One Year After the FTO Designations: Why U.S. and Canadian Companies Need to Act Now
In January 2025, the Trump Administration designated eight Mexican cartels and Latin American gangs as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs). Many U.S. and Canadian companies with Latin American operations received alerts about the designations at the time — and may have assumed the issue was covered.
It wasn't. Here's why you're hearing from us again.
What has changed in the past year
The designations were not a one-time event. They triggered a sustained enforcement campaign that has intensified throughout 2025 and into 2026. The numbers tell the story:
Treasury added 235 Latin American individuals and entities to the SDN list during 2025 alone
DOJ announced at least ten indictments of individuals for material support of FTO-designated Latin American organizations
DOJ extradited 37 individuals to the United States, including several leaders and high-ranking members of designated FTOs — potential cooperating witnesses with detailed knowledge of corporate structures used to launder cartel proceeds
FinCEN issued unprecedented orders cutting three Mexican financial institutions off from the U.S. financial system under the new FEND Off Fentanyl Act
On February 19, 2026, Treasury sanctioned an alleged timeshare fraud network tied to the CJNG — including a Mexican resort, 17 Mexican companies, and five individuals — signaling that enforcement is reaching well beyond traditional narcotrafficking structures
The enforcement architecture has also changed. DOJ has decentralized its approval processes, meaning U.S. Attorneys' Offices can move faster and more aggressively — without requiring main Justice sign-off. Different USAOs may interpret and prioritize these cases differently, which increases unpredictability.
If you haven't updated your compliance program, you're behind
The FTO designations triggered obligations that go beyond standard sanctions screening. The central legal risk is the scope of 'material support' under 18 U.S.C. § 2339B, which includes 'any property, tangible or intangible, or service' provided to a designated FTO — broader than money laundering, covering ordinary commercial transactions:
Vendor and supplier payments
Contractor and subcontractor payments
Infrastructure and logistics services
Energy sector transactions
Professional services
Payments to government officials associated with cartel-controlled structures
An important precision: to date, all DOJ indictments in the context of Latin American FTOs have been against individuals — not companies. But corporations are indictable under this statute, and the Lafarge case — in which a French cement company pleaded guilty to conspiracy to provide material support to terrorist organizations in Syria, paying protection money to continue operations — offers the clearest public benchmark for what corporate exposure looks like. What distinguished Lafarge was the documented level of executive knowledge, at both the subsidiary and parent company level. That is precisely the kind of evidence that cartel-related extraditions and cooperating witnesses may generate.
If your company has operations, suppliers, or contractual relationships in Mexico — particularly in high-risk sectors like construction, infrastructure, mining, energy, real estate, or financial services — and you haven't reviewed those relationships through an FTO lens, you have an unresolved gap in your compliance program.
The FinCEN CDD relief doesn't reduce your obligations — it shifts them
On February 13, 2026, FinCEN issued guidance relaxing certain beneficial ownership re-verification requirements. This has been misread by some as a signal that compliance requirements are loosening. It is not. The relief reduces the frequency of redundant re-verification at account opening — but it increases the importance of robust ongoing transaction monitoring and periodic reviews. Your initial due diligence baseline must be solid, and your systems for detecting changes in customer risk profile must be strong.
Why 'no corporate charges yet' is not a safe harbor
We hear this often: 'DOJ hasn't charged any company for material support in the cartel context — so the risk must not be that high.' This misreads both the legal framework and the enforcement trajectory. First, U.S. nexus is broader than most companies realize: dollar-denominated transactions between non-U.S. parties, U.S. citizen or permanent resident involvement in decisions, U.S. parent or subsidiary involvement, and routing of payments through U.S. correspondent accounts can all establish jurisdiction. Second, the absence of corporate indictments to date reflects prosecutorial sequencing — not a policy decision to spare companies. DOJ typically builds corporate cases on the back of individual cases. The extraditions of 37 FTO-linked individuals in 2025, several of whom may cooperate with U.S. authorities, could generate precisely that evidentiary foundation. Third, prosecution is entirely discretionary. Past patterns do not bind future action under a DOJ that has publicly stated cartel-related corporate crime is a top priority and has streamlined its approval process for bringing charges.
Priority actions for U.S. and Canadian companies
Review third-party relationships
Map your vendor, supplier, contractor, and distributor relationships in Mexico and flag those in high-risk sectors or geographic areas. If these weren't reviewed through an FTO lens when the designations were issued, conduct that review now.
Update contracts
Add FTO-specific representations, warranties, and termination provisions to contracts throughout your supply chain. Ensure contractual protections are in place before disputes arise — not after.
Strengthen your screening universe
Traditional sanctions screening may not capture all relevant designations. Ensure your screening program covers Latin American counterparties, particularly Mexican vendors and suppliers, and that rescreening of existing relationships is conducted regularly.
Prepare for parallel proceedings
A single set of facts can generate simultaneous criminal investigation (DOJ), regulatory enforcement (OFAC/FinCEN), private civil litigation under the Anti-Terrorism Act with automatic treble damages, and commercial disputes with contractors and suppliers. Information developed in one proceeding informs the others. Your compliance and legal teams need a coordinated response plan.
Train commercial teams
Ensure the people making commercial decisions in Mexico — procurement, operations, business development — understand that vendor payments can constitute material support to an FTO under U.S. law. No company has been charged in the Latin American cartel context yet. That is not a reason to delay — it is a reason to establish a documented compliance posture before the enforcement landscape catches up.
One year in, the enforcement posture has intensified, not stabilized. If your company has significant Mexican operations or cross-border transactions and hasn't conducted a post-designation review, now is the time. We can help you assess your specific risk profile, update your compliance program, and prepare for the range of proceedings this environment can generate. Contact us.
