset transactions, particularly with stablecoins. Another method is to avoid wire transfers through structured cash deposits into U.S. bank accounts along the southern border that are linked to fuel traders.

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Sometimes funds are sent through shell companies in Mexico and the U.S., especially in Texas.

“These companies may appear unrelated to the oil and gas industry or be registered to residential addresses, but in reality they are controlled by the same actors and used to hide the true source of funds. In many cases, these shell accounts act as pass-throughs, receiving multiple payments a day on behalf of cartel-linked front companies before moving the money along,” FinCEN said.

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A general depiction of a fiscal fuel theft scheme. (Financial Crimes Enforcement Network)

After receiving the money, the U.S. fuel traders typically hide the funds with common money-laundering practices, such as investing in real estate, luxury goods, high-end vehicles, expensive jewelry or exclusive vacation rentals or travel destinations.

Red flags

FinCEN provided a list of red flags to help financial companies detect suspicious activity related to these schemes. Businesses are encouraged to report activities listed below by U.S.-based oil, natural gas, freight or logistics companies conducting transactions with Mexican companies connected to fuel smuggling.

Financial institutions should scrutinize customers that are U.S. entities operating in the freight, logistics, oil or gas industries that are small or recently established limited liability companies or sole proprietorship firms sharing a name with a Mexican company. Signs of involvement in illegal fuel schemes include transport companies that:

• Are registered to a residential address
• Have little to no business expenses, operations or online presence
• Make excessive transactions and have profit margins above those of a typical business in their industry
• Send many high-value wire transfers to U.S. fuel distributors or refineries in a single day and later receive commensurate international wire transfers from other Mexican companies
• Operate in Mexico without a Mexican subsidiary (e.g., ABC Fuel without ABC Fuel S.A. de C.V.)

FinCEN noted that smuggled fuel is typically misclassified in customs documents or hidden to circumvent Mexican taxes on imported fuel. This action diverts billions of dollars annually in government tax revenue, creating an uneven playing field for Mexico’s state-owned petroleum and oil company, Petróleos Mexicanos, and other legitimate Mexican and U.S. energy companies.

U.S. financial institutions should also watch for complicit U.S. fuel distribution companies receiving a high volume of wire transfers from Mexico that contain little to no detail in the memo field. Two additional red flags are companies that act as pass-through accounts, immediately transferring funds to U.S. oil and gas companies, and firms that transact with many Mexican entities but only one or a few U.S. companies.

FinCEN noted Mexico is a top oil producer, pumping out nearly 1.5 million barrels daily. However, the country “lacks the capacity to refine its sour and heavy crude oil into enough gasoline, diesel and other fuel for the Mexican economy. This has resulted in the U.S. and Mexican energy-trading relationship becoming highly integrated, with Mexico exporting over 400,000 barrels of crude oil per day to refineries in the United States and importing nearly 2 million barrels per day of refined fuel — equating to over 70% of Mexico’s fuel consumption.”