United States Designates Eight Cartels and Transnational Criminal Organizations

Effective February 20, 2025, the United States Designated Eight Cartels and Transnational Criminal Organizations (TCOs) as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs).

As a result of these designations, it is illegal for any US person or anyone subject to the jurisdiction of the United States to knowingly provide material support or resources to any of these organizations, including tangible or intangible assets, services such as expert advice or assistance, currency and other monetary instruments, among other things. Companies operating in areas controlled by cartels or TCOs designated as FTOs or SDGTs, or that do business with such organizations, also face heightened risk of US sanctions violations and enforcement; becoming designated themselves on the Specially Designated Nationals and Blocked Persons List (SDN List) maintained by the US Department of the Treasury's Office of Foreign Assets Control (OFAC) and having blocking sanctions imposed against them; criminal investigation and prosecution; and becoming embroiled as defendants or garnishees in years-long terrorism-related private civil lawsuits in the United States.

Background

During his inauguration ceremony on January 20, 2025, President Trump announced his intention to designate drug cartels as FTOs¹ and SDGTs and issued a corresponding Executive Order (EO) 14157 "Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists" to initiate the process. Attorney General Pam Bondi followed with a Memorandum to all Department of Justice (DOJ) employees, calling for the "Total Elimination of Cartels and Transnational Criminal Organizations" and realigning DOJ priorities and resources to address this policy imperative. On February 6, 2025, Secretary of State Marco Rubio designated eight cartels and TCOs, effective as of February 20, 2025.

New Designations

The eight cartels and TCOs newly designated as FTOs and SDGTs include the following organizations (some of which already had been designated under other sanctions programs):

Sanctions Consequences of Designation

All of the organizations listed above have been added to the SDN List, most of them years before they were designated as FTOs and SDGTs. This means that any property or interests in property of such designated persons that are in the United States or in the possession or control of US persons (including US banks) are blocked (i.e., frozen) and may not be dealt in. Members or representatives of a designated FTO also may be barred from entry into the United States and, in certain circumstances, may be removed from the United States.

Civil and Criminal Penalties

US persons, and non-US persons subject to US sanctions jurisdiction, risk violating US sanctions regulations and facing civil and criminal liability if they engage in nearly any activity, directly or indirectly, involving these organizations. In the case of non-US persons, the US may bring enforcement actions where transactions directly or indirectly (i) are prohibited as to US persons (e.g., involve SDNs or other blocked persons such as these organizations or their property and interests in property), and (ii) have a direct or indirect connection to the United States (a "US nexus").

Designation Risk

Regardless of any US nexus, the US government may impose blocking sanctions on non-US persons determined to have provided "material support" to any of these organizations, and the US government may impose correspondent account/payable through account (CAPTA) restrictions on non-US financial institutions determined to have knowingly conducted or facilitated a significant transaction on behalf of an SDGT. The US government exercises significant discretion in selecting sanctions targets, generally imposing sanctions on a person only where the United States has a national security or foreign policy interest (in addition to a legal basis) to do so.

Criminal Liability for Providing "Material Support" to an FTO

Separate from the US sanctions risks discussed above, US persons, and non-US persons subject to US jurisdiction as set out in 18 U.S.C. § 2339B(d), that knowingly provide "material support" to FTOs may face criminal liability. The definition of "material support" broadly encompasses "any property, tangible or intangible, or service." The term excludes, medicine and religious materials but includes currency, monetary instruments, financial securities, financial services, lodging, training (i.e., instruction or teaching designed to impart a specific skill), and expert advice or assistance (i.e., advice or assistance derived from scientific, technical, or other specialized knowledge), among others.

Paying fees to a designated organization for protection or to operate in an area they control or selling them goods or services could lead to criminal investigation and prosecution. For example, paying a designated cartel fees to transport goods through, or be allowed to operate in, a certain territory or providing financial services to, or conducting financial transactions for, a cartel-owned business could expose a company or financial institution, and its employees, to criminal enforcement risk. Businesses and their employees could find themselves the subjects of criminal investigation (or, as discussed above, the targets of sanctions enforcement or designation). 

The material support statute is broad in scope and expansive in reach, and the DOJ has used it to prosecute companies that paid designated organizations, as set forth below:

• The material support statute's broad substantive scope: The material support statute prohibits persons from knowingly providing material support or resources to an FTO or attempting or conspiring to do so. As noted, "material support or resources" includes any property (whether tangible or intangible) and services, including currency, other financial instruments, and financial services;
• The material support statute's broad jurisdictional reach: The material support statute has expansive jurisdictional reach, including extraterritorial jurisdiction, and applies to US persons and any person in the United States (regardless of whether they were in the United States at the time of the conduct) and to conduct that affects interstate or foreign commerce. In the 2022 prosecution of Lafarge S.A. and one of its subsidiaries (discussed below), jurisdiction appears to have been based on a single wire transfer through a US correspondent bank account and the use of US-based email accounts. US dollar-denominated transactions that clear through banks in the United States are a common way to establish US jurisdiction. And the statute would apply to corporate executives who authorized or approved their companies doing business with or providing a payment to a cartel and then traveled to the United States. Under the principle of respondeat superior, the executive's employer also could face criminal exposure.
• Prior corporate prosecutions for making payments to designated organizations: The DOJ has brought such criminal charges in the past, prosecuting Chiquita Brands International for sanctions violations for making payments for protection to an organization in Colombia that had been designated as both an FTO and an SDGT and to ensure that the organization did not cause physical harm or damage to the company's personnel or property.² The DOJ also prosecuted Lafarge and its subsidiary for conspiring to provide material support to FTOs for making payments to ISIS and the al-Nusrah Front (ANF) for protection, to continue operating in areas they controlled, and to obtain economic advantages.³
• Duress is a narrow and limited defense: In the absence of an imminent and unlawful threat of death or serious bodily injury, duress is unlikely to be available as a defense.⁴ For example, the DOJ did not accept that Chiquita made payments under duress to a designated organization, at least in part because the company made dozens of payments over an extended period of time.
• The material support statute can lead to extensive asset forfeiture: A violation of the material support statute can constitute a "federal crime of terrorism,"⁵ which, among other consequences, triggers broad asset forfeiture provisions. A violation of the statute could lead to forfeiture, for example, of any assets "derived from, involved in, or used or intended to be used to commit" the offense.⁶ A violation could even result in forfeiture of "[a]ll assets, foreign or domestic[,]" of an entity "engaged in planning or perpetrating" the offense.⁷ In the Lafarge case, the DOJ used these expansive asset forfeiture authorities to forfeit $687 million from Lafarge, a sum representing the cost of the cement plant Lafarge operated in ISIS- and ANF-controlled territory. This substantial forfeiture was in addition to the criminal fine Lafarge paid.

The Anti-Terrorism Act (ATA) and Other Civil Litigation Risk

Financial institutions and other companies that may interact with FTOs also face potential civil lawsuits under the ATA, which provides US citizens "injured . . . by reason of an act of international terrorism" with a claim for treble damages, costs, and attorney's fees. Where the act of terrorism was carried out by a designated FTO, liability extends broadly to those who materially supported, aided and abetted, or conspired with the FTO to commit the act of terrorism.

Numerous plaintiffs and plaintiff groups have filed lawsuits in the United States against various entities, including banks, telecom providers, social media companies, and state-owned enterprises, accused of aiding and abetting or supporting FTOs. The Supreme Court has clarified that, for aiding and abetting liability to attach, a defendant must have "knowingly provid[ed] substantial assistance [to] another person in the commission of the actionable wrong—here, an act of international terrorism"; it "is not enough . . . that a defendant has given substantial assistance to a transcendent 'enterprise.'"⁸ At the same time, however, the Supreme Court suggested that, where there is a close and direct nexus between the defendant's assistance and the act of terrorism, "a court might more readily infer conscious participation."⁹

Although the Supreme Court has narrowed the scope of civil liability under the ATA, it is likely that victims of cartel activity will bring lawsuits seeking to establish liability of businesses that provide services and support to designated cartels, especially for any allegations of protection payments. Such civil lawsuits often involve costly and invasive US discovery proceedings. And, even if such suits are ultimately not successful, they could have significant reputational consequences for companies, including difficulty maintaining US business and correspondent banking relationships. Also, being named as a defendant in an ATA case can have a significant reputational impact not just on the defendants concerned, but also on those who conduct business with them. In addition, such cases often garner significant media attention, and, if a case ultimately proceeds to trial, the defendants are unlikely to face a sympathetic jury.

In addition to ATA risks, a civil case against Chiquita arising from the same facts as the company's criminal prosecution, and which resulted in a $38 million jury verdict in June 2024, highlights other civil litigation risks companies face when dealing with FTOs.¹⁰ The plaintiffs brought a number of claims against Chiquita, including under the Alien Tort Statute (ATS), for state-law torts and for Colombian-law torts. A federal trial court and court of appeals ultimately dismissed the ATS and state-law claims, and the case went to trial on two Colombian-law claims under the transitory torts doctrine. That doctrine provides that liability follows an alleged tortfeasor wherever they go. The trial court considered and rejected Chiquita's argument that the claims should be pursued in Colombian courts, emphasizing risks to the parties' physical safety in pursuing the case there. The jury ultimately found that Chiquita had violated Colombian law, including by failing to act as a reasonable businessperson would have under the circumstances and by knowingly providing substantial assistance to the FTO sufficient to create a foreseeable risk of harm to others. The jury also rejected Chiquita's duress defense. The Chiquita case likely will inspire other victims of cartel and TCO violence to pursue civil litigation against companies that do business with cartels and TCOs.

Responses to Designations

With the Trump Administration's prioritization of terrorism and sanctions offenses involving cartels and TCOs and the designation of these organizations as FTOs and SDGTs, financial institutions and other companies operating in cartel- or TCO-controlled areas or dealing with cartel- or TCO-controlled businesses will face heightened sanctions and civil and criminal enforcement risks. Financial institutions and other companies should consider carefully how they conduct business in those areas and ensure that they have robust and demonstrable compliance programs with clear guidelines and protocols to avoid violating US law. These steps should include:

• Conducting risk assessments to identify areas of business operation that are high risk;
• Implementing strict know-your-customer and third-party screening, background checks, and management procedures;
• Strengthening anti-money laundering and counter-terrorism financing and sanctions controls;
• Providing training to employees in high-risk areas, geographic or otherwise, at all levels of the operation, on identifying red flags and providing guidance on how to manage and when to escalate cartel- and TCO-related risks;
• Working with counterparties, lenders, and correspondent banks to preempt de-risking considerations;
• Establishing protocols to handle cartel demands, US government requests, and third-party queries;
• Working with local and US regulators to mitigate and manage cartel- and TCO-related risks, and to address any conflicts of laws; and
• Consulting with counsel as appropriate.

_{1 Other organizations so designated to-date include ISIS, Al Qaeda, Boko Haram, Hamas, Hezbollah, Sendero Luminoso, and the FARC.
2 Dep't of Justice, Chiquita Brands International Pleads Guilty to Making Payments to a Designated Terrorist Organization and Agrees to Pay $25 Million Fine (March 19, 2007) available at https://www.justice.gov/archive/opa/pr/2007/March/07_nsd_161.html.
3 Dep't of Justice, Lafarge Pleads Guilty to Conspiring to Provide Material Support to Foreign Terrorist Organizations (Oct. 18, 2022) available at https://www.justice.gov/archives/opa/pr/lafarge-pleads-guilty-conspiring-provide-material-support-foreign-terrorist-organizations.
4 See, e.g., Dep't of Justice, A Resource Guide to the U.S. Foreign Corrupt Practices Act 27-28 (2d ed.) (2020) available at https://www.justice.gov/criminal/criminal-fraud/file/1292051/dl; Dep't of Justice, Foreign Corrupt Practices Act Review: Opinion Procedure Release No. 22-1 (Jan. 21, 2022) available at https://www.justice.gov/criminal/criminal-fraud/page/file/1466596/dl?inline.
5 18 U.S.C. § 2332b(g)(5).
6 Id. § 981(a)(1)(G)(iii).
7 Id. § 981(a)(1)(G)(i).
8 Twitter, Inc. v. Taamneh, 598 U.S. 471, 495 (2023).
9 Id. at 492.
10 Carrizosa v. Chiquita Brands Int'l Inc., 08 MD 01916 (S.D. Fla.).}

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