Juni 29. 2023

OFAC Sanctions 17 Chinese and Mexican Individuals and Entities for Activities Related to the Production of Counterfeit Fentanyl

Authors:

The US Department of the Treasury’s (“Treasury”) Office of Foreign Assets Control (“OFAC”) announced on May 30 that it had sanctioned 17 Chinese and Mexican individuals and entities based upon a determination that they were “involved in the international proliferation of equipment used to produce illicit drugs.” According to the press release, these “targets are directly or indirectly involved in the sale of pill press machines, die molds, and other equipment used to impress counterfeit trade markings of legitimate pharmaceuticals onto illicitly produced pills, often laced with fentanyl, frequently destined for U.S. markets.” As a result of these sanctions, “all property and interest in property of the designated persons . . . that are in the United States or in the possession of U.S. persons are blocked[.]” This blocking sanction also applies to “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons[.]”¹

Seven of the sanctioned entities and six of the sanctioned individuals are based in China, while one sanctioned entity and three sanctioned individuals are based in Mexico. The announcement credits the multi-agency cooperation among OFAC, the Drug Enforcement Administration within the US Department of Justice, Homeland Security Investigations within the US Department of Homeland Security (“DHS”), and DHS’s US Customs and Border Protection agency for making the designations possible. The press also notes this multi-agency cooperation “highlight[s] the Biden-Harris Administration’s strengthened whole-of-government offensive” to tackle the sale and supply of illicit fentanyl worldwide. Regarding the designation of the Mexican individuals and entity, the announcement notes that the United States’ actions were “coordinated closely with the Government of Mexico.”²

The announcement explains that it has targeted pill presses, also called tablet presses or tableting machines, because they are required—along with a controlled substance and die molds—to manufacture illicit drugs in pill form.³ The pill press “compresses powdered substances into tablets of uniform size and weight,” with the “machines vary[ing] in size and capacity, each of which can produce thousands of pills daily.”⁴

OFAC’s designations include a Chinese pill press supplier and its three affiliates. Treasury states the supplier shipped pill press machines to individuals in the US “involved in the manufacture of counterfeit pills,” and that it did so “using techniques intended to evade law enforcement scrutiny.”⁵ According to the press release, the supplier has “shipped scheduled pharmaceuticals to the United States for counterfeit pill manufacturing,” while its affiliates have supplied both pill presses and dies to drug traffickers in the US.⁶ OFAC also designated a set of interrelated Chinese companies as entities that it alleges are involved “in the supply of [pill] press equipment internationally.”⁷ OFAC determined that one of those companies coordinated with a “Mexico-based pill equipment supplier and contact who previously provided equipment to” an individual linked to the Sinaloa Cartel.⁸ This individual reportedly “used the machines to create superlabs in Mexico with the capacity to produce millions of fentanyl-laced pills weekly.”⁹ The designations also include an online business located in China that “offers a range of press machines and dies for sale.”¹⁰ Treasury claims the entity shipped pill press die molds to the US that were used to manufacture counterfeit schedule II drugs, along with other drugs like Xanax.¹¹

Meanwhile, the press release states that the designated Mexican entity is controlled by Sinaloa Cartel pill press suppliers, and it sells pill presses and other equipment. Treasury determined this company “has been used as a cover for an individual involved with making fentanyl-laced pills and with assisting Mexico-based cartel members with pill press operations.”¹²

All parties were designated under Executive Order 14059, released in December 2021. The Order imposes sanctions on foreign persons that Treasury, in consultation with the Departments of State, Justice, and Homeland Security, determined are involved in the global illicit drug trade.¹³

¹ https://home.treasury.gov/news/press-releases/jy1507

² Id.

³ Id.

⁴ Id.

⁵ Id.

⁶ Id.

⁷ https://home.treasury.gov/news/press-releases/jy1507

⁸ Id.

⁹ Id.

¹⁰ Id.

¹¹ Id.

¹² Id.