Mexican Banks Are Purging Their Client Lists To Avoid Cartel-Related U.S. Sanctions

Mexican banks are purging their client lists to avoid sanctions related to money laundering for cartels, according to a new report.

Reforma quoted Jose Antonio Quesada Palacios, former VP of regulatory policies for the Mexican stock exchange, who said the largest banks in the country are currently de-risking. He detailed that the measure means limiting or cutting relations with clients who don't meet regulatory standards.

"It's happening. I've seen it in at least three systemic institutions and I don't doubt it reaches players of other sizes," Quesada said.

Banks have taken these measures especially since three financial firms were sanctioned for their alleged role in helping launder cartel money.

The Treasury Department granted them a reprieve shortly after, noting that the Claudia Sheinbaum administration is making progress to address the matter, granting it an additional period before a ban on fund transfers with the three companies goes into effect.

Now, the measures targeting CIBanco, Intercam Banco and brokerage Vector Casa de Bolsa will go into effect on September 4.

"Treasury will continue to take every action necessary to protect the US financial system from abuse by illicit actors and target the financing of transnational criminal organizations and narcotics traffickers," said Andrea Gacki, director of the department's Financial Crimes Enforcement Network (FinCEN), in a statement.

Bloomberg noted earlier this month that the decision sparked chaos in the country. Even though the Treasury Department said the impact would be minimal, companies in both the U.S. and Mexico immediately cut off businesses with the institutions.

The actions mark the first use of authorities granted under the Fentanyl Sanctions Act and the FEND Off Fentanyl Act, which gives the Treasury expanded powers to target money laundering tied to the trafficking of fentanyl and other synthetic opioids, including operations run by drug cartels.