The US Treasury Department’s Office of Foreign Assets Control (OFAC) is unleashing a wave of sanctions on drug traffickers and their associates, but enforcement has lagged, limiting the impact on transnational criminal networks.
For years, US sanctions in the Western Hemisphere targeted criminal kingpins in an effort to weaken their organizations from the top down. Rather than collapsing, however, criminal organizations often fragmented while drug flows persisted.
More recently, some officials in the United States, including leaders within the Drug Enforcement Administration (DEA), have been treating drug trafficking groups as adaptive financial and logistical networks to be disrupted, rather than hierarchies to be decapitated.
‘Narco-Terrorism’ Makes a Comeback
The second administration of United States President Donald Trump has equated drug trafficking with terrorism, applying various anti-terrorism policy instruments – including sanctions – against criminal groups. In parallel, the Treasury Department has turned to anti-terrorism authorities to supplement drug-trafficking sanctions. Expanding its use of the Specially Designated Global Terrorist (SDGT) authority, OFAC targeted drug networks, including money launderers, precursor chemical suppliers, and shell companies.
SEE ALSO: GameChangers 2024: Global Cocaine Networks and Trump 2
It also invoked the transnational criminal organization (TCO) label far more frequently in 2025 than in previous years, adding individuals and entities allegedly connected to trafficking networks to its blacklist.
The result: OFAC’s Specially Designated Nationals (SDN) list of sanctions targeting criminal networks in Latin America surged in 2025 even as overall global SDN designations fell.
Who is the Target of United States Sanctions?
The expanding sanctions list comes with a new focus: entities over individuals. The Treasury Department is increasingly going after broader criminal networks.
Mexican crime groups accounted for the lion’s share of new entity sanctions. In 2025, OFAC hit Sinaloa Cartel-linked shell companies, blacklisting hospitality, spa, real estate, and other front entities that it believed were laundering drug proceeds for the Chapitos, a faction led by Joaquín “El Chapo” Guzmán’s sons.
OFAC also targeted fuel smuggling networks and gas stations connected to the Jalisco Cartel New Generation (Cartel de Jalisco Nueva Generación – CJNG) and the Santa Rosa de Lima Cartel (Cartel de Santa Rosa de Lima – CSRL).
Venezuela saw sanctions designations nearly triple in 2025. In July 2025, the Treasury Department targeted the Cartel of the Suns (Cartel de los Soles – CDLS) as a Global Terrorist entity.
OFAC also moved against shipping companies and vessels operating in Venezuela’s oil sector for transporting Venezuelan crude and engaging in deceptive shipping practices, evading oil sanctions in an effort to finance the country’s “corrupt narco-terrorist regime.”
In 2025, OFAC targeted cocaine transshipment networks in Costa Rica, Guyana, and Suriname, including port officials, shipping firms, and aircraft operators, who allegedly move cocaine through the Caribbean to Europe and the United States.
Sanctions Enforcement Gap
In theory, network sanctions give OFAC more enforcement leverage. Many shell companies are registered in the United States or hold assets there. Even when they do not, their reliance on clearing dollar transactions through American banks exposes them to Treasury actions.
In practice, sanctions enforcement has largely been confined to asset blocking and transaction bans. Few reported seizures or disruptions can be traced directly to sanctions. OFAC collected only about $266 million in civil penalties in 2025.
Global recoveries for money laundering and sanctions violations fell to $940 million—down from more than $3 billion the year before—with only a negligible share linked to sanctioned Latin American trafficking networks. Even the $12.7 million seized from Sinaloa Cartel assets came through arrests and raids, not sanctions.
These lackluster enforcement figures point to a key constraint: institutional capacity.
“OFAC is understaffed,” Tony Borrayo, a former Treasury Department official, told InSight Crime. OFAC’s budget and staffing have grown only modestly as new sanctions surged, widening the gap between resources and OFAC’s expanded mandate.
Network-based sanctions further strain OFAC’s capacity. They demand deeper investigations and rely heavily on private sector compliance.
“The US financial community plays a big role,” Borrayo said. “It is mostly banks that are responsible for blocking accounts or transactions tied to designated actors.” Outsourcing enforcement to banks can be a deterrent, Borrayo added, since “any institution that helps a sanctioned party risks being sanctioned itself.”
But the deterrent effect often depends on private incentives. Freezing accounts and reporting suspicious transactions costs banks time and resources, but doesn’t bring in any revenue. That tension has created compliance gaps. In 2024, for example, TD Bank paid more than $3 billion for allowing dirty drug cash to flow through its system.
‘A Constant Game of Whack-A-Mole’
Sanctioned trafficking networks often outmaneuver OFAC, moving funds and swapping out front companies faster than authorities can shut them down.
“Cartels are inherently sanctions-evading organizations,” said Kyle Rutter, a researcher at the Center for a New American Security think tank. “It’s a constant game of whack-a-mole: shell companies pop up, OFAC sanctions them, and they are quickly replaced or relocated abroad.”
Consider the case of Sumilab, the Culiacán-based chemical supplier and its operators sanctioned by OFAC under counter narcotics authority in 2023 for supplying fentanyl and methamphetamine precursor chemicals to the Sinaloa Cartel. Within weeks, the operators removed Sumilab’s signage and spun off seven shell companies that continued the same operations under new names.
By October 2025, OFAC re-sanctioned the network under expanded authorities, including counterterrorism (SDGT), targeting 12 companies owned by the family that owned Sumilab. Treasury has so far provided no public data on assets blocked, shipments interdicted, or supply chains disrupted.
Cryptocurrency also allows crime groups to sidestep OFAC’s asset-blocking powers, since they bite only where criminals touch US banks through dollar transactions or US-based accounts.
“Crypto exchanges are decentralized, and the US has a weaker regulatory framework for it,” Rutter said. “So it makes sense that cartels are opting for crypto over dollar transactions.”
Expanding designations without parallel investment in enforcement questions the capacity of this mechanism to meaningfully disrupt transnational criminal networks.
Featured Image: President Donald Trump, pictured on May 6, 2024, in New York, has overseen a wave of sanctions on drug traffickers and their associates, but enforcement has lagged. Credit: AP Photo/Julia Nikhinson, Pool.