backIntroduction
The Trump Administration has made eradication of criminal cartel organizations a top law enforcement priority.1Note, for example, the recent remarks by the new DOJ Criminal Division Chief, Tysen Duva, at Compliance Week National 2026, who used company payment to cartels as an example of something that should be self-reported sooner rather than later. Global Investigations Review, New criminal division chief: Early communication with DOJ “critical”, (May 7, 2026), available here. Since 2025, several Mexican and other Latin American cartels have been designated Foreign Terrorist Organizations, and there have been public reports of discussions regarding the potential designation of two of Brazil's most notorious criminal organizations — Comando Vermelho (“CV”) and Primeiro Comando da Capital (“PCC”) — as FTOs, as well.2See, e.g., The Wall Street Journal, How a Brazilian Prison Gang Became a Global Cocaine Power, (Apr. 20, 2026), available at https://www.wsj.com/world/americas/brazilian-prison-gang-global-cocaine-1edb4883; see also The New York Times, U.S. May Label Brazilian Gangs as Terror Groups, After Push by the Bolsonaros, (Mar. 27, 2026), available here. FTO designations under Section 219 of the Immigration and Nationality Act (8 U.S.C. § 1189) carry significant implications, as we have highlighted in previous articles.3See 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. The discussions about possible designations of Brazilian criminal groups have recently intensified with the U.S. State Department reportedly completing the technical work for designation and awaiting political sign-off.4Rio Times Online, “Brazil Scrambles to Block U.S. Terror Label for Its Gangs” (Mar. 10, 2026); EJIL: Talk!, “U.S.’s moves to label Brazilian crime syndicates as ‘terrorist organizations’” (Mar. 18, 2026). If they occur, such designations would reflect a continuation of Washington's broader strategy of casting major transnational criminal organizations through a counterterrorism lens.5White House, Executive Order 14157, “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists” (Jan. 20, 2025).
Such designations carry immediate and far-reaching legal consequences for U.S. persons and entities, including criminal prohibitions on providing material support to the organizations, asset-blocking obligations for financial institutions, and significant civil liability exposure under the Anti-Terrorism Act (“ATA”).6King & Spalding, Drug Cartel Designations as FTOs Increase Financial Institutions’ Civil Liability Risks Under the Antiterrorism Act, (Apr. 18, 2025), available at here.
For companies and businesspeople operating in or with exposure to Brazil — the largest economy in Latin America and a critical market for multinational enterprises — the potential designations demand 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.7Americas Quarterly, “Brazil’s Gangs in Trump’s Crosshairs” (2026), discussing how FTO designations could affect Brazilian firms and compliance departments.
Even absent formal designation as FTOs, businesses should remain vigilant with respect to potential connections to CV and PCC and take steps to understand the extent of any exposure to these groups.
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.8EJIL: 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.9MercoPress, “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.10Americas 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.11Americas 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.”12U.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.13InSight 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.14Diálogo Américas, “South America’s Largest Drug Organization Expands to Europe and Africa” (Jan. 19, 2024); The Guardian (Jun. 23, 2022), discussing PCC-’Ndrangheta connections and West Africa expansion. Critically for U.S. sanctions compliance purposes, the U.S. Treasury designated the PCC as a Specially Designated National (“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.15U.S. Department of Treasury, Treasury Sanctions Primeiro Comando da Capital (PCC) Operative, (Mar. 14, 2024), available here.
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 is reported to exploit financial channels through sophisticated money-laundering networks, including the use of fintech companies, cryptocurrency platforms, and front companies.16InSight Crime, Historic PCC Bust Spurs Brazil Crackdown on Digital Money Laundering, (Sep. 11, 2025), available here. The 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.17InSight Crime, Brazil’s PCC Complicates Fight Against Illegal Mining in Amazon, (May 26, 2023), available at here.
Legal Framework: Consequences of FTO Designation
The possible designation of CV and PCC as FTOs would trigger 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 asset-blocking requirements for U.S. financial institutions that identify PCC-related funds, an FTO designation would layer additional consequences on top of these existing obligations.
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.1818 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.19Id. The Department of Justice has shown its willingness to pursue material support charges against major corporations.20See, 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).
Asset Freezing and Blocking Obligations. Any U.S. financial institution that becomes aware that it has possession of or control over funds in which a designated FTO or its agent has an interest 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 (“OFAC”).21U.S. Department of State, “Foreign Terrorist Organizations” (legal ramifications of designation, including financial institution obligations under Section 219 of the INA).
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.2218 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.23For additional risks created by the FTO designations see K&S articles regarding False Claims Act exposure and state-level enforcement, available here and here.
Key Risks to Keep in Mind
While any dealings with the CV and PCC would involve serious compliance risks – including, in the case of the PCC, risks arising from its existing SDN designation – the designation of CV and PCC as FTOs would create enhanced risk categories for corporations:
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. An FTO designation would heighten these obligations and further expand litigation risk. As was the case with the Mexican cartel 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.24As 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 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 PCC’s existing SDN designation and the potential FTO designations for both the PCC and CV, companies and individuals should consider 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 criminal organizations. If these criminal groups are designated, third-party vetting that may have been sufficient to address other compliance risks may need to 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 should prepare to incorporate any 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 thoroughly and promptly.
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 could be triggered by a potential FTO designation.
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
While any dealings with CV, PCC, or connected entities can create legal exposure, the designation of CV and PCC as FTOs would represent a significant expansion of U.S. law enforcement attention and carry substantial implications for any U.S. person or entity with business exposure to Brazil. Companies should not wait for a formal FTO designation to act; an assessment of compliance systems, policies, and controls can help identify and mitigate those risks.
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.