On February 20, 2025, the US Department of State designated several international cartels and transnational criminal organizations as Foreign Terrorist Organizations (“FTOs”) pursuant to section 219 of the Immigration and Nationality Act and as Specially Designated Global Terrorists (“SDGTs”) pursuant to Executive Order (“EO”) 13224. These parties have been designated for “threaten[ing] the safety of the American people, the security of the United States, and the stability of the international order in the Western Hemisphere,” pursuant to EO 14157 recently signed by President Trump. Please see our previous blog post here regarding the new US sanctions policy under EO 14157 to designate certain international cartels as FTOs or SDGTs, and to ramp-up criminal enforcement against these organizations.
The designations include the following cartels and transnational organizations:
- Tren de Aragua
- Mara Salvatrucha (MS-13)
- Cártel de Sinaloa
- Cártel de Jalisco Nueva Generación
- Cártel del Noreste (formerly Los Zetas)
- La Nueva Familia Michoacana
- Cártel de Golfo (Gulf Cartel)
- Cárteles Unidos.
In conjunction with these designations, the State Department issued a press release and fact sheet.
Consequences of the SDGT SDN Designations
Other than Cárteles Unidos, all of the parties were previously identified on the List of Specially Designated Nationals and Blocked Persons (“SDN List”) maintained by the US Department of the Treasury’s Office of Foreign Assets Controls (“OFAC”). So these are most likely not organizations with which legitimate US businesses were engaged with in any case, and their additional designations should not warrant any change in approach on the part of US companies and their compliance organizations.
US Persons are generally prohibited from engaging in virtually all transactions involving such designated parties, including entities owned 50% or more by such designated parties. Designations also require all property and interest in property of these designated parties within the United States or the possession or control of US Persons to be blocked and reported to OFAC.
Non-US persons may also face the so-called US “secondary sanctions” risks for providing “material support” to any of these parties. US secondary sanctions target non-US persons who engage in transactions with SDNs by introducing the risk of the non-US persons themselves being added to the SDN List. OFAC has wide discretion in determining when to designate a party under the secondary sanctions.
Consequences of the FTO Designations
Separate from the OFAC sanctions risks, US persons and non-US persons subject to US jurisdiction as set out in 18 U.S.C. § 2339B(d) may face criminal liability for knowingly providing “material support” to FTOs. “Material support” is broadly defined 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.
Trump Administration’s Heightened Focus on Cartel-related Enforcement
The move to re-designate these entities into more restrictive categories is consistent with the broader agenda of the current Administration, and its DOJ to tackle Cartels as terrorist organizations. There is a clear mandate to aggressively prosecute these organizations and those which support them with a goal of total elimination. A recent memo, issued by newly confirmed United States Attorney General Pam Bondi, outlined the various initiatives that DOJ will employ to achieve this. These initiatives include diverting resources from traditional corporate Foreign Corrupt Practices Act, Anti Money Laundering and Anti-Kleptocracy enforcement efforts. Please see our prior alerts on these initiatives here and here. These re-designations open up to prosecutors in these cases a range of enhanced criminal charges under the International Emergency Economic Powers Act and other statutes and much-extended potential criminal penalties under the applicable Sentencing Guidelines. Administrative burdens to local prosecutors bringing these types of charges (e.g. the need to seek approval form the National Security Division of DOJ in Washington before doing so) have also been removed.
Canada Designations
Following the U.S., on February 20, 2025, the Government of Canada listed several transnational criminal organizations as terrorist entities pursuant to Canada’s Criminal Code. The organizations include cartels alleged to have played a “leading role” in the production and distribution of fentanyl throughout Canada. Public Safety Canada’s press release is available here, the backgrounder on each designation is available here, and the current list of designated terrorist entities maintained by Public Safety Canada is available here.
With the exception of the Cártel del Noreste (formerly Los Zetas) all organization designated by the US are now listed as terrorist entities in Canada. A terrorist listing under the Criminal Code is equivalent to an asset freeze: all persons in Canada and Canadian citizens anywhere in the world are prohibited from dealing in any property owned or controlled by or on behalf of a listed organization, facilitating transactions or providing financial assistance in respect of this property. These designations create new compliance obligations for certain entities, including financial institutions, which must now determine on a continuing basis whether they are in possession or control of property owned or controlled by or on a behalf of these terrorist entities and report on a continual basis to their principal regulator whether or not it is in possession/control of terrorist property.
From an enforcement perspective, these designations provide Canadian law enforcement personnel with more tools to prosecute these organizations under the Criminal Code and to stem related criminal activities such as financing and recruitment. From a policy perspective, the designations appear to be a direct response to the current U.S. administration’s proposed tariffs on all Canadian-origin goods imported into the United States under the International Emergency Economic Powers Act, citing grounds of an illegal immigration and drug crisis at the Canadian border. The designations are yet another commitment made by the Government of Canada in an attempt to terminate the proposed tariffs. These designations follow the recent appointment of a Fentanyl Czar, the establishment of the Canada-U.S. Joint Strike Force, the establishment of a new taskforce to combat money laundering, and a CAD 1.3 billion investment to strengthen security at the Canada-U.S. border.
