United States Designates Brazil’s PCC and CV as Terrorist Organizations: Key Legal and Compliance Implications

On May 28, 2026, the US Department of State designated Brazil’s largest criminal organizations—Primeiro Comando da Capital (“PCC”) and Comando Vermelho (“CV”)—as Specially Designated Global Terrorists (“SDGTs”) pursuant to Executive Order 13224 and announced its intention to designate both groups as Foreign Terrorist Organizations (“FTOs”), with the FTO designations expected to become effective upon publication in the Federal Register on June 5, 2026. This action aligns with a broader US policy shift toward the use of counterterrorism laws to target cartels and transnational criminal organizations (“TCOs”) across Latin America,  and materially elevates the legal and compliance risks for companies operating in the region, particularly those with a nexus to the United States.

While sanctions exposure associated with these groups—particularly the PCC—was already significant, the FTO designation introduces a more expansive framework with materially increased legal risk. Companies and individuals may now face criminal liability for providing “material support” of terrorism, as well as civil liability under US law, even where any interaction with these organizations is indirect or occurs under coercion. In practical terms, the designation transforms a range of operational challenges—especially those involving extortion, third-party risk, and supply chain opacity—into high-stakes legal risks under US counterterrorism statutes. Companies with operations in Brazil or other parts of Latin America should review their compliance measures in light of this designation.

Operating in Brazil and Latin America: From Security Risk to Legal Exposure

In many parts of Brazil and the broader Latin American region, companies operate in environments where TCOs exercise de facto territorial influence, affect labor and logistics, and impose informal “taxation” through extortion or protection schemes.

Historically, these dynamics have been addressed as security, operational, or local compliance issues. The designation of the PCC and CV as FTOs fundamentally alters this analysis. Conduct undertaken to ensure employee safety or maintain operations—such as payments to secure access, transportation, or protection—may now fall within the scope of US criminal law. This creates a structural tension for companies, as actions taken locally to mitigate physical risk may simultaneously increase exposure to US enforcement.

The PCC, which originated in São Paulo’s prison system, has evolved into a highly structured organization with a reputation for operational discipline and international reach. The CV, historically rooted in Rio de Janeiro, maintains strong territorial control and longstanding influence over drug distribution networks. Both organizations operate across complex, often opaque commercial and financial ecosystems that intersect with legitimate business activity.

In practice, exposure is not limited to direct interaction with these groups and may arise across a wide range of sectors. Financial institutions are particularly sensitive, given their role in processing transactions that may, even inadvertently, involve illicit proceeds or designated entities. Sectors such as energy, infrastructure, construction, transportation, and logistics also face elevated risk due to their operational footprint, reliance on intermediaries, and presence in regions where criminal organizations exert territorial control. At the same time, locally embedded businesses—such as auto repair shops, fuel stations, and other retail or service providers—may face heightened exposure in certain regions, including through coercion, indirect payments, or relationships with counterparties whose affiliations are not fully visible.

This designation also reflects a broader US policy trend. In 2025, the United States designated several Latin American criminal organizations—including major Mexican cartels, MS-13, and Tren de Aragua—as FTOs, signaling an increasing willingness to address organized crime through counterterrorism frameworks. The State Department’s announcement characterized CV and PCC as groups whose “influence and illicit networks extend far beyond Brazil’s borders, across our region and into our country,” reinforcing the extraterritorial framing of these designations. At the same time, Brazilian authorities have expressed reservations regarding this approach, emphasizing the primarily economic motivations of these groups and raising concerns related to sovereignty and the extraterritorial reach of US law. This divergence underscores the increasingly complex regulatory environment in which companies must operate.

Key Legal Implications Under US Law

The legal risks arising from the designation of the PCC and CV are not limited to US-based companies. US counterterrorism and sanctions laws have broad extraterritorial reach, and a sufficient US nexus may arise in a variety of circumstances, including transactions denominated or cleared in US dollars, the use of US correspondent or intermediary banks, or the involvement of US-based investors, personnel, or operations.

As a result, companies operating in Brazil or elsewhere in Latin America may be exposed to US enforcement risk even in the absence of a physical presence in the United States. The formal designation of these groups as FTOs triggers a range of severe legal consequences that increase the risk profile for multinational entities.

Criminal Liability for Material Support

As designated FTOs, the PCC and CV are subject to 18 U.S.C. § 2339B, which makes it a criminal offense to knowingly provide “material support or resources” to a designated organization. This concept is interpreted broadly and may encompass financial payments of any size, the provision of goods or services (including lodging, training, expert advice, or personnel), logistical support or transportation, as well as dealings conducted through intermediaries or third parties. Liability does not depend on an intent to support terrorism. The act of providing support—directly or indirectly—may be sufficient.

Equally important, US law generally does not recognize a duress or extortion defense to material support charges. Payments made under pressure or coercion, including so-called protection payments or informal taxation imposed by territorial criminal groups, may still be treated as unlawful material support. In addition, parties that facilitate, enable, or route such payments—particularly through intermediaries—may face exposure under aiding and abetting or conspiracy theories of liability, even where they do not engage directly with a designated organization.

These risks may extend beyond the entity providing such support and, depending on the circumstances, may implicate parent companies, subsidiaries, officers, directors, and, in certain cases, individual employees. Violations may result in criminal prosecution, including significant fines, asset forfeiture, and potential custodial sentences of up to 20 years.

Sanctions and Asset Blocking

The designation reinforces and expands sanctions administered by the Office of Foreign Assets Control (“OFAC”). The PCC was already designated as a Specially Designated National, meaning that US persons were prohibited from engaging in transactions involving the group and its assets were subject to blocking. The FTO designation materially increases exposure by introducing criminal liability for a broader range of conduct, extending beyond financial transactions to include services, facilitation, and other forms of material support.

Civil Liability

Under the US Anti-Terrorism Act (“ATA”), as expanded by the Justice Against Sponsors of Terrorism Act, US nationals may also bring civil claims against entities that provide substantial assistance to designated terrorist organizations. This creates significant litigation risk, including exposure to treble damages, and may apply even where the alleged support is indirect or mediated through third parties.

Additional Regulatory and Anti-Corruption Enforcement Risks

In addition to the core criminal, sanctions and civil frameworks, companies should also be aware of related enforcement tools that further expand exposure.

US authorities have also increasingly relied on financial measures to designate foreign financial institutions as “primary money laundering concerns,” effectively restricting their access to the US financial system. These measures can have significant downstream effects on commercial counterparties whose transactions are routed through such institutions. At the same time, enforcement authorities have highlighted the growing use of virtual currencies and digital payment mechanisms by transnational criminal organizations, and have signaled an intention to prioritize cases involving digital assets that facilitate illicit activity.¹

US authorities have also prioritized Foreign Corrupt Practices Act (“FCPA”) investigations involving foreign bribery that facilitates the operations of cartels and TCOs. In practice, this means that transactions—particularly those involving intermediaries or third parties operating in high-risk environments—may be scrutinized not only under counterterrorism and sanctions frameworks, but also under anti-corruption laws. Payments that facilitate the operations of criminal organizations may attract enforcement attention, and the FCPA provides an additional avenue to target payments to or benefitting foreign officials.

Enforcement Precedents

Recent US enforcement actions illustrate the breadth and seriousness of potential liability under US counterterrorism and related frameworks, including:

• Chiquita Brands International, which admitted in 2007 to making over 100 payments to Colombia’s Autodefesas Unidas da Colombia disguised as “security expenses,” paying a US$25 million fine;
• Lafarge S.A., which pleaded guilty in 2022 to supporting ISIS and al-Nusrah Front through protection payments in Syria, resulting in a US $778 million penalty; and
• CJNG Crude Oil Case, in which the DOJ charged Texas crude oil operators in 2025 with conspiring to support Mexican cartel Cártel de Jalisco Nueva Generación (CJNG) by smuggling shipments and directing payments to cartel-linked businesses; the case carries potential 20-year prison terms, fines, and asset forfeiture.

These cases underscore that: (i) liability may arise from relatively small or indirect payments; (ii) conduct both before and after designation may be scrutinized; and (iii) the absence of intent to support illicit activity is not determinative. More importantly, even companies with otherwise robust compliance programs may face exposure, particularly where local operations are subject to pressure or coercion.

AML, Financial Intelligence, and How Exposure May Arise in Practice

In practice, exposure may arise not only through direct dealings with designated organizations, but also through financial intelligence, indirect connections, and patterns that emerge across transactions and counterparties. In particular:

• Financial system monitoring: Banks operating in US dollars, or with US exposure, routinely monitor transactions and file Suspicious Activity Reports (SARs) where activity presents unusual characteristics or potential links to designated entities. These reports often serve as the starting point for broader investigations.
• Cross-border investigations and data analysis: Authorities build on this information through cooperation among regulators and law enforcement, as well as through data analytics that identify patterns across transactions, entities, and beneficial ownership structures—often revealing connections not apparent from any single relationship.
• Supply chain tracing and internal reporting: Authorities may also trace the ultimate destination of goods or services, identifying situations in which otherwise legitimate commercial activity is indirectly linked to designated organizations. Whistleblower reports and internal investigations can further contribute to uncovering these connections.

Across these enforcement efforts, a consistent theme emerges: exposure frequently arises through intermediaries—including distributors, logistics providers, contractors, and local partners—rather than through direct interactions with a designated organization.

How We Can Help

In light of these developments, companies operating in Brazil and across Latin America should consider a proactive and integrated strategy that addresses both operational realities and evolving US enforcement expectations. Our Global Investigations & White-Collar team combines legal, compliance, and operational expertise to help clients navigate high-risk environments while managing US enforcement exposure.
We regularly assist clients in:

• Providing rapid-response counseling when extortion demands or security incidents arise, including real-time assessment of potential exposure under US material support and sanctions frameworks;
• Conducting comprehensive risk assessments across subsidiaries, joint ventures, supply chains, and logistics corridors to identify direct and indirect links to designated organizations;
• Designing and enhancing compliance programs, including policies, internal controls, and escalation protocols tailored to high-risk environments;
• Implementing risk-based due diligence and monitoring of third parties, including vendors, distributors, logistics providers, and other intermediaries;
• Delivering targeted training and scenario-based exercises to support decision-making under pressure, including in extortion scenarios;
• Conducting forensic reviews of historical transactions and advising on remediation strategies, including evaluation of voluntary disclosure considerations;
• Supporting crisis management efforts involving security risks, regulatory exposure, and cross-border enforcement coordination; and
• Advising on whether and how to pursue voluntary self-disclosure to US authorities in connection with potential exposure arising from transactions or conduct linked to designated organizations, and supporting clients in assessing, investigating, and addressing such risks.

In providing these services, we draw on a multidisciplinary team that includes former federal prosecutors, sanctions and export controls specialists, white-collar defense practitioners, and native Spanish- and Portuguese-speaking investigators with extensive field experience across Latin America. We have guided clients through parallel criminal, regulatory, and civil proceedings under the ATA, designed compliance frameworks recognized as industry benchmarks, and secured OFAC licenses permitting humanitarian and other legally permissible transactions in high-risk jurisdictions.

We would be pleased to discuss how these developments may affect your organization and to tailor an approach aligned with your operational footprint, risk profile, and existing compliance framework.

 

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¹ The US Government Accountability Office (GAO) has warned that TCOs increasingly use virtual currencies and “Crypto ATMs” to move bulk illicit cash across international borders. Consequently, the DOJ is prioritizing prosecution of willful violations involving digital assets that facilitate the criminal conduct of cartels.