31 January 2002

Treasury's Gurule on Actions Against Drug Cartel Finance

Treasury Under Secretary Jimmy Gurule has announced action blocking U.S. residents from doing business with 12 companies and 15 individuals in Mexico and the Caribbean accused of money laundering for drug cartels.

The action also freezes assets of those persons and entities in U.S. banks and financial institutions.

At a January 31 press conference, Gurule said eight of the companies, including the drugstore chain Farmacia Vida Suprema, were believed to be owned or controlled by the leaders of the Arellano Felix drug trafficking organization based in Tijuana, Mexico.

He said another company, which runs the Oasis Beach Resort in Baja California, Mexico, was owned or controlled by an Arellano Felix associate.

In St. Kitts and Nevis, he said, the companies include local subsidiaries of multinational corporations DHL Worldwide Express and Freight Movers International. He said these subsidiaries were under the control of Glenroy Vingrove Matthew, a member of a drug trafficking organization with strong ties to South American sources.

"Today we send a very clear message to those who support the drug traffickers financially by devising schemes to legitimize their dirty money by operating front companies that allow drug proceeds to infiltrate legitimate-looking businesses," Gurule said in a written statement.

The actions were the first taken under the 1999 Drug Kingpin Act to incapacitate what are called "Tier II" entities, the financial networks supporting drug traffickers. Earlier, the United States had identified 24 foreign drug kingpins themselves under Tier I of the law.

Following are abbreviations used in the text:

• OFAC: Treasury Department's Office of Foreign Assets Control


• DEA: Drug Enforcement Administration

Following is the text of Gurule's statement:

January 31,2002

Statement of Treasury Under Secretary for Enforcement Jimmy Gurule
Kingpin Tier Two Designations

Thank you all for coming today. I am particularly pleased to be joined here today by the Director of OFAC Rick Newcomb, DEA Administrator Asa Hutchinson and Customs Deputy Commissioner Chuck Winwood. As many of you know, since September 11th, the Treasury Department has been at the forefront of the war against terrorism. We have moved aggressively on many fronts to cut off the money used to fund these terrible acts that threaten the security and well being of our nation. We are determined and committed to this cause. At the same time, we know that there are other enemies that threaten the stability of our society and the safety of our children. We continue to battle every day the scourge of illegal narcotics that infects our society.

Today we send a very clear message to those who support the drug traffickers financially by devising schemes to legitimize their dirty money by operating front companies that allow drug proceeds to infiltrate legitimate looking businesses. The United States is committed to routing out both the drug dealers and the financiers who make their illegal actions profitable. To those who think otherwise -- who think the United States is too preoccupied with the war on terrorism to pay attention -- I am here today to tell you that you are wrong. We have been, and remain, committed to this objective.

Let me now turn to the specific actions taken today by Treasury's Office of Foreign Assets Control. Rick Newcomb and his team have worked tirelessly to make today's actions possible. Their long hours and dedication to this project has resulted in credible information linking the individuals and entities named here beside me to major narcotics traffickers. Twelve foreign businesses and fifteen individuals in the Caribbean and Mexico have been named "Tier II" designations, pursuant to the Foreign Narcotics Kingpin Designation Act. Under authority of the Kingpin Act, OFAC has determined that these 27 entities are acting as fronts or agents for foreign drug kingpins previously named by the President.

Today's action prohibits Americans from doing business with these 27 designees and blocks their assets found in the United States. The newly designated businesses and individuals, located in the Caribbean and Mexico, include a drugstore chain and pharmaceutical distributor, air courier services, a hotel and resort complex, as well as real estate, electronic security and consulting firms. Treasury has determined that drug kingpins previously named by the President under the Kingpin Act exert ultimate control over these Tier II designees.

By taking this action today, Treasury is exposing, isolating, and incapacitating the foreign drug cartels and their purportedly "legitimate" businesses and agents.

The entities and individuals named today are associated with either the Arellano Felix organization centered in Tijuana or a Caribbean drug kingpin, Glenroy Matthews, who operates out of St. Kitts. A total of 24 foreign drug kingpins, from various foreign drug cartels, have been named by the President under the Kingpin Act. The U.S. Government will continue to identify businesses owned or controlled by these significant foreign narcotics traffickers and expand the Kingpin Act list to include additional drug traffickers and their organizations.

The war on drugs, like the war on terrorism, is a battle being fought daily on a multitude of fronts. We can only be successful against our enemies if we pool together all of our collective resources to fight against a common enemy. I am delighted that Administrator Hutchinson and Deputy Commissioner Winwood could join me here today. The importance of interagency coordination cannot be overestimated. The Treasury Department believes the best way to put the drug traffickers out of business is to partner closely with our law enforcement colleagues and attack the traffickers and other criminals from all sides. The Drug Enforcement Administration and the Customs Service do a superb job of investigating these drug organizations for purposes of prosecution. The fight against illegal drugs does not end there however. We are taking the fight one step further and taking action on the financial front by targeting companies that facilitate money laundering and drug trafficking. I believe that this is only the first of many joint law enforcement efforts between the Department of Justice, Treasury, DEA and Customs.

end text