What the Trump administration is doing to cut off cash to drug cartels

National security experts and former diplomats have told us that an effective way to hurt Mexican cartels is to cut off access to their money. The Trump administration is rightly ramping up scrutiny of bank transactions along the U.S.-Mexico border in a move intended to curtail money-laundering activities.

Under a new directive from the U.S. Treasury agency in charge of safeguarding the financial system, banks and money service businesses in certain border ZIP codes now have to report transactions of $200 or more. Previously, the minimum threshold for reporting was $10,000.

In Texas, this order affects Cameron, El Paso, Hidalgo, Maverick and Webb counties. While this measure will make banking more burdensome, it might have real impacts on the financial maneuvering of cartels, which rely on American and Mexican banking systems to exchange money with little consequence. Much of the drug trafficking business relies on small cash deposits to evade detection.

The U.S. Treasury Department is also pointing fingers at three Mexican financial firms, accusing them of laundering millions of dollars in connection with fentanyl trafficking by drug cartels. One of the firms, Vector Casa de Bolsa, is controlled by a man who served as chief of staff for former Mexican President Andrés Manuel López Obrador.

The Trump administration alleges that Vector, a brokerage firm, is involved in money laundering in connection with illicit opioid trafficking. According to the Treasury Department, a Sinaloa cartel "mule" laundered $2 million using this firm. Also, between 2018 and 2023, Vector allegedly made over $1 million in payments on behalf of Mexican companies to Chinese companies, known for shipping precursor chemicals used to manufacture fentanyl.

Linking a former president's ally with money laundering is a thorny situation for the U.S. government. Mexican President Claudia Sheinbaum has demanded "convincing evidence" of the alleged illicit money laundering. However, a Mexican nonprofit watchdog group recently reported that the Mexican government has been aware of Vector's suspicious transactions at least since 2024.

According to Mexicanos Contra la Corrupción y la Impunidad, two figureheads linked to former Mexican government official Genaro García Luna transferred over $40 million to Vector. A U.S. court convicted García Luna, Mexico's secretary of public security from 2006 to 2012, of drug trafficking charges two years ago. Despite Sheinbaum's protests to U.S. officials, Mexico's attorney general opened its own investigation into Vector a few days ago.

Mexican cartels have other means to move money, including Chinese money launderers and cryptocurrencies. Our government needs to consider other measures to safeguard our financial systems from money laundering.

For years, tackling money laundering has been a weak spot in U.S.-Mexico relations, dating back to the failed Merida Initiative, a U.S. assistance program to combat drug trafficking that was phased out when the López Obrador government ceased cooperation.

Our government should look for every opportunity to cooperate with Mexico on security strategies, but there will be times when U.S. officials will have to pursue measures unilaterally. We should do what's in our power to block the flow of cash to and from cartels.

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