Treasury Alert on Mexican Oil Smugglers

The Treasury Department announced sanctions targeting individuals and entities tied to oil smuggling and narcotics trafficking networks linked to the Jalisco New Generation Cartel (CJNG). The action aligns with the Administration’s focus on southwest border enforcement and the financial disruption of designated Foreign Terrorist Organizations.

The Office of Foreign Assets Control (OFAC) designated three Mexican nationals and two Mexico-based companies for their roles in smuggling crude oil stolen from Petróleos Mexicanos (Pemex) into the United States. 

“Fuel theft and crude oil smuggling are major sources of income for CJNG,” said Treasury Secretary Scott Bessent. “Treasury will continue using available tools to disrupt foreign terrorist organizations and criminal cartels.”

There is no official public estimate of the exact volume of oil smuggled across the U.S.-Mexico border, due to the covert nature of these operations. While not quantified in barrels, the scope is described as systemic and industrial, not incidental. Mexican government data confirms billions of dollars in annual losses from fuel theft (huachicol),

The Financial Crimes Enforcement Network (FinCEN) issued FIN-2025-Alert002, warning financial institutions of typologies and red flags associated with oil smuggling schemes involving Mexican cartels and U.S.-based importers. FinCEN requested institutions include the term “FIN-2025-OILSMUGGLING” in related Suspicious Activity Reports (SARs).

OFAC designated Cesar Morfin Morfin (a.k.a. “Primito”), identified as a CJNG cell leader in Tamaulipas, for involvement in oil smuggling and narcotics distribution. Treasury stated that Morfin operates front companies, controls border crossings, and facilitates the falsification of customs documentation to move stolen oil into the U.S. His brothers, Alvaro Noe Morfin Morfin and Remigio Morfin Morfin, were also sanctioned.

Two logistics firms—Servicios Logisticos Ambientales S.A. de C.V. and Grupo Jala Logistica S.A. de C.V.—were designated for transporting fuel and crude oil on behalf of CJNG.

Red Flags

FinCEN’s alert outlines behavioral indicators of smuggling activity, including:

• Crude oil sold below market price;

• Use of shell companies or unregistered importers;

• Wire transfers involving waste oil invoices from firms lacking EPA registration;

• Business addresses listed as residential;

• Unusual volumes of trade between small U.S. firms and Mexican entities.

These networks exploit crude oil exports permitted under Mexican law by substituting stolen product, which is mislabeled to avoid inspection. The oil is routed through front companies and sold to brokers in the U.S. and abroad. Revenues are returned to cartel networks via layered financial transactions.

[FinCEN Alert]