OFAC Continues Battle Against Mexican Cartels and Gun Runners

By David Williams, ACSS Editor. Nikos Kartsaklis
August 6, 2022

Mexican drug cartels and their gun runners are in the sights of the US Department of Treasury’s Office of Foreign Assets Control (OFAC) as it continues to take aim at escalating weapons and drug use.

Obed Christian Sepulveda Portillo (Obed Sepulveda) has joined OFAC’s specially designated nationals and blocked persons (SDN) list in line with Executive Order 14059 for acting for or on behalf of the Cartel de Jalisco Nueva Generacion (CJNG), a Mexican drug cartel that trafficks fentanyl and other deadly drugs to the US.

Portillo is alleged to traffick high-caliber firearms from the US to CJNG.

OFAC said Portillo, a Mexican national, coordinates the procurement of firearms and bulk ammunition from the US southwest border into Mexico through a network affiliated with CJNG.

Whole of Government Effort

OFAC’s actions are “part of a whole-of-government effort to counter the global threat posed by the trafficking of illicit drugs” into the US. OFAC acknowledged assistance from the Mexican government to disrupt its domestic drug trafficking organizations’ procurement of weapons, including those sourced in the US.

Brian Nelson, undersecretary of the Treasury for terrorism and financial intelligence, said: “Treasury is actively targeting those who support and supply drug trafficking and criminal organizations, especially those engaged in the production and distribution of synthetic opioids that claim the lives of tens of thousands of Americans each year.”

Nelson attributed CJNG’s power to “its ability to obtain high-powered weapons” to protect drug trafficking routes, territory and illicit assets.

OFAC has designated a wide range of businesses and individuals linked to CJNG and its close ally, Los Cuinis. Previously designated businesses in Mexico include shopping centers, real estate companies, agricultural companies, a music promotion business and a luxury boutique hotel, which OFAC said are used to launder drug profits.

OFAC said it will continue to further the policy objectives of EO 14059 and “identify drug cartels, transnational criminal organizations, and their financial facilitators and enablers globally.”

National Drug Control Strategy

In April, the Biden administration released the National Drug Control Strategy to tackle the ongoing overdose epidemic. The policy directs law enforcement agencies to combat drug traffickers by strengthening data systems to disrupt the supply chain and reduce profits.

The strategy calls for the obstruction and disruption of financial activities of transnational criminal organizations that manufacture illicit drugs and traffic them into the US; a reduction of the supply of illicit drugs through domestic collaboration and international coordination; and a reduction of drugs across US borders.

The Biden administration’s stance on drugs and guns in Mexico is similar to the Trump administration’s. Sigal Mandelker, former undersecretary of the Treasury for terrorism and financial intelligence, said in a statement in 2019: “Our counter-narcotics program is one of our oldest and most robust… We have made it a priority to map out the financial networks of major narcotics traffickers so that financial institutions can identify their key financial associates and disrupt their money movements.”

Narcotics Traffickers Weigh Heavily in SND List 

Figures for 2019 show that, since 1995, OFAC designated more than 3,800 narcotics traffickers and their criminal support and financial networks. In 2019, narcotics traffickers and their associates accounted for almost 50 percent of the SDN list.

Actions have included the identification of the first Chinese fentanyl kingpin in April 2018 and designations that have targeted narcotics traffickers in Mexico, India, and the United Arab Emirates which are involved in moving synthetic opioids to the US.

Recent Designations

In February, Sergio Armando Orozco Rodriguez (aka “Chocho”) was designated for acting on behalf of CJNG by facilitating illicit activities in Puerto Vallarta on Mexico’s southern Pacific coast. OFAC said Rodriguez launders drug proceeds and facilitates extortion schemes, requiring new businesses to receive “unofficial permission.” Rodriguez collects taxes from them on behalf of CJNG, and has ties to multiple nightclubs, bars, and restaurants, OFAC said.

OFAC said CJNG “infiltrates the economy of Puerto Vallarta and intimidates legitimate businesses” using the tourist destination as a “strategic stronghold” for drug trafficking, money laundering, extortion, kidnappings, and assassinations.

Other designations include:

  • Equadorian national Wilder Emilio Sanchez Farfan and Mexican national Miguel Angel Valdez Ruiz. OFAC collaborated with the Drug Enforcement Administration announcing in February that the two materially contributed to the illicit activities of major Mexican cartels to traffick cocaine to the US.

OFAC said that Farfan transports multi-ton quantities of cocaine over land from manufacturing labs in the south of Colombia to Ecuador where shipments are transported by land, air and maritime vessels (including commercial shipping containers), and land-based vehicles through Central America, Mexico, and ultimately the US.

Ruiz, a Mexican national, is a drug trafficker in Culiacan, Sinaloa, OFAC said. Ruiz imports cocaine from Ecuador and is supplied by and works directly with Farfan. Ruiz serves as an intermediary between Farfan and Ismael Zambada Garcia, a Sinaloa Cartel leader, who was designated in December 2021.

  • In December 2021, OFAC designated Oseguera Cervantes pursuant to EO 14059.
  • In April 2021, OFAC designated Carlos Andres Rivera Varela (aka “La Firma”) and Francisco Javier Gudino Haro (aka “La Gallina”) under the Foreign Narcotics Kingpin Designation Act (Kingpin Act). OFAC said both lead a Puerto Vallarta-based CJNG enforcement group that has helped “orchestrate assassinations of rivals and politicians using high-powered weaponry.”

OFAC said Varela and Haro are linked to Gonzalo Mendoza Gaytan (aka “El Sapo”), a senior CJNG member who has acted as the “plaza boss” for Puerto Vallarta and was also designated under the Kingpin Act in May 2019.

Under the Kingpin Act, OFAC can designate and sanction foreign individuals and entities that contribute to illicit narcotics trafficking. OFAC works with partner agencies to identify potential designees, compiling evidence and submitting it for legal review.

Criminal and Civil Penalties

A Government Accountability Office Report to Congressional Requesters published in 2019 points out that the Treasury may enforce criminal and civil penalties for any US person who willfully violates the Kingpin Act. Civil penalties are up to $1.5 million per violation. Criminal penalties comprise fines of up to $5 million for individuals, $10 million for corporations, and up to 30 years in prison.

Federal banking agencies monitor the OFAC compliance programs of US banks through regular bank examinations. OFAC handles enforcement through warnings, monetary penalties, and other methods.

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