Access to beneficial ownership data is key to cutting fentanyl flow

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American families are facing a crisis: Drug overdoses and poisonings have become a leading cause of death, according to the U.S. Center for Disease Control and Prevention. In 2022 alone, the drug epidemic contributed to 109,680 deaths in the U.S., with 70% caused by fentanyl and other synthetic opioids. Called the "deadliest drug threat our country has ever faced" by Attorney General Merrick B. Garland, it is estimated that one in five individuals who use fentanyl have died from overdoses.

Beyond the tragic loss of life and its devastating impact on families, the opioid crisis puts enormous strain on an already overburdened health system, driving up overall health care costs. For example, opioid use was associated with more than 66 million emergency and 760,000 inpatient admissions resulting in an estimated cost of $95.4 billion or 7.9% of all hospital expenditures. Plus, these patients averaged 32.5% higher cost per emergency room visit and 8% higher cost for in-patient visit, according to PINC AI Data Analysis.

While there is some debate about the cause of this epidemic, it is clear how criminal networks exploit the use of complex legal vehicles through shell companies to facilitate money laundering and drug trafficking, including dangerous opioids like fentanyl. 

But there are positive developments to help uncover these complex legal arrangements: An amendment proposed by Montana Sen. Steve Daines to this year's National Defense Authorization Act, or NDAA, can help. The Daines amendment is a sensible advancement toward making the Corporate Transparency Act, or CTA, more effective. While the CTA aims to enhance accountability and transparency by requiring disclosure of beneficial ownership information, its strict access restrictions ironically undermine the intended goal of combating illicit finance. This amendment represents a critical step forward to improve national security and prevent serious crimes that affect every American. 

The scale of global financial crimes can be difficult to grasp or even believe. According to the 2024 Global Financial Crime Report, more than $3 trillion in illicit funds flowed through the global financial system in 2023, including $1.1 trillion in the U.S. alone. The bulk of that figure is organized crime, fraud and drug trafficking.

Criminal organizations continue to take advantage of the secrecy around beneficial ownership information, or BOI, data, hiding behind complex, geographically dispersed business structures and front companies. The criminals facilitating these illicit financial flows are getting away with it, too. By obscuring ownership structures, criminals can shield the identities of those who reap financial reward from companies and protect the shell companies they use as fronts to smuggle drugs and weapons.

As part of U.S.–China counter narcotic cooperation, the recent announcement by China to impose restrictions on the export of precursor chemicals used to produce fentanyl are welcome. This will hopefully create obstacles in the path of the global narcotics supply and distribution chains. For example, in the case of fentanyl and opioids, the Sinaloa cartel is the largest trafficker of fentanyl into the United States. They work with Chinese pharmaceutical companies to enable them to manufacture and distribute fentanyl sold in the U.S. Mining companies, pharmaceutical companies and others have been known to traffic the precursors of fentanyl as well as fentanyl and other narcotics into the U.S. from other regions via shipments of mislabeled packages through companies shipping to the U.S. Unscrupulous chemical suppliers rely on deliberate mislabeling, multiphase shipping maneuvers and other evasive techniques to ship fentanyl precursor chemicals into North or Central America to either legitimate or shell companies, without being detected by law enforcement or stopped by international chemical regulators.

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Such crime is not limited to border states like Texas or New Mexico. According to the Department of Justice, the Sinaloa cartel used a complex scheme involving a network of shell companies incorporated in Wyoming to launder millions of dollars in cash belonging to the Sinaloa cartel. The scheme operated all over the country in cities including Chicago, Omaha, Boston, New York, Baltimore, Charlotte and Philadelphia. In addition, their scheme involved dozens of bank accounts, the purchase of vehicles and equipment including aircraft and aircraft engines — illustrating that the risk of exposure to money laundering is not limited to financial firms. Every industry and sector everywhere in the country is exposed to potential fraud and money laundering schemes.

To protect Americans and help prevent these types of crimes, global companies need the ability to vet supply chains and ownership structures that span countries, languages and regulatory regimes. However, the CTA's strict restrictions on access to critical BOI data could come with unintended, and potentially dire, consequences. Screening companies is on the front lines of the battle against money laundering, playing a crucial role in performing due diligence for financial institutions and businesses. Access to Financial Crimes Enforcement Network's BOI registry would equip them to share crucial, enhanced intelligence with financial institutions, which is necessary to peel back the layers of opaque company structures, and ultimately make the U.S. safer.

Senator Daines' proposed amendment would allow screening companies who are in the business of helping financial institutions comply with anti-money-laundering/know-your-customer obligations apply for a license to access Fincen's BOI registry. Expanded access would in turn help reduce the flow of deadly drugs that devastate families and place ever increasing financial burdens on Americans.