On February 5, 2025, Attorney General (AG) Pam Bondi issued a memorandum to Department of Justice (DOJ) personnel entitled "Total Elimination of Cartels and Transnational Criminal Organizations." The memorandum follows and implements aspects of President Trump's Executive Order (E.O.) 14157, issued on January 20, 2025, on the same topic. The E.O. and Bondi memorandum will impact legal and compliance risks companies face when doing business in Latin America and other parts of the world where cartels and transnational criminal organizations (TCOs), such as (as noted in the E.O.) "Tren de Aragua (TdA), La Mara Salvatrucha (MS-13), the Sinaloa Cartel, and the Jalisco New Generation Cartel," are active. The memorandum and other administration actions also implicate changes to corporate Foreign Corrupt Practices Act (FCPA), Foreign Extortion Practices Act (FEPA), and certain anti-money laundering (AML) enforcement priorities that we will discuss in our upcoming Winter 2025 FCPA Review.

Risks of Transacting with Cartels and TCOs

Although the administration's focus is on prosecuting cartels and other TCOs,¹ the laws on which the DOJ will rely can also create exposure for companies that interact (even unintentionally) with cartels or TCOs. 

In E.O. 14157, the president directed the Department of State (in collaboration with the Secretary of the Treasury, the AG, the Secretary of Homeland Security, and the Director of National Intelligence) to designate certain cartels and other organizations as Foreign Terrorist Organizations (FTOs) or Specially Designated Global Terrorists (SDGTs). The FTO designation is significant in that it could create criminal and civil liability for companies providing "material support" to designated entities. "Material support" is broadly defined in 18 U.S.C. § 2339A as providing an FTO with any property (tangible or intangible) or services, including currency, financial services, lodging, personnel, and transportation. Those providing material support to the FTO may face criminal sanctions under 18 U.S.C. § 2339B and potential civil liability under 18 U.S.C. § 2333(a), (d).

The Bondi memorandum directs U.S. Attorneys' Offices to "lead the charge" against cartels and TCOs. As with the E.O., the memorandum highlights the use of terrorism charges to prosecute members and associates of cartels and TCOs. However, the memorandum also identifies other laws to use in addressing cartel activity. For example, it directs the DOJ Criminal Division's FCPA Unit to "prioritize investigations related to foreign bribery that facilitates the criminal operations of Cartels and TCOs, and shift[s] focus away from investigations and cases that do not involve such a connection." Examples of priority cases "include bribery of foreign officials to facilitate human smuggling and the trafficking of narcotics and firearms." Similarly, the memorandum directs the Criminal Division's Money Laundering and Asset Recovery Section to "prioritize investigations, prosecutions, and asset forfeiture actions that target activities of Cartels and TCOs." The changes set forth in the memorandum are to be implemented for a period of 90 days unless renewed or made permanent by the AG and Deputy Attorney General (DAG).

Potential Impact on Corporations

The following highlights potential corporate interactions that could involve cartel or TCO interests, which could create liability based on "material support" of FTOs, the FCPA, or AML laws. 

Operations in Cartel and TCO Controlled Areas

Companies that operate in remote or conflict-affected areas (for example, in the extractives, agriculture, and telecommunications sectors) may come into contact with cartels and TCOs, which have infiltrated the economies, communities, and local governments in many areas of the world. Companies may face extortion demands from cartels or TCOs that threaten physical harm against employees and associated third parties unless protection payments are made. Depending on the law at issue, companies may be able to raise the defense that such payments qualify as duress payments and do not violate the law; however, a continuing series of payments or payments to protect assets as opposed to people can raise sanctions/FTO regime risk. 

The 2007 Chiquita Banana case is an example of this risk. Chiquita made protection payments for years to Autodefensas Unidas de Colombia (AUC), which the U.S. government had designated as an FTO and as an SDGT. As a result, Chiquita pleaded guilty to engaging in transactions with an FTO and SDGT and agreed to pay a $25 million criminal fine (with five years' probation thereafter) and implement and maintain an effective compliance and ethics program. In addition, Chiquita faced a related long-running civil wrongful death case in which a jury in 2024 found Chiquita liable and awarded $38.3 million in damages. Activities that the DOJ pursues under the Bondi memorandum could raise similar risks for companies under similar tort theories or the Anti-Terrorism Act (ATA).

A more recent example is the 2022 Lafarge case, in which Lafarge pleaded guilty to conspiring to provide material support to multiple FTOs (including ISIS) in exchange for permission to operate a cement plant in Syria. Lafarge was sentenced to terms of probation and to pay financial penalties, including criminal fines and forfeiture, totaling $777.8 million. Similar to many FCPA case fact patterns, Lafarge used intermediaries to make payments to the FTOs. The matter is also an example of mergers and acquisitions (M&A) risk, as Lafarge was acquired by Holcim in 2015 and the DOJ determined that Holcim undertook insufficient due diligence related to the acquisition. Like Chiquita, Lafarge has been sued for civil damages based on their actions in Syria.

In addition, where payments to cartels are facilitated by local police, municipal officials, or other officials controlled by a cartel or TCOs, the payments can also raise FCPA risk for companies. 

Logistics and Transport Providers

Companies involved in logistics, transportation, or air travel may also be susceptible to cartel risk. For example, a cartel may attempt to use such providers to transport narcotics, weapons, and people in connection with their criminal activities. If providers fail to identify and prevent transactions with cartels and TCOs designated as FTOs, their services could be seen by U.S. authorities as providing "material support" and lead to criminal liability. 

Moreover, if employees of such providers make payments to customs, immigration, port authorities, or other officials to avoid inspections, speed up customs clearance processes, avoid duties, or obtain other advantages, it could also raise FCPA liability. Providers accepting payment from cartels for these services or assisting in the transport of currency for a cartel or TCO may also face money laundering charges.

Suppliers of Materials 

Companies that produce products that could be used by cartels and FTOs also face risk. For example, producers of chemicals that could be used in the manufacture of narcotics, manufacturers of weapons purchased by cartels, and producers of agricultural products used in the growing or harvesting of drugs, could all be viewed as providing material support. Cartels often operate through front companies or intermediaries, making it difficult to identify direct or indirect ties. Due diligence and know-your-customer (KYC) strategies are needed to mitigate risk of dealing with cartels. 

Financial Services

Banks and non-bank financial institutions such as money services businesses (MSBs) are also susceptible to TCO and cartel risk. The Bank Secrecy Act (BSA) requires banks and certain non-bank financial institutions to develop AML compliance programs that prevent and detect money laundering and terrorist financing. As discussed in detail in the 2024 National Terrorist Financing Risk Assessment, terrorist groups regularly seek to use banks and non-bank financial institutions, such as MSBs, to move funds around the world and to access U.S. financial markets. 

In recent years, the Financial Crimes Enforcement Network (FinCEN) has focused on risks posed by Iran-backed terrorist organizations, among other priorities. We expect that targeting terrorism financing in connection with Iran will remain a priority under the Trump administration consistent with the National Security Presidential Memorandum/NSPM-2. However, in light of the Bondi memorandum, financial services companies (including MSBs) that offer services (i) in markets with heightened TCO and cartel activities and (ii) to clients in industries with a greater risk of TCO and cartel participation should revisit their internal risk matrices and accompanying analyses to determine whether enhanced risk mitigation measures, (such as heightened KYC, certification, or transaction monitoring measures) are required in connection with such services or transactions. 

In addition, we expect the U.S. enforcement authorities to continue focusing on Hamas-related financing. On the same day the memorandum regarding total elimination of cartels and TCOs was issued, AG Bondi issued another memorandum entitled "Establishment of Joint Task Force October 7." This second memorandum establishes a joint task force to focus on "seeking justice for victims of the attack and addressing the ongoing threat posed by Hamas and its affiliates, both domestically and abroad" and, among other things, authorizes the task force to issue administrative subpoenas to foreign banks with correspondent accounts in the U.S. without prior centralized authorization.

Safeguards Related to Cartel/TCO Risks

The complexity of value chains and third-party relationships increases the risk of unintentional association with illicit actors like cartels and TCOs. In high-risk environments, companies can significantly lower their exposure by implementing robust controls and demonstrating a strong commitment to compliance and ethics. Companies can:

• Implement or enhance strict AML and counter-terrorism financing policies and related controls and maintain appropriate FCPA-related policies and other measures. 
• Develop clear crisis response protocols for handling extortion attempts, requests for support of bribes to relevant government officials, or drug contamination in the supply chain, and for timely and adequate reporting of potential risks. 
• Maintain thorough documentation and transparency in business operations to defend against potential allegations of aiding and abetting cartels.
• Conduct and refresh systematic background checks on customers, partners, and suppliers to identify links to criminal networks (in addition to other existing risks, such as FCPA), regularly updating processes to address evolving risks and legal requirements.
• Require appropriate counterparties to certify that they have their own screening procedures to identify and remediate potential links to cartels or TCOs.
• When conducting risk assessments or human rights due diligence in conflict-affected and other challenging contexts, make specific inquiries with local stakeholders into cartel- and TCO-related risks – such as human trafficking and support to non-state armed groups.
• Consistently train employees to recognize and avoid cartel-related risks, including fraudulent schemes and red flags in transactions and any activities in the company's value chain involving cartels or TCOs.
• Where appropriate, build relationships and actively engage with U.S. law enforcement to ensure compliance, report threats, mitigate risks, and enhance security measures.

Contributors: Kathryn Cameron Atkinson, William P. Barry, John E. Davis, Joshua Drew, Matteson Ellis, Laura G. Ferguson, Ian A. Herbert, Nate Lankford, Maria Elena Lapetina, Jeffrey A. Lehtman, Leah Moushey, James G. Tillen

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¹Defined in 31 C.F.R. § 590.312 as "a group of persons that includes one or more foreign persons; that engages in or facilitates an ongoing pattern of serious criminal activity involving the jurisdictions of at least two foreign states, or one foreign state and the United States; and that threatens the national security, foreign policy, or economy of the United States." 

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