US Designates Brazilian Criminal Organizations as Foreign Terrorist Organizations

The Trump administration has extended its anti-cartel campaign to Brazil. On May 28, 2026, the US Department of State announced the designation of two of Brazil’s most powerful criminal organizations — Primeiro Comando da Capital (PCC) and Comando Vermelho (CV) — as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs), effective June 5, 2026.https://www.state.gov/releases/office-of-the-spokesperson/2026/05/terrorist-designation-of-comando-vermelho-and-primeiro-comando-da-capital.

The designations follow a January 2025 executive order that directed the Secretary of State to recommend cartels and other transnational criminal organizations (TCOs) for FTO and SDGT designation. In February 2025, the State Department designated eight organizations — six Mexican cartels, MS-13, and Tren de Aragua — as FTOs and SDGTs, followed by subsequent waves targeting Haitian gangs, Ecuadorian criminal organizations, and the transnational gang Barrio 18.On the first day of President Trump’s second term, he issued Executive Order 14157, directing the Secretary of State to recommend designations of cartels and other transnational organizations as FTOs and SDGTs. See https://www.state.gov/designation-of-international-cartels/Executive Order 14157. The addition of PCC and CV marks the first time Brazilian criminal organizations have been subjected to FTO designation and signals that the administration’s anti-cartel campaign will continue to broaden across Latin America.

These designations carry substantial consequences for companies with operations or counterparties in Brazil, particularly those in São Paulo and Rio de Janeiro — Brazil’s two largest commercial centers and the respective strongholds of PCC and CV. Companies in financial services, logistics and transportation, real estate, construction, agriculture, energy, and telecommunications face particular risk given the new criminal and civil liability exposure. Dealings not intended to support PCC or CV may still create risk and, where the requisite knowledge can be shown, potential material-support exposure.

This Client Alert provides background on PCC and CV, summarizes the legal framework and consequences of FTO/SDGT designation, identifies specific risks for companies operating in Brazil, and outlines practical compliance steps.

Background: PCC and CV

PCC is Brazil’s largest and most sophisticated criminal organization. Founded in the 1990s, PCC has grown into a transnational enterprise involved in drug trafficking, extortion, and infiltration of legitimate industries throughout the state of São Paulo. PCC has expanded its operations beyond Brazil into Paraguay, Bolivia, and other South American nations, and has been linked to international cocaine trafficking routes to Europe and Africa.

CV is one of Brazil’s oldest criminal factions. Dating back to the 1970s, CV exercises territorial control over significant portions of Rio de Janeiro and its surrounding areas, operating in drug trafficking, arms smuggling, and extortion. CV’s geographic stronghold in greater Rio de Janeiro — Brazil’s second-largest commercial center — creates significant points of contact with legitimate commerce. Like PCC, CV has developed transnational networks across South America.

Implications of FTO and SDGT Designations

The designations create overlapping criminal, civil, regulatory, and sanctions risks for companies and individuals.

Criminal Liability: Material Support Under the ATA

Perhaps the most significant consequence of FTO designation is that it creates criminal exposure for companies and individuals who provide “material support or resources” to designated organizations. Under the US Anti-Terrorism Act (ATA), the US Department of Justice (DOJ) can investigate and bring criminal charges against companies for providing material support to FTOs. The term “material support or resources” is defined broadly as “any property, tangible or intangible, or service,” and includes currency or monetary instruments, financial services, lodging, training, expert advice or assistance, transportation, personnel, communications equipment, and facilities.18 U.S.C. § 2339A(b)(1); 18 U.S.C. § 2339C(a).

Making payments to cartel-affiliated organizations or individuals, providing financial services to a cartel-owned business, or conducting financial transactions for such entities may all constitute material support to an FTO. Notably, extortion, protection, and ransom payments could be considered “material support and resources.” No connection to a specific terrorist act is required; the provision of support to the designated entity is sufficient.

The material support statute applies extraterritorially, meaning US authorities can prosecute individuals and entities for conduct occurring outside the United States. The statute also applies to conduct that has a de minimis effect on interstate or foreign commerce — which includes most transactions by a multinational company or facilitated by a multinational or local bank.18 U.S.C. § 2339B(d)(1)(F). A single US dollar transaction through a correspondent account or the use of a US-based email account could be a sufficient jurisdictional hook.

Criminal penalties against a corporation can involve steep fines and asset forfeiture. A corporate defendant may be fined up to $500,000 per violation or twice the gross monetary gain or loss resulting from the offense under the material support statute. An individual may be imprisoned up to 20 years (or up to life if the commission of the offense results in death) and/or fined up to $250,000 per violation.

Material support prosecutions are subject to an eight-year statute of limitations. In the most prominent corporate prosecution to date, French cement manufacturer Lafarge S.A. pled guilty in 2022 to conspiring to provide material support to ISIS and was ordered to pay criminal fines and asset forfeiture totaling over $778 million.Press Release, US Dep’t of Justice, Lafarge Pleads Guilty to Conspiring to Provide Material Support to Foreign Terrorist Organizations (Oct. 18, 2022), https://www.justice.gov/opa/pr/lafarge-pleads-guilty-conspiring-provide-material-support-foreign-terrorist-organizations. The 2007 Chiquita Brands case, involving protection payments to a designated Colombian paramilitary group, resulted in a $25 million fine.Press Release, US Dep’t of Justice, Chiquita Brands International Pleads Guilty to Making Payments to a Designated Terrorist Organization and Agrees to Pay $25 Million Fine (Mar. 19, 2007), https://www.justice.gov/archive/opa/pr/2007/March/07_nsd_161.html. Criminal liability can also be imposed on corporate officers and employees who play any role in the prohibited conduct.

DOJ’s Criminal Division recently highlighted material support by corporations to FTOs, including recently designated cartels and TCOs, as a priority area of white collar enforcement.Memorandum from Matthew R. Galeotti, Head of the Criminal Division, US Dep’t of Justice, “Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime,” at 2 (May 12, 2025). DOJ also added material support and sanctions violations to its Corporate Whistleblower Awards Pilot Program, under which whistleblowers can receive awards of up to $50 million for reporting corporate misconduct.Press Release, US Dep’t of Justice, Deputy Attorney General Lisa Monaco Announces New Corporate Whistleblower Awards Pilot Program (Aug. 1, 2024), https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-monaco-announces-new-corporate-whistleblower-awards-pilot.

Civil Liability: ATA and JASTA

The designations create risk of civil liability. Under 18 U.S.C. § 2333, US national victims of international terrorism can sue for treble damages and attorneys’ fees. The Justice Against Sponsors of Terrorism Act (JASTA) permits secondary liability against a person who aids and abets, by knowingly providing substantial assistance, or conspires with the person who committed an act of international terrorism, where that act was committed, planned, or authorized by a designated FTO.18 U.S.C. § 2333(d)(2).

The Supreme Court has noted that providing routine services in an unusual way or providing dangerous goods to a terrorist group could constitute aiding and abetting a foreseeable terror attack.See Twitter, Inc. v. Taamneh, 598 U.S. 471, 499 (2023) (noting that liability may exist “where the provider of routine services does so in an unusual way or provides such dangerous wares that selling those goods to a terrorist group could constitute aiding and abetting a foreseeable terror attack”). Companies must therefore be aware of their heightened civil liability risk if they have clients or counterparties in areas controlled by PCC or CV.

Sanctions and Blocking Obligations

As designees, PCC and CV have been added to the Office of Foreign Assets Control (OFAC) list of Specially Designated Nationals (the SDN List). This means that US persons, including companies, must freeze any assets belonging to these organizations and report them to OFAC. The same rule applies to any entity that is 50% or more owned by someone on the SDN List.

Because PCC and CV are not formal legal entities with clear ownership structures, it can be difficult to determine whether a business partner or counterparty has ties to these organizations. As a result, companies must conduct careful due diligence on their counterparties (particularly in São Paulo and Rio de Janeiro) to avoid inadvertent dealings that could trigger sanctions liability.

SEC Disclosure Obligations

Covered issuers should assess whether Section 13(r) of the Securities Exchange Act of 1934 requires disclosure of specified knowing transactions or dealings with persons whose property and interests in property are blocked pursuant to Executive Order 13224, including SDGTs; those reporting obligations do not include a materiality threshold.

We have already begun to see reports and self-disclosures relating to these issues in the context of the Mexican cartel designations. For example, in late 2025, Kodiak Gas Services disclosed an internal investigation revealing that its former Mexican affiliate made payments likely benefiting a designated FTO.https://ir.kodiakgas.com/sec-filings/all-sec-filings/content/0001767042-25-000085/kgs-20250930.htm. Those payments were allegedly made prior to Kodiak’s 2024 acquisition to protect employees from threats of harm and to ensure access to worksites. The company self-reported to DOJ, the US Securities and Exchange Commission (SEC), and OFAC.

Specific Risks for Companies Operating in Brazil

In regions where PCC and CV exercise territorial control, companies may face demands for protection payments or other forms of extortion to permit continued business operations. Payments made under duress — including payments to allow transportation, communication, and other business operations in territory controlled by a designated organization — may still be charged as material support to an FTO. DOJ has not recognized a blanket defense for payments made under threat, and these situations require careful, fact-specific legal analysis.

Key Takeaways for Companies Operating in the Region

Companies with any nexus to Brazil — whether through direct operations, counterparties, supply chains, or financial relationships — should consider the following steps:

• Conduct a targeted risk assessment. Identify customers, suppliers, vendors, counterparties, business lines, and geographic operations that may implicate PCC or CV, or areas where those organizations maintain significant operations or investments. The assessment should examine whether goods or services are likely to be provided or diverted to designated FTOs or SDGTs, and whether the company maintains accounts or facilitates transactions with individuals or entities that may be linked to these organizations. Consider whether alternative, less risky counterparties can be identified and used.
• Update compliance policies and internal controls. Review and, as needed, update existing compliance programs to address anti-terrorism and national security risks, including sanctions screening, third-party due diligence, and anti-money laundering and counter-terrorism financing controls. Give particular attention to FTO and cartel-specific screening and due diligence controls.
• Enhance counterparty screening and due diligence. Implement or strengthen know-your-customer processes, screening customers, vendors, carriers, and other third parties against OFAC’s SDN List and the State Department’s announcements of new terrorist designations. In higher-risk areas, require enhanced documentation and identification of ultimate beneficial ownership of counterparties.
• Train personnel. Design and provide training to staff on identifying red flags and escalating cartel- and TCO-related risks. Prioritize training for frontline personnel and high-leverage functions, such as management, supply chain, and finance personnel, emphasizing the legal consequences of seemingly routine transactions and the importance of assessing the legitimacy of goods and services and confirming they are from reputable counterparties.
• Establish escalation protocols. Provide clear, secure escalation channels to legal and security leadership for any demand involving extortion, protection payments, or other contacts with potentially designated entities. Adopt bright-line rules prohibiting protection payments or any response that could be construed as material support.
• Review SEC disclosure obligations. Public company issuers should assess whether their existing disclosure controls adequately capture the reporting obligations triggered by the designations.

Conclusion

The designation of PCC and CV as FTOs and SDGTs confirms that the Trump administration’s anti-cartel campaign extends well beyond Mexico and that cartel activity across Latin America continues to be a priority for the administration. Companies with any nexus to Brazil — particularly those operating in São Paulo or Rio de Janeiro, or in sectors vulnerable to criminal organization influence — should take proactive steps to assess their exposure, update their compliance frameworks, and ensure their personnel are equipped to identify and escalate risks.

The consequences of inaction are severe: potential criminal prosecution, substantial fines and forfeiture, civil liability, sanctions penalties, and reputational harm. Companies that invest now in robust, risk-based compliance programs will be best positioned to demonstrate good faith and mitigate their exposure in this rapidly evolving enforcement environment.