U.S. sanctions Chinese suppliers of chemicals for fentanyl production

Two Chinese businesses were sanctioned Friday by the United States after allegedly supplying precursor chemicals used to produce fentanyl to drug cartels in Mexico.

“Illicit fentanyl is responsible for the deaths of tens of thousands of Americans each year,” said Brian E. Nelson, the Under Secretary for Terrorism and Financial Intelligence, in a Treasury Department news release announcing the sanctions. The department “will continue to vigorously apply our tools” to stop chemicals from being transferred, he said.

The announcement comes on the same day the Justice Department charged 28 Sinaloa Cartel members in a sprawling fentanyl trafficking investigation. The indictments also charged four Chinese citizens and one Guatemalan citizen with supplying those chemicals. The same five were also sanctioned by the Treasury Department, according to its release.

In recent years, the Drug Enforcement Administration has called on the Chinese government to crack down on supply chain networks producing precursor chemicals. DEA Administrator Anne Milgram told CBS News last year that Chinese companies are the largest producers of these chemicals.

In February, Iowa Republican Sen. Joni Ernst accused China of “intentionally poisoning” Americans by not stopping the supply chain networks that produce fentanyl. 

Vanda Felbab-Brown, a Brookings Institution senior fellow who has researched Chinese and Mexican participation in illegal economies said in testimony submitted to the House of Representatives Subcommittee on National Security, Illicit Finance, and International Financial Institutions there is little visibility into China’s enforcement of its fentanyl regulations, but it likely “remains limited.” 

Law enforcement and anti-drug cooperation between the U.S., China and Mexico “remains minimal,” Felbab-Brown said in her testimony, and sanctions are one tool that may induce better cooperation.

Sanctions ensure that “all property and interests in property” for the designated persons and entities must be blocked and reported to the Treasury.

Chemical companies Wuhan Shuokang Biological Technology Co., Ltd and Suzhou Xiaoli Pharmatech Co., Ltd were slapped with sanctions for their contribution to the “international proliferation of illicit drugs or their means of production,” the Treasury Department said. 

The Guatemalan national was sanctioned for their role in brokering and distributing chemicals to Mexican cartels.

Reporting contributed by Caitlin Yilek and Norah O’Donnell