Brazil Michel Sankovski comments the classification of PCC and CV as terrorist organizations
With the U.S. government signaling its intention to classify the PCC (Primeiro Comando da Capital) and CV (Comando Vermelho) as terrorist organizations, concern is growing among Brazilian companies regarding potential exposure to international sanctions, the effects of which may be far broader than they initially appear. In an interview with UOL Economia, our partner Michel Sancovski, global co-head of the Global Investigations & White Collar Defense practice, analyzes the concrete risks for the Brazilian market and the key points of attention that this change imposes on companies with any type of connection to the United States.
Known for its rigorous enforcement, U.S. economic sanctions legislation has a distinctly extraterritorial character. It is not limited to companies headquartered in the U.S., reaching any entity that maintains, directly or indirectly, some type of connection with the country. One of the main warnings lies precisely in the growing sophistication and high degree of organization of criminal structures, which can make the risk invisible to many companies that inadvertently end up engaging with these groups. Suppliers, service providers, minority partners, and even customers can serve as the link connecting a company to the organized crime chain and, consequently, to U.S. sanctions. Sectors such as Energy, Transportation, and Construction are among the most vulnerable, given the complexity and extent of their supply chains. The risk, however, is not limited to these segments. Financial institutions, in particular, face an additional and potentially existential risk: the possible inability to operate in dollars, which in practice could render their very business model unviable.
According to Sancovski, the scenario demands heightened attention to compliance programs and continuous monitoring of the commercial partner chain. "This position reinforces the understanding of U.S. authorities that even extortion payments to local intermediaries, such as suppliers or service providers, may, under certain circumstances, be classified as FCPA violations, even without direct involvement of public officials. This significantly raises the level of risk for companies operating in Latin America or maintaining any connection with the U.S. market," he concludes.
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