The Trump Administration’s “total elimination” strategy against cartels creates unprecedented business risks throughout the Americas. José Cortina and Jennifer Christian of FTI Consulting analyze how designating cartels as foreign terrorist organizations transforms business operations in regions where these groups are embedded in legitimate commerce.
The Trump Administration’s strategy to pursue the “total elimination” of transnational criminal organizations (TCOs) and to reduce flows of fentanyl and migrants into the US may introduce unconventional and complex risks for companies operating throughout North and South America.
Since taking office in January, President Donald Trump has directed the revision of national security and foreign policy priorities to ensure US intelligence, military and law enforcement resources are focused on the degradation of cartel operations in the region by, among other things, designating certain cartels and TCOs as foreign terrorist organizations (FTOs), decentralizing the DOJ’s enforcement of laws related to cartel activities and identifying foreign illicit drug actors as posing an immediate threat to the homeland. Most recently, on May 12, the DOJ identified TCOs and FTOs as one of 10 “high-impact areas” the Criminal Division will prioritize investigating and prosecuting.
These actions create new risks for companies operating in areas where cartels, turned FTOs, are just as much a part of legitimate commerce as they are the illicit economy.
Latin America today: FTOs acting in legitimate economic interests
TCOs have long posed security and reputational risks for businesses operating throughout Latin America. For instance, in Mexico, businesses have reported steady increases since 2015 in extortion demands. According to federal government data, 1,809 cases of extortion were reported in the first two months of 2025, the highest levels in 10 years.
While official crime statistics in Mexico are prone to underreporting, and capturing rates of extortion is otherwise notoriously difficult, industry groups have for years decried the high number of extortion demands. And extortion demands are just one way in which cartel operations affect businesses in Mexico. Inter- and intra-cartel violence, kidnappings and other overtly criminal behavior on the part of cartels compound general insecurity in Mexico, increasing risks and costs for businesses. The same is true for businesses operating in Central and South America, where TdA and MS-13, along with other TCOs, increase security risks with geographic variation.
The new FTO designations now add an additional layer of risk to an already difficult operating environment. An obvious first layer of risk lies in extortion payments to cartels, often made to ensure a company’s assets, operations and people remain safe. These may now run afoul of US laws prohibiting material support to FTOs, namely 18 U.S.C. § 2339, as well as the US Anti-Terrorism Act (ATA), which potentially opens a company to civil liability.
Less obvious, though just as illegal under the new administration, are risks that lie in cartels’ involvement in legitimate business ventures. A recent American Chamber of Commerce in Mexico survey found that 12% of respondents indicated organized crime “has taken partial control of the sales, distribution and/or pricing” of goods in their industry.
Those groups the Department of State recently designated as FTOs, particularly those groups based in Mexico — Cartel de Sinaloa, CJNG, CDN, LNFM, CDG and CU — are now more than ever part of Mexico’s legitimate economy. From agriculture and hospitality to petroleum products, mining, and wireless internet services, these FTOs are ingrained in the Mexican economy in a way that renders historic due diligence practices undertaken by companies operating in Mexico inadequate when assessing today’s operating risks.
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Of course, questions remain around the extent to which the DOJ will seek to enforce the designations. The May 12 DOJ memo appears to emphasize prosecution of individual criminals, while noting corporate misconduct may be more appropriately addressed through civil and administrative remedies. The memorandum further places emphasis on a revised corporate enforcement and voluntary self-disclosure policy (CEP). How the DOJ will engage with corporations via the CEP remains unclear, as does the hurdle to prosecute corporate misconduct involving TCOs and FTOs.
Beyond the most recent DOJ memo, some key takeaways can be drawn from actions the department has taken to date. Bondi’s Feb. 5 memorandum lowered historic bureaucratic hurdles for federal prosecutors pursuing material support to terrorism charges and related charges under the RICO Act of 1970. Now, federal prosecutors countrywide can pursue charges under these statutes without clearance from DOJ officials in Washington opening the door to broad, though potentially inconsistent enforcement.
As well, if a foreign company is connected to a FTO through its operations in Mexico, the US could potentially bring charges against it. This could happen especially during a broader conflict between the US and the country where that company is based. In other words, companies with operations in the US and Mexico now navigate uncertain legal waters; with the bounds of enforcement unclear, companies in this position must ensure their compliance and due diligence risk management processes adjust quickly to account for the FTO designations.
Commentators are quick to cite the case of French building materials manufacturer Lafarge, which paid $778 million in penalties to the US government in 2022 after it was found the company made security and other payments to multiple FTOs in Syria, including ISIS. But the environment for companies in Syria was relatively more black and white than that in which companies operate today in Mexico; where a cartel ends and a business begins in the country is oftentimes not abundantly clear, meaning companies must employ expertise in risk management.
Regardless of the Trump Administration’s appetite for white collar enforcement related to the designations, some US states have criminalized material support to FTOs, among them Michigan and Florida, opening companies up to state-level prosecutions.
Companies also face reputational and financial risks from civil suits under the ATA. In 2024, a federal court in Florida found Chiquita Brands International civilly liable for the deaths of eight Colombian nationals killed by the Autodefensas Unidas de Colombia (AUC). Chiquita had previously pleaded guilty to making protection payments to the AUC. A jury awarded the families $38 million in damages.
For the financial services industry, the designations may open the door for ATA lawsuits similar to the 2018 case against four HSBC-related financial institutions that were alleged to have aided and abetted an al-Qaeda-linked attack against a CIA base in Afghanistan. While a DC district judge ultimately dismissed the cases in 2020, on the grounds of lack of personal jurisdiction and failure to state a claim, the cases nonetheless demonstrate the ways in which victims’ plaintiff groups may seek to leverage the ATA in the Mexico context, with significant impacts for companies’ reputations and legal liability.
José Cortina
Jennifer Christian
