US Senate Leader Seeks Bipartisan China Sanctions Over Fentanyl Trafficking

On July 16, 2023, US Senate Majority Leader Chuck Schumer said he would push to sanction China over its alleged role in producing the synthetic opioid fentanyl. While the Department of Justice (DOJ) has previously issued charges against Chinese companies responsible for manufacturing the chemicals used to make fentanyl, Schumer has proposed to introduce new sanctions in a bipartisan amendment to the upcoming defense policy legislation. 

The proposal would also deem fentanyl trafficking an “international emergency,” opening the door to sanctions activity beyond charging the companies involved in the manufacturing process.

The 2024 National Defense Authorization Act

Initially proposed by Democratic Senator Sherrod Brown and Republican Senator Tim Scott, the amendment relates to the 2024 National Defense Authorization Act (NDAA). In his statement, Schumer advocated for the FEND Off Fentanyl Act to be included as part of the annual defense spending. Senator Kirsten Gillibrand called for the passage of this act on July 14, stating that the legislation would put more responsibility on government agencies and further hold drug traffickers accountable. In her statement, Gillibrand highlighted the main focus areas of the act:

• Preventing illicit drugs from crossing the US border.
• Better identifying fentanyl-related suspicious transactions.
• Increasing education of illegal drug flows.

On July 18, the Democratic-led Senate initiated discussions on the fiscal NDAA, while the Republican-controlled House of Representatives passed its version of the bill on July 13. The Senate is likely to approve its version of the NDAA in late July 2023. Following this, both chambers will negotiate to reach a compromise that will then undergo voting later in the year.

The Global Coalition to Address Synthetic Drug Threats

These recent efforts to ramp up opoid enforcement follow a trilateral workshop in May 2023 between the US, Canada, and Mexico. As a part of the North American Drug Dialogue (NADD), the event focused on cross-border efforts to curb the abuse of the financial system by drug traffickers.

Prior to the workshop, the White House issued a fact sheet in April 2023 highlighting the need for targeted efforts to tackle the significant impact fentanyl trafficking and abuse has had on the US. Specifically, the sheet listed five bullet points on how the Biden-Harris Administration plans to decrease the number of deaths due to fentanyl overdose, including:

• Leading a coordinated global effort with international partners to disrupt the illicit synthetic drug trade.
• Strengthening coordination and information-sharing among US intelligence and domestic law enforcement agencies.
• Accelerating work with the private sector globally.
• Further protecting the US financial system from use and abuse by drug traffickers.
• Continuing to call on Congress to close legal loopholes for illicit synthetic drugs.

Key Takeaways

To bolster efforts against illicit finance and drug trafficking, compliance staff can refer to the Financial Crimes Enforcement Network’s (FinCEN) 2019 advisory document, which provides insight into the primary typologies of fentanyl trafficking and red flags derived from financial reporting. Some of these red flags include:

• Multiple US remitters sending money transfers to the same individual beneficiary in China.
• Difficulties in corroborating an entity’s source of funds.
• Commercial databases revealing a company is associated with multiple businesses in unrelated industries.
• Virtual private network (VPN) services being used to access convertible virtual currency (CVC) exchange accounts.

In the advisory, FinCEN instructs firms to provide all relevant information when filing suspicious activity reports (SARs) to indicate a potential connection between suspicious transactions and fentanyl trafficking. The key term “FENTANYL FIN-2019-A006” should also be used in SAR field 2.