US Treasury Issues Sanctions Targeting China-Backed Fentanyl Entities, Individuals

Fentanyl pills found by officers from the Drug Enforcement Administration are seen in this handout picture, in New York, on Oct. 4, 2022. (Drug Enforcement Administration/Handout via Reuters)

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced on Oct. 3 sanctions against 28 individuals and entities involved in a network that sends foreign fentanyl over the nation’s borders.

The Justice Department (DOJ) also unsealed eight indictments against China-based chemical manufacturing companies and employees involved in fentanyl production.

Sanctions

The 14 entities and 14 individuals are responsible for manufacturing and distributing fentanyl, methamphetamine, and ingredients used to make MDMA, as well as trafficking potent drugs often mixed with fentanyl and other drugs. The majority of those sanctioned are in China. Two entities and one individual were based in Canada.

“Effective immediately, these individuals and entities, located in the People’s Republic of China and in Canada, are cut off from using the U.S. financial system and all U.S. persons are barred from transacting with them,” said Deputy Secretary of the Treasury Wally Adeyemo.

“Additionally, we have identified and blocked over a dozen virtual currency wallets associated with these actors. The blocked wallets, which received millions of USD funds over hundreds of deposits, illustrate the scope and scale of the operation targeted today.”

“It’s the latest step in the rapid scaling up of our work targeting the financial flows that power the global illicit drug trade,” Mr. Adeyemo added. According to a 2022 report (pdf) by the global inter-governmental and watchdog organization Financial Action Task Force, which OFAC referenced, synthetic opioid production and trafficking moves tens of billions of dollars annually.

OFAC emphasized that the effort was part of a “whole of government,” multi-departmental approach to combat the fentanyl crisis. The Treasury had also sanctioned 17 individuals and entities based in China and Mexico in May. To date, the Biden administration has imposed 200 sanctions related to this illicit drug trade.

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Fentanyl is a synthetic opioid that can be 50 times more potent than heroin and 100 times more potent than morphine. As of 2022, fentanyl was responsible for 70 percent of deaths by overdose or poisoning, and the number is thought to be an underestimate because overdose deaths involving other drugs laced with fentanyl sometimes go uncounted. The Drug Enforcement Administration (DEA) reported seizing 387.9 million potentially lethal doses of fentanyl in 2022.

Mr. Adeyemo explained that the government has taken up a network-focused approach, freezing several branches of these illicit operations as they have become more fractured and global, and exerting pressure financially as well.

“The United States government is focused on breaking apart every link in that chain, getting fentanyl out of our communities, and bringing those who put it there to justice,” Attorney General Merrick Garland said.

Indictments

The DEA had led investigations that resulted in the eight charges.

According to the DOJ, China-based producers of fentanyl and of chemicals used to make fentanyl are skirting the law by using “re-shippers” who send the products to the United States. They use “false return labels, false invoices, fraudulent postage,” obscure packaging, and take payments in cryptocurrency to hide their location, according to an Oct. 3 DOJ release. The primary redistributors are in cartels based in Sinaloa and Jalisco in Mexico.

Eight Chinese corporations and 12 Chinese nationals were charged with illegally importing fentanyl and related chemicals into the United States. The defendants “openly advertised their ability to thwart U.S. customs and deliver the chemicals used to make fentanyl” into the country, and had successfully done so in the past.

Five companies were charged in the Middle District of Florida: Hebei Shenghao Import and Export Company, based in Shijiazhuang, China; Lihe Pharmaceutical Technology Company, based in Wuhan, China; Henan Ruijiu Biotechnology Company, based in Zhengzhou, China; Xiamen Wonderful Biotechnology Company, based in Xiamen, China; and Anhui Ruihan Technology Company, based in Hefei, China.

Some of these companies were involved in negotiating sales, and others were involved with transporting fentanyl and related chemicals across borders.

In the Southern District of Florida, two pharmaceutical companies were charged with exporting large amounts of chemicals used to make fentanyl. Of recent concern is xylazine—a non-opioid drug used for sedation and pain relief mainly in horses, cattle, and other animals—which is now being mixed into fentanyl to increase the effects of the drug. The companies also produce several other chemicals, known as “precursors,” used to make fentanyl.

Several of the individuals charged are connected to the Du Transnational Criminal Organization, which the government has flagged as a priority target.