Red Flag Indicators of Cartel Oil Smuggling Schemes.
As no single red flag is determinative of illicit or suspicious activity, financial institutions should conduct an comprehensive review of the relevant activity, to see if the customer exhibits multiple red flag indicators.
A customer is a small company that:
- has transactional activity and profit margins that exceed the typical profile of similar companies in their industries.
- is selling crude oil for significantly less than the market rate.
- is selling millions of dollars of crude oil per month but has no online presence or is using a generic website to appear legitimate.
- it is sending wire transfers to Mexican companies for purchases of purported waste oil or other hazardous materials.
- is suddenly purchasing waste oil or other hazardous materials from a singular or small number of Mexican and U.S. companies.
- is sending wire transfers for waste oil or other hazardous materials without possessing the appropriate registrations with the U.S. Environmental Protection Agency (EPA).
- is sending wire transfers for waste oil or other hazardous materials to companies that do not appear to be related to the oil and natural gas industry.
- has a sudden and significant volume of transactional activity with companies that have little to no online presence and displays other indicators of illicit shell company activity.
- is receiving wire transfers for invoices related to the sale of crude oil and sending wire transfers for the purchase of waste oil or other hazardous materials.
- is receiving wire transfers and lacks the U.S. importing appropriate registrations.
- is receiving wire transfers for the sale of waste oil or other hazardous materials and rewiring those funds to a singular or small number of companies in Mexico.
- appears to be a shell company of a Mexican company.
- is registered to a residential address.
- is transacting with Mexican and U.S. companies and their beneficial owners are associated with Cartel-related activities.
Source:
- FIN-2025-Alert 002. May 1, 2025.
