Brazil: The Next Front in the Battle Against FTOs - Implications for U.S. and Brazilian Businesses of the Designations of Brazilian Criminal Organizations PCC and CV as Foreign Terrorist Organizations

Introduction

The Trump Administration opened a new front in its battle against FTOs on May 28, 2026 when the U.S. Department of State designated Brazilian criminal groups Comando Vermelho (“CV”) and Primeiro Comando da Capital (“PCC”) as Specially Designated Global Terrorists (“SDGTs”) and announced its intention to designate both groups as Foreign Terrorist Organizations (“FTOs”), effective June 5, 2026.¹U.S. Department of State, Press Statement by Secretary Marco Rubio, Terrorist Designation of Comando Vermelho and Primeiro Comando da Capital (May 28, 2026), available at https://www.state.gov/releases/office-of-the-spokesperson/2026/05/terrorist-designation-of-comando-vermelho-and-primeiro-comando-da-capital/. The designations, made pursuant to Section 219 of the Immigration and Nationality Act (8 U.S.C. § 1189) and Executive Order 13224, carry significant implications, as we have highlighted in previous articles,²See Grant Nichols, Brandt Leibe and Michael Galdo, Preparing for Mexican Drug Cartels’ Terrorist Designation, (Jan. 13, 2025), available here; King & Spalding, State Criminal and Civil Liability for Material Support: How the FTO Designation of Drug Cartels Increases the Risk of State Enforcement, (Mar. 11, 2025), available here ; Recent FTO Designations Raise FCA Liability Concerns for Multinational Organizations, (Mar. 31, 2025), available here; Drug Cartel Designations as FTOs Increase Financial Institutions’ Civil Liability Risks Under the Antiterrorism Act, (Apr. 18, 2025), available here;  Brazil: The Next Front in the Battle Against FTOs? Implications for U.S. and Brazilian Businesses of the Potential Designation of Brazilian Criminal Organizations as Foreign Terrorist Organizations, (May 19, 2026), available here. and reflect a continuation of Washington’s broader strategy of casting major transnational criminal organizations through a counterterrorism lens.³White House, Executive Order 14157, “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists” (Jan. 20, 2025).

Such designations trigger immediate and far-reaching legal consequences for U.S. persons and entities, including criminal prohibitions on providing material support to the organizations, property blocking and reporting obligations for U.S. financial institutions, and significant civil liability exposure under the Anti-Terrorism Act (“ATA”).⁴King & Spalding, Drug Cartel Designations as FTOs Increase Financial Institutions’ Civil Liability Risks Under the Antiterrorism Act, (Apr. 18, 2025), available at https://www.kslaw.com/news-and-insights/drug-cartel-designations-as-ftos-increase-financial-institutions-civil-liability-risks-under-the-antiterrorism-act

For companies and businesspeople operating in or with exposure to Brazil — the largest economy in Latin America and a critical market for multinational enterprises — these designations demand immediate attention.  The extension of these criminal organizations’ presence internationally and Brazil’s deep integration into global financial systems and supply chains mean the practical compliance and litigation risks are significant.⁵Americas Quarterly, “Brazil’s Gangs in Trump’s Crosshairs” (2026), discussing how FTO designations could affect Brazilian firms and compliance departments.

Now that the formal designations have been announced businesses must act promptly to assess and address any exposure to CV and PCC and take steps to ensure compliance with the legal obligations that flow from these designations.

Background on CV and PCC

Comando Vermelho. The CV is reported to be Brazil’s oldest major criminal organization, founded in the late 1970s in the prisons of Rio de Janeiro.⁶EJIL: Talk!, “U.S.’s moves to label Brazilian crime syndicates as ‘terrorist organizations’: a prelude to the use of force?” (Mar. 18, 2026), discussing CV’s origins in Rio de Janeiro’s prison system in the 1970s. Originally engaged in bank robberies and petty crime, the CV reportedly moved into the cocaine trade in the 1980s, forging connections with Colombian cartels and assuming a social leadership role in many of Rio's marginalized communities.  The CV is estimated to have approximately 30,000 members across Brazil.⁷MercoPress, “BBC says legal weapons from Paraguay end up in Comando Vermelho’s hands” (Nov. 3, 2025), citing Insight Crime estimate of approximately 30,000 CV members. Internationally, the CV has reportedly expanded throughout the Amazon basin, establishing control over trafficking routes and forging alliances in the border regions of Colombia, Peru, and Bolivia to receive cocaine shipments for distribution within Brazil and onward export to Europe and Africa.⁸Americas Quarterly, “Brazil’s Gangs in Trump’s Crosshairs” (2026); Ojo Público, “Narco-territory: cocaine trafficking dominates more than 70% of Amazonian borders” (discussing CV’s Amazon expansion).

Primeiro Comando da Capital. The PCC is reported to be Brazil’s largest and best-organized criminal network.  Reports indicate that it was founded in 1993 in São Paulo’s prison system in the aftermath of the Carandiru massacre, in which security forces killed over 100 prisoners.⁹Americas Quarterly, “PCC” (Jan. 26, 2021) (discussing PCC’s founding in 1993 after Carandiru massacre).  In 2024, the U.S. Department of the Treasury described the PCC as “the most notorious organized crime group in Brazil and among the largest in Latin America.”¹⁰U.S. Department of the Treasury, “Treasury Sanctions Primeiro Comando da Capital (PCC) Operative” (Mar. 14, 2024). The PCC operates what is reported to be a hierarchical, centrally commanded structure and has expanded internationally, with an estimated 30,000 members in Brazil and a presence in multiple countries, including an estimated 1,000 members in Paraguay.¹¹InSight Crime, “PCC’s Rapid Expansion” (March 2020); Americas Quarterly, “PCC” (Jan. 2021), estimating at least 30,000 members in Brazil; The Guardian, “’The PCC are after me’: the drug cartel with Paraguay in its clutches” (June 23, 2022), estimating 1,000 PCC members in Paraguay. Through trans-Atlantic ties with Italy’s Ndrangheta mafia and networks in West Africa, the PCC reportedly serves as an intermediary in the global cocaine trade, facilitating shipments to Europe, Asia, and the Americas.  The U.S. Treasury had previously designated the PCC as a SDN in 2021.  In March 2024, Diego Macedo Gonçalves do Carmo, a PCC operative, was designated as an SDN for laundering approximately $240 million for the organization, and investigations have revealed PCC-linked money-laundering schemes moving billions of dollars through fintech platforms and front companies with cross-border corporate footprints.¹²U.S. Department of Treasury, Treasury Sanctions Primeiro Comando da Capital (PCC) Operative, (Mar. 14, 2024), available at https://home.treasury.gov/news/press-releases/jy2180.

Nexus to U.S. Commerce. Both organizations are connected to the global financial system. Brazil’s economy has extensive trade and investment ties to the United States.  U.S. financial institutions process significant volumes of Brazilian-origin transactions.  The CV and PCC are reported to exploit financial channels through sophisticated money-laundering networks, including the use of fintech companies, cryptocurrency platforms, and front companies.¹³InSight Crime, Historic PCC Bust Spurs Brazil Crackdown on Digital Money Laundering, (Sep. 11, 2025), available at https://insightcrime.org/news/historic-pcc-bust-spurs-brazil-crackdown-on-digital-money-laundering/. These organizations are also reportedly involved in illicit activities with direct implications for U.S. multinational supply chains, including illegal mining, logging, and control of transportation corridors.¹⁴InSight Crime, Brazil’s PCC Complicates Fight Against Illegal Mining in Amazon, (May 26, 2023), available at https://insightcrime.org/news/narcogarimpo-pcc-complicating-brazils-fight-against-illegal-mining/.

Legal Framework: Consequences of FTO Designation

The designation of CV and PCC as FTOs triggers an expanded set of legal obligations and liability risks under federal law.  While the PCC’s existing SDN designation already imposes significant legal restrictions, including a prohibition on U.S. persons engaging in any transactions with the PCC, and property blocking requirements for U.S. financial institutions that identify PCC-related funds, the FTO designations layer additional consequences on top of these existing obligations.¹⁵The designation of CV as FTO results in property blocking obligations for any U.S. financial institution in the possession of or control over funds in which CV or its agents have an interest in. The U.S. financial institution must retain possession of or control over such funds and report their existence to the U.S. Department of the Treasury’s Office of Foreign Assets Control.  

Criminal Prohibition on Material Support. It is unlawful for any U.S. person, any person within the United States, or any entity subject to U.S. jurisdiction to knowingly provide “material support or resources” to an FTO.  Material support is broadly defined to include property, services, currency, financial services, expert advice or assistance, among others.¹⁶18 U.S.C. § 2339A(b)(1). The statute’s jurisdictional reach extends to conduct occurring overseas and convictions carry criminal penalties of up to 20 years’ imprisonment, or life imprisonment if death results.¹⁷Id. The Department of Justice has shown its willingness to pursue material support charges against major corporations, as it did, for example, in 2022, when it prosecuted Lafarge S.A. for corporate material support for terrorism.¹⁸See, e.g., DOJ Press Release, “Chiquita Brands International Pleads Guilty to Making Payments to a Designated Terrorist Organization” (March 19, 2007); DOJ Press Release, “Lafarge Pleads Guilty to Conspiring to Provide Material Support to Foreign Terrorist Organizations” (Oct. 18, 2022).

Civil Liability Under the Anti-Terrorism Act. The ATA creates a private cause of action for U.S. nationals injured in their person, property, or business by an act of international terrorism.  The ATA extends to secondary liability for aiding and abetting, provided the act was committed, planned, or authorized by a designated FTO.¹⁹18 U.S.C. § 2333(a), (d). Successful plaintiffs are entitled to treble damages, plus attorneys’ fees and costs, making such claims highly attractive to the plaintiffs’ bar.²⁰For additional risks created by the FTO designations see K&S articles regarding False Claims Act exposure and state-level enforcement, available at https://www.kslaw.com/news-and-insights/recent-fto-designations-raise-fca-liability-concerns-for-multinational-organizations and https://www.kslaw.com/news-and-insights/state-criminal-and-civil-liability-for-material-support-how-the-fto-designation-of-drug-cartels-increases-the-risk-of-state-enforcement.

Key Risks to Keep in Mind

The designations of CV and PCC as FTOs create enhanced risk categories for corporations and individuals operating in Brazil

Financial Institutions and Money Service Businesses. Banks, money services businesses, fintech companies, and other financial service providers with Brazilian exposure already face compliance obligations arising from the PCC’s SDN designation, including transaction-screening and asset-blocking requirements.  The FTO designation heightens these obligations and further expands litigation risk.  As was the case with the Mexican cartel FTO designations, the first effects may be felt not by the criminal organizations themselves, but by the compliance departments of financial institutions facing new screening and reporting burdens.²¹As an example of potential consequence for financial institutions, please note that on June 25, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) designated CIBanco S.A., Institución de Banca Multiple, Intercam Banco, and Vector Casa de Bolsa, Mexico-based financial institutions, as foreign financial institutions of “primary money laundering concern” in connection with illicit opioid trafficking. FinCEN found that these institutions had a long-standing pattern of providing financial services to major Mexico-based drug trafficking organizations.  FinCEN prohibited all covered U.S. financial institutions from engaging in any transmittals of funds to or from these institutions, effectively severing their access to the U.S. financial system.

Multinational Corporations Operating in Brazil. Companies in extractive industries (mining, energy, timber), agriculture, logistics, manufacturing, and infrastructure that operate in Brazil — particularly in the Amazon region, the northeast, or in major urban centers such as Rio de Janeiro and São Paulo — may find themselves at risk of inadvertent material support through interactions with third parties, unions, vendors, or local intermediaries that are connected to these organizations.

Federal Contractors and Grant Recipients. Organizations that receive U.S. government contracts, grants, or cooperative agreements and operate in or source from Brazil face False Claims Act (“FCA”) exposure based on Office of Foreign Assets Control (“OFAC”) and anti-terrorism certifications they are required to make.  This is particularly relevant for development organizations, NGOs, and defense and security contractors active in the region.

Companies with Brazilian Supply Chains. Businesses sourcing goods or services from Brazil should evaluate whether their supply chains intersect with regions or industries in which FTO-designated organizations are active, including ports, logistics corridors, and the agricultural and mining sectors.

Recommended Actions

In light of the FTO and SDGT designations of both the PCC and CV, companies and individuals should promptly take the following steps:

Conduct a Privileged Risk Assessment. A privileged assessment can identify potential points of contact with CV, PCC, or their affiliates across their operations, supply chains, vendor relationships, and financial transactions in Brazil.  A key aspect for any assessment is the physical location of the company’s operations, particularly for those operating in the Amazon region, the northeast of Brazil, or in major Brazilian urban centers, which have a higher exposure to these organizations.

Review Third-Party and Vendor Relationships. Companies operating in Brazil should review their third-party relationships, including vendors, suppliers, logistics providers, local agents, and joint venture partners, to assess whether any such relationships could constitute material support to the designated organizations.  Now that these criminal groups have been designated, third-party vetting that may have been sufficient to address other compliance risks must be enhanced for FTO-related risks.

Enhance Sanctions Screening and KYC/AML Programs. Financial institutions and companies processing Brazilian-origin transactions should ensure that their sanctions screening systems already account for the PCC’s existing SDN designation and must now incorporate the new FTO and SDGT designations.  KYC, AML, sanctions screening, and beneficial-ownership review processes should be adequate to detect activity linked to these organizations.

Update OFAC and Anti-Terrorism Certifications. U.S. federal government contractors and grant recipients should review their OFAC compliance certifications and anti-terrorism certifications to ensure accuracy in light of new designations.

Strengthen Whistleblower Intake Mechanisms. Companies should review their internal reporting and whistleblower-intake processes to ensure that issues raised internally are addressed quickly and thoroughly.  Companies should be particularly vigilant about investigating complaints that mention CV or PCC. 

Evaluate U.S. State-Law Exposure. Companies with operations or personnel in states such as Florida and Texas should assess their potential exposure under state material support and anti-terrorism statutes, which may be triggered by the FTO designations.

Monitor Regulatory Developments. Corporations should anticipate further regulatory actions, including potential FinCEN Geographic Targeting Orders, additional OFAC designations of individuals and entities linked to CV and PCC, and possible U.S. state-level executive orders.

Conclusion

The designations of CV and PCC as FTOs and SDGTs represent a significant expansion of U.S. law enforcement attention and carry substantial implications for U.S. persons or entities with business exposure to Brazil.  Companies must immediately conduct an assessment of their compliance systems, policies, and controls, which is essential to identify and mitigate the risks flowing from these designations.

This alert provides a general summary of recent legal developments. It is not intended to be, and should not be relied upon as, legal advice. In some jurisdictions, this may be considered attorney advertising.