Sanctions for Money Laundering, Unprecedented Interventions, and Fentanyl: The Week the U.S. Challenged Mexican Banking

The United States escalates its confrontation with Mexico over drug trafficking and has triggered a quake in the Mexican financial system. The Trump administration is targeting Intercam and CIBanco banks and the brokerage house Vector for their alleged involvement in money laundering for the country’s major drug cartels. The grenade launched by the Treasury Department at the financial system opens a new front in the relationship between Mexico and the U.S. The Treasury’s investigations reveal multimillion-dollar transfers for the alleged payment to fentanyl suppliers, meetings between banking executives and drug lords, and the payment of bribes. On the Mexican side, President Claudia Sheinbaum has criticized the U.S. investigation, claiming it relies solely on hearsay. However, the sanctions have opened a deep crack in the banking sector. This Thursday, the National Banking and Securities Commission (CNBV) temporarily intervened the three firms in question to protect customers, savers, and investors.

The Trump administration was unequivocal in stating that CIBanco, Intercam, and Vector were key and long-standing players in laundering millions of dollars for cartels based in Mexico and facilitating payments for the acquisition of chemical precursors necessary for fentanyl production. These sanctions are the first actions taken by the Treasury Department under the law against fentanyl, which grants the Trump administration additional powers to combat money laundering associated with this drug and other synthetic opioids. Although the U.S. touted that the sanctions were based on a solid relationship with Mexico, President Sheinbaum has denied any binational collaboration and reproached that, despite her government’s request for more details on the cases, the Treasury Department did not share such evidence.

Although the Mexican government insists that the financial system is in solid condition, the Treasury Department’s sanctions represent a precise blow to the financial system. Although the entities under suspicion have vehemently denied any ties to drug trafficking, the internal damage has begun to be felt: the brokerage house Vector announced this Friday the closure of its foreign exchange business. “This measure does not affect the continuity of our operations in any way, nor does it compromise the integrity of our clients’ resources,” stated the financial institution, owned by businessman Alfonso Romo, a former advisor to former President Andrés Manuel López Obrador. Vector added that the rest of its business lines remain active and that the company’s liquidity is guaranteed.

Nonetheless, uncertainty looms, and leading rating agencies have already begun to downgrade the investment grades of the targeted banks. S&P Global Ratings downgraded CIBanco’s credit ratings after assessing that the bank is in a very vulnerable position given the repercussions following the announcement by FinCen—the financial intelligence arm of the U.S. Treasury—which could weaken its funding and liquidity. “There is a risk that the bank may not be able to access funds transfers with U.S. institutions and possibly also not access local funds, which could limit the sustainability of this business line in the next 12 months,” it noted.

Fitch Ratings also downgraded the credit ratings of Intercam Banco, Intercam Grupo Financiero, CIBanco, and Vector Casa de Bolsa, placing them on negative watch, reflecting the imminent negative impact on the business and financial profiles of these entities in light of the U.S. Treasury Department’s indications of potential weaknesses in anti-money laundering efforts concerning illicit opioid trafficking. In this same vein, HR Ratings cut the ratings of CIBanco and Intercam banks. In light of this delicate situation, some clients of these banks have already begun to move. For example, real estate investment trusts Fibra Inn and Terrafina announced through the Mexican Stock Exchange that they have disengaged CIBanco as their trustee.

The fallout for the Mexican financial system is still to come, despite calls for calm from the Treasury and the Association of Banks of Mexico, who insist on downplaying the weight of these entities, which hold around 22 billion dollars in assets, while emphasizing the strength and resilience of the country’s banking sector. Even though Mexico and its banks have reinforced their measures and regulations against money laundering, experts recognize that there is still a need to integrate this regulatory framework across the entire spectrum of the financial system, as there exist mechanisms and incentives within international finance that facilitate the emergence of these illicit flows.

Rogelio Madrueño, a researcher at the Center for Advanced Studies in Security, Strategy, and Integration, explains that there is evidence from specialized centers regarding the growing weight of illicit financial flows, which include money laundering, estimated to be worth over 5% of Mexico’s GDP. “The U.S. has an ad hoc structure within its Treasury Department focused exclusively on detecting these illicit practices, and this nation has privileged and firsthand information from arrests of strategic actors linked to these illegal operations,” he mentions.

The expert warns that the actions of the U.S. should be framed as part of a strategic reconfiguration to confront its main global rival: China, and to utilize all geoeconomic instruments of its foreign policy accordingly to achieve strategic objectives. “In this framework, there were already early warnings of a second wave of pressures in the area of money laundering, with a distinctly political orientation toward the Mexican government. In sum, there is a real market, and it is potentially true. However, it is not an exclusive problem of Mexico, but regional, and in any case, it is being used as a tool of political pressure,” he concludes.

From the media-fueled seizures of fentanyl to dismantling the finances of Mexican cartels. The United States has escalated its narrative of combating drug trafficking by demanding that the government ensure not only more security at the borders but also close monitoring of the 52 banks integrated into the system. However, the damage is done. Right now, more than one bank is reviewing its own anti-money laundering security protocols, while Mexican authorities attempt to convey a message of calm and resilience.