On July 1, 2026, the Office of Foreign Assets Control (“OFAC”) in the US Treasury Department imposed sanctions on several parties due to links to Brazil-based Primeiro Comando da Capital (i.e., First Capital Command, or “PCC”). This was the first round of sanctions against parties connected to PCC since the US Government’s actions in the spring designating PCC as both a Foreign Terrorist Organization (“FTO”) and a Specially Designated Global Terrorist (“SDGT”).
We refer to this as the “first round” of sanctions because additional designations involving parties allegedly linked to PCC may follow in the coming months. These measures are consistent with the current US Administration’s treatment of cartels and certain transnational criminal organizations as terrorist organizations, as well as a broader enforcement focus on parties that support them. The designations therefore should be viewed as an early signal of a potentially expanding enforcement approach, rather than as an isolated action limited to the parties named in the July 1 sanctions.
Refresher on the Designations of PCC as an FTO and SDGT
As described earlier, the US State Department announced two actions against PCC at the end of May:
SDGT Designation
- OFAC designated PCC and another Brazilian criminal organization, Comando Vermelho (Red Command, or “CV”), on the List of Specially Designated Nationals (“SDN List”) as SDGTs. PCC was already on the SDN List, having been added in 2021 when OFAC designated PCC under a separate anti-narcotics trafficking sanctions program. In March 2024, a Brazilian individual was sanctioned under that program for laundering money for PCC. The SDGT designation of PCC added another layer of sanctions to PCC, increasing the enforcement risks related to PCC.
- The SDN designations mean that these parties are effectively cut off from the US market. US Persons are prohibited from dealing directly or indirectly with SDNs and must block property in which SDNs have an interest and report such property to OFAC. Non-US persons are prohibited from “causing” US Persons to violate the sanctions by involving them in transactions involving SDNs. Additionally, items subject to US export controls may not be exported, reexported, or transferred to SDNs, whether directly or indirectly through third parties. These are strict liability violations; liability can occur without knowledge or intent.
- Even absent any US Person involvement, OFAC can add non-US persons to the SDN List for providing material or other support to SDNs. These are referred to as “secondary sanctions”. OFAC has wide discretion to determine when to designate a party under the secondary sanctions.
FTO Designation
- The State Department designated PCC and CV as FTOs, effective June 5.
- The additional designation of PCC and CV as FTOs introduces criminal liability for anyone determined to provide “material support or resources” to the FTOs or their agents. “Material support” is broadly defined in 18 U.S.C. § 2339B(d) to mean “any property, tangible or intangible, or service” such as currency, monetary instruments, and financial securities, but excludes medicine and religious materials. The US Department of Justice (“DOJ”) has historically used the material support statute to prosecute companies that have made payments to FTOs. A violation of the material support statute may lead to extensive forfeiture of assets, such as assets derived from, involved in, or used or intended to be used to commit the violation.
The simultaneous FTO-SDGT designations of PCC signal a clear US Government enforcement priority and introduce the heightened risk that parties with links to PCC could themselves become sanctioned. The July 1 designations appear to be an early example of that enforcement approach.
More Detail on the July 1 Designations
The parties sanctioned on July 1 included two Brazilian nationals, three Brazilian companies, and one Portuguese company. They were designated for (1) having provided, or attempted to provide, financial, material, or technological support for, or goods or services in support of PCC, or (2) being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, one of the new SDNs.
The press release accompanying the designations provides a sense of PCC’s reach and the risk of encountering PCC or its agents:
- PCC is described as the largest transnational criminal organization in the Western Hemisphere.
- PCC-related risks are not limited to Brazil. As noted, one of the companies sanctioned by OFAC is based in Portugal. Further, the press release states that (1) PCC operatives in the United States, particularly in Florida, launder drug proceeds for PCC (six members of the Florida-based group were indicted on money laundering charges in January 2026); (2) in recent years, PCC has expanded its global operations and now has a “significant presence” in the United Kingdom, Türkiye, and Japan; and (3) recent law enforcement actions by authorities in Brazil identified a PCC-controlled money laundering operation through a Chinese electronics distribution network and Chinese e-commerce platform.
- PCC’s network spans various sectors. The July 1 designations include financial services companies, a construction company, and a transportation and storage company.
Why This Matters for Brazil-Facing Businesses
As noted above, PCC-related risks are not limited to Brazil, but there are particularly heightened risks for Brazil-facing businesses.
From a Brazil-facing trade and supply-chain perspective, the July 1 designations are significant because they illustrate how PCC-related risk may surface through ordinary commercial activity. For companies importing from, exporting to, investing in, financing, insuring, or otherwise doing business in Brazil, exposure may arise through intermediaries, logistics providers, warehousing and transportation companies, customs brokers, freight forwarders, payment channels, trade finance arrangements, or counterparties with opaque ownership.
PCC-related exposure may not be obvious from the face of a transaction. It may arise from the way goods move, how payments are structured, who controls or benefits from a counterparty, or whether the transaction involves sectors or regions identified in public enforcement materials. Brazil-facing companies should therefore treat these designations as a broader supply-chain and counterparty-risk issue, not simply as an addition of a few parties to a sanctions list.
What Should Companies Do to Address These Risks?
These latest designations underscore the importance of reviewing and updating your screening and due diligence procedures to ensure that they are fit for purpose in this evolving risk landscape. This exercise should include an assessment of whether there are any parties in your supply chain or other business relationships that may be at heightened risk of acting for PCC or becoming sanctioned for links to PCC. It is also important to review compliance and termination clauses in your contracts and consider options and contingency plans. You should also monitor information about government investigations in Brazil, including Operation Carbono Oculto, which have resulted in press reports and other public information about parties with alleged connections to PCC.
We are working closely with clients on these issues and would be pleased to discuss how these developments may affect your company’s operations, supply chains, payment flows, and compliance programs.
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