A new compliance framework for companies operating in Latin America: heightened risks of exposure to cartel activity

Margot Laporte
Barnes & Thornburg, Washington DC
margot.laporte@btlaw.com

Jeffrey Lehtman
Barnes & Thornburg, Washington DC
jlehtman@btlaw.com

Katie Mills
Barnes & Thornburg, Los Angeles
katie.mills@btlaw.com

Facundo Galeano
Barnes & Thornburg, Washington DC
fgaleano@btlaw.com

Introduction

Recent changes in the use of counter-terrorism, anti-money laundering and economic sanctions tools against regional criminal organisations by the United States government have resulted in increased compliance and enforcement risks for companies operating in Latin America. The geographic reach and operational influence of major cartels, newly designated foreign terrorist organisations (FTOs), present potential liability far beyond traditional anti-corruption, anti-money laundering and economic sanctions concerns.

While no legitimate business would knowingly support drug cartels, the new enforcement focus of US President Donald Trump's administration means even well-intentioned companies face increased risk from routine business activities, including payments, supply chain logistics and third-party relationships. Cartels and their associates have infiltrated the economy in certain regions of Latin America, and have become increasingly sophisticated, making it difficult to identify potential touch points. In some high-risk areas, businesses may be compelled to pay cartel fees to operate (that is, a protection/safety fee or derecho de piso) or to pass through a region (ie, a right of way or derecho de paso). Below we provide an overview of the recent regulatory changes in this regard and discuss practical steps companies can take to mitigate the risks.

Regulatory background and policy updates

Recent executive orders, US Department of State designations, Department of Justice (DOJ) policy guidance and Department of Treasury and Financial Crimes Enforcement Network (FinCEN) directives have created a new enforcement and regulatory environment for companies operating in jurisdictions where major cartels, now designated as FTOs, operate, most notably, Latin America. The indirect influence exerted by cartels creates a particularly challenging compliance environment for companies operating locally or seeking partners with which to operate locally.

On 20 January 2025, President Trump, through Executive Order 14157, ordered the Secretary of State to recommend the designation of cartels as foreign terrorist organisations and specially designated global terrorists. The following month, the Department of State formally designated multiple organisations as FTOs, including prominent Mexico-based cartels and other regional criminal networks.[1]

As a result, the Antiterrorism Act (ATA) has become a central source of corporate liability for companies operating in Latin America. The ATA prohibits providing ‘material support’ to FTOs, broadly defined to include financial services, goods, logistics and other assistance, even when effectuated indirectly through intermediaries. Violations create both criminal and civil liability, permitting private plaintiffs to bring claims against companies that knowingly or recklessly facilitate ‘material support’ to FTOs.

The ATA’s application to cartel conduct significantly raises the stakes for companies in sectors with heightened exposure to such activity, for example, energy, mining, agriculture, transportation, retail and financial services, particularly where business operations require complex local supply chains or are conducted in remote areas.

Federal guidance identifies cartel activity as fundamental risk

Following the 2025 FTO designations, then Attorney-General Pam Bondi’s ‘Total Elimination of Cartels and Transnational Criminal Organizations’ memorandum (5 February 2025)[2] instructed prosecutors to prioritise dismantling cartels using all of the available tools, including terrorism-related charges. The guidance emphasised coordination across criminal, national security and financial enforcement units, encouraging the use of material support statutes, asset forfeiture and extraterritorial jurisdiction to target cartel leaders and facilitators embedded within legitimate businesses.

Subsequent DOJ white-collar enforcement[3] guidance identified corporate misconduct involving cartels as a hybrid threat, merging traditional financial crime with counterterrorism concerns, and highlighted that companies may face heightened penalties when violations involve interactions with FTO-designated entities.

The DOJ has also intensified prosecutions targeting individuals involved in cartel-related networks. On 18 December 2025, the DOJ unsealed indictments against more than 70 individuals linked to Tren de Aragua (a designated FTO), including conspiracy to provide material support to an FTO.[4] These cases demonstrate the US government’s willingness to assert extraterritorial jurisdiction and highlight personal liability risks for executives and employees who fail to identify or escalate suspicious conduct.

Additionally, FinCEN and the US Treasury Department’s Office of Foreign Assets Control (OFAC) have issued orders targeting interactions with FTOs, including: (1) a geographic targeting order requiring money services business (MSBs) near the southwest border to file currency transaction reports (CTRs) for cash transactions of US$200 or more;[5] (2) a FinCEN order identifying three Mexico-based financial institutions as ‘primary money laundering concerns’;[6] and (3) OFAC designations of ‘cartel-linked casinos and key associates’ supporting Cártel del Noreste (a designated FTO).[7]

Together, these developments reinforce that conduct once viewed primarily through a compliance, anti-corruption or anti-money laundering lens may now trigger terrorism-related scrutiny, significantly raising the scope and significance of risk for companies operating in Latin America.

Practical steps for companies operating in Latin America

To address these overlapping risks, companies operating in Latin America should implement integrated compliance strategies tailored to the particular risks they face, which may include the following:

• map geographic and operational risk: conduct comprehensive risk assessments including: (1) mapping any third parties operating in high-risk regions; (2) mapping interactions with public officials, especially at state and municipal levels where cartel infiltration risk is elevated; and (3) mapping internal controls designed to mitigate FTO-related risks, including due diligence procedures, contractual compliance provisions and escalation protocols;
• strengthen employee and third-party due diligence: move beyond basic screening to include site visits, enhanced background checks and continuous monitoring of distributors, agents and suppliers, particularly in high-risk regions;
• integral compliance functions: breakdown silos between anti-corruption, sanctions and anti-money laundering teams to ensure ‘red flags’ are identified, assessed and dealt with holistically;
• enhance transaction monitoring: deploy data analytics to identify anomalies, such as structured payments, the rapid movement of funds or inconsistent invoicing patterns;
• control cash exposure: implement strict cash-handling procedures, require documentation for virtually all cash transactions and incentivise electronic payments where feasible;
• train employees and third parties: provide scenario-based training tailored to local operations, emphasising how everyday decisions, vendor selection, routing of goods or payment approvals, can create exposure to financial crime risks;
• establish robust escalation mechanisms: ensure employees have clear, protected channels to report their concerns and make sure that investigations are timely and well-documented; and
• conduct periodic legal and compliance reviews: regularly reassess the firm’s exposure as per US laws and update the firm’s policies to reflect new enforcement trends and regulatory guidance.

Conclusion

For companies operating in Latin America, shifting US enforcement priorities and FTO designations represent a fundamental change to compliance risk. The ATA now complements established frameworks like the US Foreign Corrupt Practices Act (FCPA), while enforcement agencies increasingly pursue cases that intersect commercial exposure and corruption, economic sanctions, money laundering and counter-terrorism. In this environment, siloed compliance approaches are no longer sufficient. Companies operating in Latin America would be well-served to adopt integrated, risk-based programmes in order to navigate an increasingly complex and interconnected regulatory landscape.