Compliance in the Era of “Total Elimination”: What the Administration’s Cartel Focus Means for Cross-Border Business

The exact contours of the national security enforcement landscape under the second Trump administration are still taking shape, but one thing is clear: drug cartels and their financial networks are an enforcement priority. By promising to exercise the sanctions authorities of the U.S. Departments of State and Treasury, revising the U.S. Department of Justice’s (DOJ) charging policies, and reassigning prosecutors, the administration’s vow to pursue cartels portend an increase in cartel-related enforcement actions. That same commitment, however, heightens the potential criminal and civil exposure for even legitimate commercial operators in Mexico and Central and South America, as well as for their business associates and affiliates in the United States and overseas. As a result, U.S. and non-U.S. businesses — particularly those operating in Latin America — should carefully evaluate their compliance programs in light of this new enforcement orientation.

Recent Government Efforts Targeting Cartels

During his inaugural address, President Trump promised to leverage federal and state law enforcement to eliminate the presence and influence of cartels and other criminal networks in the United States. A short time later, he issued Executive Order 14157, which directed the Secretary of State to designate certain cartels and transnational criminal organizations (TCOs) as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs). Attorney General Pam Bondi later vowed “total elimination” of cartels and TCOs through a “fundamental change in mindset and approach” at DOJ.

Since President Trump’s inauguration, a flurry of government activity targeting cartels has previewed how this enforcement priority could play out in practice. To date, the Secretary of State has designated eight cartels as FTOs and SDGTs, and the Department of the Treasury’s Office of Foreign Assets Control (OFAC) has implemented these designations. Last month, OFAC itself designated several individuals and entities associated with the Sinaloa Cartel, a newly designated FTO and SDGT. In addition, both OFAC and the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) have issued alerts raising awareness about cartel activities, the new designations, and associated legal exposure.

Expanded Liability Risks Posed by the New Terrorism Designations

Among the eight new FTO and SDGT designations, each organization except one — United Cartels — had previously been designated as blocked persons under other OFAC authorities. Those prior designations already created the risk of civil and criminal penalties for people who transacted with those blocked persons, as well as the risk of additional sanctions on foreign financial institutions that knowingly facilitated significant transactions for or on behalf of those persons.

But the new terrorist designations create additional avenues for potential liability. Specifically, U.S. persons and certain non-U.S. persons could face criminal prosecution under 18 U.S.C. § 2339B (Section 2339B) for providing “material support or resources” to a designated FTO. “Material support” is broadly defined to include “any property, tangible or intangible, or service,” such as currency, financial services, expert advice, facilities, and communications equipment. OFAC highlighted that liability risk under Section 2339B in a March 2025 alert.

Section 2339B has exceptionally broad extraterritorial reach, and non-U.S. entities and individuals potentially could face criminal liability where there is a U.S.-related jurisdictional hook — even a minor one. The most notable application of Section 2339B’s jurisdictional reach is the 2022 prosecution of, and guilty plea by, French cement giant Lafarge S.A., and its Syrian subsidiary Lafarge Cement Syria S.A. (collectively, Lafarge), for conspiring to provide material support to ISIS and the al-Nusrah Front, both designated FTOs. In that case, U.S. jurisdiction appears to have rested on a single wire transfer made by Lafarge from its operating account in Paris through a U.S. intermediary bank, and on Lafarge’s use of U.S. email accounts.

The Antiterrorism Act (ATA) also provides a civil cause of action for U.S. citizens injured by an act of international terrorism, including by designated FTOs, against persons who provided material support to the FTO. And the Justice Against Sponsors of Terrorism Act amended the ATA to allow for secondary liability against persons that aided, abetted, or conspired with the FTO.

Associated Compliance Considerations

As OFAC cautioned in its recent alert, U.S. and non-U.S. businesses should “assess their existing sanctions compliance programs to ensure controls are sufficient to minimize sanctions exposure for interacting with [] designated terrorist organizations,” especially in light of the heightened liability risk posed by the new designations. They also should assess their operations more broadly, such as their supply chains, for potential connections to cartel activity that could subject them to liability for materially supporting an FTO.

Financial institutions, in particular, should familiarize themselves with “red flags” that may indicate cartel activity, including money-laundering methodologies that cartels may use. They also should update their customer and counterparty due diligence processes, employee training, and transaction-monitoring and -screening protocols. In an alert issued just last week, FinCEN urged financial institutions to look out for a particular methodology that Mexico-based cartels use, which involves the smuggling and repatriating of bulk cash through Mexican businesses, typically with locations near the U.S. southwestern border. For that reason, FinCEN previously issued a Geographic Targeting Order requiring all money services businesses located in 30 zip codes near the southwestern border to file reports with FinCEN for cash transactions of $200 or more.

Other industries — particularly those with cross-border operations, such as technology, life sciences, aerospace, defense, international NGOs, and even fashion — likewise should consider taking steps to prepare for additional cartel-related enforcement risks. For example, companies would be wise to have third-party due diligence processes that are specifically tailored to the risks associated with their operations. In some instances, those processes may include site visits to potential partners, vendors, and suppliers.

In the coming months, we anticipate an uptick in cartel-related enforcement actions by DOJ, OFAC, and others, and perhaps even civil actions under the ATA. Businesses, particularly those that operate in or with a nexus to Latin America, should evaluate whether their existing compliance programs adequately protect their interests, given the Trump administration’s unambiguous message about its cartel-related enforcement priorities.

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For questions about this or any other topic, contact the authors or any of their colleagues in Arnold & Porter’s White Collar Defense & Investigations or Export Control & Sanctions practice groups.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.