United States designates Brazilian criminal organizations as Foreign Terrorist Organizations

On May 28, 2026, the United States announced the designations of Primeiro Comando da Capital (PCC) and Comando Vermelho (CV) – two of Brazil’s largest and most powerful criminal organizations – as Foreign Terrorist Organizations (FTOs), effective June 5, and Specially Designated Global Terrorists (SDGTs), effective immediately. The practical consequences are significant: SDGT designation blocks any assets the groups hold under US jurisdiction and prohibits US persons from conducting business with them, while FTO designation carries severe criminal penalties for the provision of material support to the designated organizations and also exposes parties to potential civil liability.

As previously noted, the US Department of Justice’s (DOJ) Criminal Division has identified material support by corporations to FTOs as a priority white-collar enforcement area and added material support and sanctions violations to its Corporate Whistleblower Awards Pilot Program, offering awards of up to US$50 million. US Government agencies appear primed to pursue companies that do business with, or make payments to, designated FTOs. The US Government’s response to the designation of Mexican drug cartels as FTOs offers a preview of what may follow for Brazil. Accordingly, companies and financial institutions must act now to ensure they have robust and effective compliance programs in place to avoid violating US law.

Background: The US Government’s Campaign Against Cartels and Transnational Criminal Organizations (TCOs)

Prior Designations

The May 28 designations are a continuation of the US Government’s stated commitment to the “total elimination” of cartels and transnational criminal organizations (TCOs). Effective February 20, 2025, the United States designated eight cartels and TCOs as FTOs and SDGTs, including the Sinaloa Cartel and CJNG in Mexico, Tren de Aragua in Venezuela, and MS-13 in El Salvador, later designating TCOs in Ecuador and Colombia. The designations of PCC and CV now extend this campaign squarely into Brazil. PCC was previously designated under Executive Order 14059 in December 2021, and in March 2024 OFAC designated a PCC member responsible for laundering $240 million for the organization.

The US Government Has Acted Swiftly and Broadly

Since the initial February 2025 FTO designations, the US Government has moved aggressively across multiple agencies:

• Department of Justice (DOJ): The DOJ has brought multiple indictments charging individuals with providing material support to newly-designated FTOs under 18 U.S.C. § 2339B – the first filed just two months after the initial designations. 
• Office of Foreign Assets Control (OFAC): OFAC has waged a sustained and escalating campaign targeting not only cartel members, but the money laundering networks, front companies, and shell corporations that sustain them – and in February 2026, a US school paid a $1.7 million penalty for accepting tuition payments from individuals included on the Specially Designated Nationals (SDN) list, a stark reminder that enforcement reaches across all sectors.
• Financial Crimes Enforcement Network (FinCEN): In June 2025, FinCEN imposed special measures on three Mexican financial institutions designated as being of “primary money laundering concern,” prohibiting US financial institutions from transmitting funds to or from them – acting without needing to prove knowing or intentional misconduct on the part of anyone at the designated financial institutions. In November 2025, FinCEN proposed special measures to sever ten Mexico-based gambling establishments from the US financial system for facilitating money laundering for the Sinaloa Cartel.
• US Department of State: The State Department announced a visa restriction policy targeting individuals believed to have colluded with or provided assistance to others involved in illicit narcotics trafficking.

What the Designations Mean for Companies

The designations carry sweeping consequences that extend beyond Brazil’s borders. Any company or financial institution with any connection to the United States – including US dollar-denominated transactions, US correspondent banking relationships, US email or cloud accounts, or US-based personnel – is potentially subject to US jurisdiction and may be affected.

1. Criminal Liability: Material Support and Other Offenses

US persons, and non-US persons subject to US jurisdiction, who knowingly provide “material support” to FTOs face criminal liability. “Material support” is defined broadly to include any property or service, including financial services – meaning that paying fees to an FTO (including extortion-type payments to operate without interference), providing goods or services to FTOs or entities they own or control, or using FTO-controlled companies as vendors could all lead to criminal investigation and prosecution. The statute has expansive extraterritorial reach: in the 2022 prosecution of a French company and one of its subsidiaries, jurisdiction was established on the basis of a single wire transfer through a US correspondent bank and the use of US-based email accounts. The statute even applies where conduct occurs outside the United States and a person involved in the conduct subsequently travels to the United States. Notably, duress is a limited defense – absent an imminent threat of death or serious bodily injury, it is unlikely to succeed. In addition to pursuing material support investigations, the DOJ will likely use all available tools where companies and individuals facilitate criminal activity by the PCC or CV.

2. Asset Forfeiture

A material support violation can trigger the broadest asset forfeiture provisions in US law, including forfeiture of all assets of an entity engaged in planning or perpetrating the offense. In the 2022 prosecution of the French company for providing material support to a designated FTO, the DOJ forfeited $687 million – the approximate full value of a cement plant operating in FTO-controlled territory – in addition to the criminal fine imposed.

3. OFAC Sanctions Designation

Companies operating in areas controlled by designated FTOs or SDGTs face heightened risk of being placed on the SDN list themselves. OFAC may impose blocking sanctions on non-US persons who provide material support to these organizations, and correspondent account restrictions on non-US financial institutions that conduct or facilitate significant transactions on behalf of an SDGT.

4. FinCEN Special Measures

FinCEN may impose “special measures” on non-US financial institutions – including prohibiting them from maintaining US correspondent bank accounts – where it finds “reasonable grounds” to designate an institution as a “primary money laundering concern.” It need not prove knowing or intentional misconduct. With few exceptions, FinCEN designation under this authority has proven fatal to the targeted institution. For a Brazilian bank reliant on US dollar-denominated trade finance or correspondent banking, the imposition of special measures could be existential – and as the Mexican experience demonstrates, the reputational and operational consequences often outpace legal remedies.

5. Civil Litigation Under the Anti-Terrorism Act (ATA)

The ATA provides US citizens injured by an act of international terrorism with a claim for treble damages, costs, and attorney’s fees, extending liability to those who materially supported, aided and abetted, or conspired with an FTO. Even ultimately unsuccessful ATA suits carry serious reputational and operational consequences and litigation costs.

Key Steps Companies Should Take Now

Financial institutions and other companies should review their operations for risk of exposure to PCC and CV and ensure they have robust, demonstrable compliance programs. Priority steps include:

• Conducting risk assessments across business lines where PCC or CV presence or influence is known or suspected, and identifying high-risk counterparties and transactions; 
• Implementing strict know-your-customer (KYC) and third-party screening, and strengthening anti-money laundering / countering the financing of terrorism and sanctions controls to reflect US regulatory guidance, including FinCEN red flag advisories;
• Training employees on identifying red flags and escalating FTO-related risks, with particular focus on those in high-risk geographic areas or business lines; 
• Working with counterparties, lenders, and correspondent banks to preempt de-risking; 
• Establishing protocols to handle FTO demands, US Government requests, and third-party queries; and
• Consulting experienced counsel as appropriate.

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