US imposes sanctions on Mexicans, entities tied to Mexican fuel smuggling network

Highlights:

• Treasury sanctioned two Mexican nationals and nine entities
• Says they are linked to a fuel smuggling scheme
• Treasury also issued guidance to help banks spot cross-border fuel trade red flags
• Mexican cartels make hundreds of millions of dollars annually from smuggled fuel, stolen crude oil

The US Treasury said on Tuesday it had imposed sanctions on two Mexican nationals and nine entities tied to a cartel-linked smuggling scheme that moves fuel from the United States into Mexico without paying a hefty tax on the imports.

In a statement, the Treasury said the scheme is linked to Mexico's Jalisco New Generation Cartel (CJNG) and part of an illegal enterprise generating hundreds of millions of dollars annually for the cartel. Smuggled fuel and stolen crude oil have become the second-largest revenue source for Mexican cartels after drugs, according to the US government.

"Today's action highlights the extent to which Mexico's cartels are expanding beyond traditional drug trafficking to generate revenue for their criminal organisations, which continue to traffic deadly drugs that kill Americans," said Secretary of the Treasury Scott Bessent.

Mexico applies a levy known as IEPS on a wide variety of goods, including imported diesel and petrol.

Mexican cartels and their networks can evade the tax, including by misclassifying customs documentation and by bribing government officials, the Treasury said.

Complicit US companies, meanwhile, leverage their relationships with major refineries and fuel distributors at home to purchase fuel and then divert it using networks of US and Mexican front and shell companies, it said.

Mexico is a major crude oil producer, but it imports these fuels because its ageing refineries cannot meet local demand.

Once in Mexico, the Treasury said the fuel smuggled from the US is sold through cartel-controlled petrol stations and unregulated roadside fuel stops at a steep profit.

Complicit US fuel distributors obscure their proceeds through money laundering — purchasing luxury goods, real estate and investment assets, the Treasury added.

It also issued new guidance to help banks and other financial institutions identify red flags in the cross-border fuel trade.

Those sanctioned on Tuesday include Oscar Juraidini and seven companies he owns or controls — Centro Cambiario La Peseta, OJ Living Trust, RK Real King, Soma Transporte y Servicios, Ogui Fletes, OF Transportes and UK-based Cucumber Sweet Waves — all designated for acting on behalf of CJNG.

Also sanctioned were J. Refugio Ruiz and his two logistics companies, Jomadi Logistics & Cargo and Ahavat Logistics Solution, for providing material support to the cartel.

Jomadi Logistics & Cargo, Soma Transporte y Servicios, OF Transportes and Centro Cambiario La Peseta did not respond to requests for comment. Juraidini and Ruiz, as well as the other companies, could not be reached for comment as no online presence or contact information could be found.