The Fentanyl crisis is one of the most serious crises facing the U.S. today. According to the White House,1 in 2023 alone, illicit opioids, primarily fentanyl,2 cost Americans an estimated $2.7 trillion (in December 2024 dollars), equivalent to 9.7% of GDP. Of this total cost:

  • 41%($1.1 trillion) is attributed to deaths
  • 49% ($1.34 trillion) to lost quality of life
  • 10% ($277 billion) to other costs, such as healthcare, reduced labor productivity, and crime-related expenses
  • Alarmingly, 93% of opioid deaths are caused by powerful synthetic opioids like fentanyl

Financial institutions can play a key role in helping combat the Fentanyl crisis and disrupting the flow of funding to the illicit actors involved in the trafficking of these drugs.

Suspicious Activity in the Illicit Fentanyl Supply Chain

On April 9, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a Financial Trend Analysis3 in which it stated that in 2024 over 1,200 Suspicious Activity Reports (SARs) under the Bank Secrecy Act (BSA) were filed that identified suspected fentanyl-related activity. This amounted to approximately $1.4 billion in suspicious transactions touching various aspects of the illicit fentanyl supply chain, including precursor chemical procurement, fentanyl trafficking, and fentanyl-linked money laundering.

Cash (54% of BSA filings) and P2P transfers (51% of BSA filings) were the most commonly referenced financial mechanisms, involving suspected U.S.-based fentanyl traffickers. Fentanyl precursor chemicals and manufacturing equipment were also purchased using virtual currency, including bitcoin, ether, among others.

FinCEN Guidance on Combatting Illicit Fentanyl Activity

Drug trafficking and the rise of transnational criminal organization (TCO) activity were also included in the FinCEN’s Anti-Money Laundering and Countering the Financing of Terrorism National Priorities4 issued in June 30, 2021.

In June 2024, FinCEN had issued a Supplementary Advisory on the Procurement of Precursor Chemicals and Manufacturing Equipment Used for the Synthesis of Illicit Fentanyl and Other Synthetic Opioids5 in which financial institutions were urged to maintain continued vigilance in monitoring for potentially suspicious activity related to the procurement of precursor chemicals, pill presses, die molds, and other manufacturing equipment used for the synthesis of illicit fentanyl and other synthetic opioids.

FinCEN also highlighted key typologies and red flags that financial institutions should consider and incorporate into their BSA/AML risk assessments to the extent necessary and also provide training to their staff.

Typologies Associated With the Procurement of Fentanyl Precursor Chemicals and Manufacturing Equipment

The procurement of fentanyl precursor chemicals and manufacturing equipment by TCOs involves complex financial and operational typologies designed to obscure supply chains and evade detection.

Use of Shell and Front Companies

Shell and front companies are often used, which may appear to be legitimate Chinese exporters or Mexican importers in the chemical manufacturing and pharmaceutical industries, or in some instances in entirely unrelated business sectors such as textiles, food, or the electronics industry.

China-based suppliers generally sell fentanyl precursor chemicals and manufacturing equipment to shell and front companies under their control to create the façade of a legitimate transaction and to obfuscate the source of the illicit diversion. The shell and front companies ultimately sell the fentanyl precursor chemicals and manufacturing equipment to Mexico-based TCOs, often utilizing chemical brokers that control other shell and front companies to further obfuscate the supply chain.

Transfers Through Banks, MSBs, and Online Payment Processors

Money transfers through banks, MSBs, and online payment processors are a common financial typology associated with TCOs’ procurement of fentanyl precursor chemicals and manufacturing equipment. These transactions may be sent from Mexico or the United States to mainland China (including via Hong Kong and other jurisdictions) to individuals and shell and front companies associated with either a PRC-based supplier or a chemical broker.

While some money transfers are sent from TCOs in Mexico to PRC-based suppliers without crossing the U.S. financial system, many of these foreign transactions are cleared in U.S. dollars through U.S. correspondent banks, Mexico- and China-based agents of U.S. MSBs, and U.S. online payment processors.

Virtual Currency

Mexico-based TCOs are increasingly purchasing fentanyl precursor chemicals and manufacturing equipment from PRC-based suppliers in virtual currency, including bitcoin, ether, monero, and tether, among others. Virtual currency payments are often sent to persons affiliated with PRC-based suppliers or secondary money transmitters with hosted wallets at virtual asset service providers.

FinCEN Red Flag Indicators

Financial institutions therefore should familiarize themselves with Fentanyl smuggling-related typologies and the following list of red flags.

Procurement of Fentanyl Precursor Chemicals and Manufacturing Equipment

As no single red flag is determinative of illicit or suspicious activity, financial institutions should consider the surrounding facts and circumstances, such as a customer’s historical financial activity, whether the transactions are in line with prevailing business practices, and whether the customer exhibits multiple red flags, before determining if a behavior or transaction is suspicious or otherwise indicative of illicit procurement of fentanyl precursor chemicals and manufacturing equipment or is otherwise suspicious.

Customer and Counterparty Profile Red Flags:

  • A customer or counterparty has previous drug-related convictions or open-source reporting indicates connections to clandestine lab operations.
  • A customer or counterparty is a chemical or pharmaceutical company in the PRC, Hong Kong, or another jurisdiction with a residential address or a business address shared with other similar businesses or that has no physical presence or shows other indicators of possible illicit shell company activity.
  • A counterparty, with no supposed affiliation with the PRC, uses a PRC-based phone number or Internet Protocol (IP) address that is affiliated with the website of a Chinese chemical or pharmaceutical company.
  • A customer or counterparty is a vendor on an e-commerce or Darknet marketplace that advertises the sale of precursor chemicals (using chemical names, abbreviations, or CAS numbers in the advertisement) and manufacturing equipment used for the synthesis of illicit fentanyl and other synthetic opioids.
  • A customer is a Mexican company that, according to open-source and commercially available reporting, is importing shipments of fentanyl precursor chemicals and manufacturing equipment without appropriate importing licenses and registrations in Mexico.
  • A customer is a Mexican company with little or no online presence and is involved in the import of the same precursor chemicals and manufacturing equipment used in the synthesis of fentanyl. Multiple, seemingly unrelated Mexican importing companies share phone numbers, email addresses, or physical addresses and transact with the same PRC-based chemical manufacturing and pharmaceutical companies.
  • A customer is a Mexican importing company that predominantly transacts only with chemical or pharmaceutical companies in the PRC or Hong Kong for no apparent legitimate reason as compared to similar importers that transact with foreign chemical manufacturing and pharmaceutical suppliers in multiple jurisdictions.

Transactional Red Flags

  • A customer sends low-dollar or virtual currency payments for no apparent legitimate purpose to beneficiaries involved in the chemical manufacturing and pharmaceutical industries in the PRC, Hong Kong, or another jurisdiction.
  • Multiple customers send funds for no apparent legitimate purpose to the same beneficiary involved in the chemical manufacturing and pharmaceutical industries in the PRC, Hong Kong, or another jurisdiction (i.e., many-to-one).
  • A Mexico-based entity from an unrelated industry transacts with a PRC-based chemical or pharmaceutical company. Alternatively, a PRC-based entity from an unrelated industry transacts with a Mexico-based chemical or pharmaceutical company.
  • A customer engages in behavior that suggests efforts to evade the Currency Transaction Report (CTR) filing requirement (e.g., the customer alters or cancels a transaction when advised a CTR would be filed or engages in structuring with multiple cash transactions for under $10,000), as well as avoiding recordkeeping requirements.
  • A customer sends virtual currency payments to an address that is linked through blockchain analytics to beneficiaries associated with the PRC-based chemical manufacturing and pharmaceutical industries or to individuals or entities listed in DOJ indictments and OFAC designations.
  • A customer is a Mexican company that does not appear to be involved in the chemical manufacturing and pharmaceutical industries despite transactional activity indicating the procurement of fentanyl precursor chemicals and associated manufacturing equipment.

SAR Filing

FinCEN requests that financial institutions indicate any connection between the suspicious activity being reported and the activities highlighted in the advisory by including the key term “FENTANYL FIN-2024-A002” in SAR field 2 (“Filing Institution Note to FinCEN”), as well as in the narrative. Financial institutions may highlight additional advisory or alert keywords in the narrative, if applicable.

  1. The Staggering Cost of the Illicit Opioid Epidemic in the United States,” The White House, thewhitehouse.gov, March 26, 2025.
  2. Fentanyl, a synthetic opioid 50 times more potent than heroin, is cheaper to produce and easier to smuggle across borders, fueling the illicit opioid epidemic in the United States with devastating consequences
  3. “FinCEN Issues Analysis of Fentanyl-Related Threat Patterns and Trends in Bank Secrecy Act Reports,” Financial Crimes Enforcement Network, April 9, 2025.
  4. AML/CFT Priorities (June 30, 2021)
  5. FinCEN Advisory A002 Procurement