Latin America in Focus: Trump Administration Bolsters Regional Focus by Designating Brazilian Organized Crime Groups as SDGTs and FTOs

On 28 May 2026, the State Department announced that it designated Brazil’s two largest organized crime groups—Comando Vermelho (CV) and Primeiro Comando da Capital (PCC)—as Specially Designated Global Terrorists (SDGTs) and that it intends to designate both groups as Foreign Terrorist Organizations (FTOs) effective 5 June 2026.¹ The State Department cited CV’s and PCC’s facilitation of illegal activity, including violent attacks on public officials, drug production and trafficking, weapons trafficking, money laundering, and fuel smuggling, as well as their expansive influence and involvement in activities across Latin America.² 

The SDGT and FTO designations expand upon prior Trump administration and Department of Justice (DOJ) actions increasing the focus on cartels and gangs, particularly in Latin America.³

These new designations, coupled with the criminal organizations’ expansion into legitimate business and infiltration of the ordinary economy, increase risks for international companies operating in Latin America. As these organizations become more deeply embedded in routine commercial activity, companies doing business in the region must exercise heightened caution in assessing counterparties, transactions, and operational relationships. This is particularly true in Brazil and other Latin American countries (e.g., Mexico) where FTOs are intertwined with legitimate businesses.

Criminal Organization’s Infiltration of Legitimate Business Operations

The FTO designations of CV and PCC come as organized crime groups, particularly in Latin America, are increasingly infiltrating legitimate business operations, including global supply chains, agriculture, energy and fuel, mining, real estate, and banking and investment.⁴ 

CV and PCC present two prominent examples of this infiltration. In August 2025, Brazilian officials seized US$220 million from PCC money-laundering activities across 40 investment funds (with investments in Brazilian port terminals, ethanol plants, and gas stations) and Brazilian fuel distributors, transport companies, and gas stations.⁵ The Brazilian Federal Revenue Service alleged that a fintech company served as a “shadow bank” for PCC to move more than US$8.5 billion in illicit profits and that the people and companies involved evaded more than US$1.6 billion in fuel sales taxes.⁶ Additionally, the National Treasury of Brazil requested that courts freeze US$1 billion in assets allegedly tied to PCC’s activities. Subsequently, in October 2025, Brazilian state police conducted the largest raid against CV to limit the organization’s expansion into other parts of the country.⁷

The expansion of illicit activities, and infiltration of legitimate business operations, have resulted in an all-of-government approach, including increased coordination between the United States and the Latin American countries these organizations call home. 

Impact on International Companies Operating in Latin America

These designations significantly increase compliance, sanctions, and enforcement risks for companies operating in Latin America, particularly as criminal organizations become increasingly embedded in legitimate commerce, supply chains, and financial networks. The risk is especially acute in countries like Brazil, Mexico, Colombia, Ecuador, and Venezuela, where designated FTOs and affiliated networks may intersect with otherwise lawful businesses. Companies must therefore enhance due diligence, third-party risk management, and ongoing monitoring.

While there have always been potential civil and criminal consequences for companies working with, supporting, or associating with transnational criminal organizations (TCOs), the DOJ’s stated priority of seeking the highest possible penalties under the sentencing guidelines for cases involving cartels⁸—combined with the recent FTO designations—has increased these potential consequences significantly.

Under the United States terrorism statutes, 18 U.S.C. § 2339A and § 2339B, DOJ may pursue companies both criminally and civilly for providing “material support” to an FTO. Section 2339A provides criminal liability for providing material support or resources in support of an act of terrorism. Section 2339B provides criminal liability for providing material support or resources to an FTO. Material support is broadly defined as providing an FTO with any property (tangible or intangible) or services, including currency, financial services, lodging, personnel, or transportation.

Companies and their personnel may face civil or criminal liability for even inadvertent dealings that provide support to a cartel or TCO, including transactions with FTO-linked counterparties, entities with concealed beneficial ownership, or businesses that pay cartels to operate safely. The penalties can be severe. Under 18 U.S.C. § 2339A, material support may trigger substantial fines and prison terms of up to 15 years—or life if death results. Under section 2339B, defendants may face criminal fines and prison terms of up to 20 years—or life if death results.⁹ Although DOJ has not yet used these provisions against international companies in this context, precedent exists.¹⁰

DOJ has also used civil forfeiture to seize assets tied to TCOs and FTOs. Recent examples include a multimillion-dollar Iranian fuel shipment in 2020,¹¹ US$2 million in digital currency linked to Hamas in 2025,¹² and 300,000 kilos of methamphetamine precursor chemicals tied to the Sinaloa Cartel later that year.¹³ Although DOJ has applied this authority selectively, it provides a basis to pursue products or funds connected to an FTO.

The impact on legitimate business does not end with DOJ. The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) can issue sanctions against FTOs like CV and PCC.¹⁴ These sanctions may result in the blocking or freezing of property, assets, and interests associated with TCOs or FTOs; trade and financial transaction prohibitions; and targeted restrictions on certain industries or sectors. In practice, this means an international company engaged in a business sector that has been infiltrated by a TCO or FTO—such as energy or fuel—could face sanctions, have its assets or property frozen, face trade and financial restrictions, or have its entire business in that sector paused.

Moreover, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) can restrict financial institutions, such as foreign banks, from transmitting funds associated with TCOs and FTOs. For example, in June 2025, FinCEN issued orders identifying three Mexico-based financial institutions as engaging in money laundering in connection with Mexican cartels and limiting all US dollar (USD) transactions with those banks.¹⁵ International companies associated with financial institutions that have ties to TCOs or FTOs may have their business operations paused, funds frozen, or access to the USD market restricted.

The resulting criminal and civil penalties from inadvertent support of FTOs is not limited to US-based companies. Any company or financial institution with connections to the United States—including USD-denominated transactions, US correspondent banking relationships, US email or cloud accounts, or US-based personnel—could be subject to US jurisdiction and may be affected by these US enforcement actions. 

These designations are also likely to channel additional US enforcement and administrative resources toward Latin America, increasing scrutiny of conduct that may implicate not only material-support theories but also adjacent enforcement regimes such as the Foreign Corrupt Practices Act, export controls, and anti-money laundering laws. For companies operating in the region, the practical effect is a heightened likelihood that issues once viewed in isolation will now be examined through a broader, coordinated enforcement lens.

Proactive and Tangible Actions International Companies Can Take

Given the significant potential criminal and civil penalties—and business disruptions—associated with supporting or associating with TCOs or FTOs, international companies and their senior leadership should prioritize assessing and proactively updating policies and procedures and engaging counsel to identify potential risks. These proactive actions can include:

Conducting Cartel and TCO-Focused Due Diligence on Third Parties and Merger Targets

Any business operating in Latin America must scrutinize employees, vendors, agents, customers, and even local governments where TCOs or FTOs may be so embedded that licensing payments are effectively bribes to the regional cell. When entering into a new business relationship, companies should: (1) conduct background checks and review government-maintained lists from US regulators (OFAC, the US Department of the Treasury, and the Bureau of Industry and Security), as well as any lists published by national or local governments; (2) conduct planned and unplanned site visits to meet with personnel and observe day-to-day business operations; and (3) seek corporate and leadership references from trusted industry participants and regulators.

Assess and Revise Third-Party Agreements in Known Cartel or TCO Territories

Beyond the standard anti-bribery and anti-corruption clauses, these agreements should include: (1) clear descriptions of services to be provided; (2) requirements to investigate potential cartel, TCO, and FTO associations uncovered in background checks; (3) robust audit clauses to aid in potential future investigations; (4) notification requirements for any changes to beneficial ownership and structure, and the ability to revise or terminate agreements if these changes are problematic; and (5) notification requirements if third parties are solicited or otherwise approached by a cartel, TCO, or FTO.

Implement Robust Internal Policies, Procedures, and Training to Prevent, Detect, and Respond

Companies should: (1) codify the due diligence policies and procedures described above; (2) train employees to act upon these policies and procedures, with a particular focus on identifying red flags, and identify and train key personnel to assess internal reports of potential encounters with a cartel or TCO and determine whether external reporting is necessary; (3) expand awareness of direct and indirect conduct constituting “material support” (e.g., hiring associated individuals, payments to local charitable organizations, or providing information); (4) implement physical and technological safeguards to protect employees and business operations, including financial controls requiring purpose-of-payment documentation; and (5) proactively prepare for increased investigative inquiries by stress-testing policies, procedures, and crisis-management systems.

Proactively Engage Independent Counsel to Assess Potential Concerns

Companies should proactively engage independent, third-party counsel to assess any potential financial and operational connections to cartels, TCOs, or FTOs and evaluate self-reporting of any findings. Doing so quickly and thoroughly may limit the extent of the company’s exposure and potential liabilities. For example, in November 2025, Kodiak Gas Services engaged counsel to conduct an internal investigation into concerns that payments were made to individuals associated with a Mexican criminal organization designated as an FTO to protect employees of the Mexican business from threats of harm or harassment and to ensure access to worksites. Although these payments occurred prior to the company’s 2024 acquisition of the Mexican affiliate, the company voluntarily self-reported to US authorities and has since sold all its operations in Mexico.¹⁶