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On May 28, 2026, Secretary of State Marco Rubio announced the designation of Comando Vermelho (CV) and Primeiro Comando da Capital (PCC), two of Brazil’s largest criminal organizations, as Specially Designated Global Terrorists (SDGTs), and the U.S. Department of State’s intent to designate both groups as Foreign Terrorist Organizations (FTO), effective June 5, 2026.
The move extends the U.S. counterterrorism framework and imposes significant potential U.S. criminal and civil legal liability, as well as asset-blocking obligations, on individuals and entities that have direct or indirect business dealings with CV or PCC, including where such activities take place entirely outside of the United States.
For companies operating in Brazil, the designations present important compliance considerations, especially as the U.S. Department of Justice (DOJ) has prioritized investigations and prosecutions related to “[m]aterial support by corporations to foreign terrorist organizations, including recently designated Cartels.”The Trump Administration previously designated eight Mexico-based and transnational criminal cartels as FTOs in 2025, and subsequently took action against three Mexican financial institutions that were identified as processing transactions related to designated FTOs, severely restricting their access to the U.S. financial system.
What the FTO Designation Means
The planned designation of PCC and CV as FTOs creates significant new legal risks for companies operating in Brazil.
Criminal Risks. The “Material Support” statute (18 U.S.C. § 2339B) criminalizes knowingly providing, attempting to provide or conspiring to provide “material support or resources” to an FTO. The term “material support” is defined extraordinarily broadly to encompass any property, service, currency, financial services, lodging, training, expert advice, personnel or transportation. Violations, which can stem from conduct that occurs outside the United States, carry penalties of up to 20 years’ imprisonment (or life imprisonment if the death of any person results).
The requirement that an individual or entity “knowingly” provide material support or resources generally can be satisfied both by affirmative knowledge that it was providing support to an FTO or, alternatively, if a defendant is aware of a “high probability,” or deliberately avoids obtaining information that would confirm, that its counterparty is linked to an FTO. As a result, for companies operating in Brazil, ignoring red flags that indicate potential transactions with PCC or CV, or avoiding taking action to identify such red flags, could potentially lead to U.S. criminal liability if any such companies are found to have done business with an FTO or FTO-controlled entity.
This statute also explicitly provides for extraterritorial jurisdiction, enabling U.S. authorities to bring Material Support charges for conduct that occurs entirely outside of the United States, including against U.S. or non-U.S. persons or entities, so long as a minimal jurisdictional nexus with the United States can be established.
Civil Liability. The Anti-Terrorism Act (18 U.S.C. § 2333) provides a private cause of action—with treble damages and attorneys’ fees—for U.S. nationals injured by acts of international terrorism, including on aiding-and-abetting theories against entities that provided “substantial assistance” to a designated FTO.
The designation of PCC and CV as FTOs will subject companies to civil litigation risk where a plaintiff can credibly allege the company engaged in a commercial relationship that facilitated PCC or CV operations that caused damages. Plaintiffs injured by activities of other designated cartels have brought claims under this statute against banks alleged to have processed transactions for those FTOs.
Asset-Blocking Obligations. Under 18 U.S.C. § 2339B(a)(2), any U.S. financial institution that becomes aware it possesses or controls funds in which a designated FTO or its agent has an interest must hold those funds and report them to the U.S. Department of the Treasury. This obligation will apply to funds linked to PCC and CV upon the June 5 effective date of the designations. Violations expose noncompliant institutions to civil penalties of up to $50,000 per violation or twice the amount involved.
Additional Considerations
SDGT Designations. The U.S. Department of State’s designation of PCC and CV as SDGTs separately prohibits U.S. persons from engaging in any direct or indirect dealings with them. In addition, although PCC has been on OFAC’s SDN List since 2021, State’s SDGT designations create new secondary sanctions risks for foreign financial institutions and others who continue to engage in dealings with the groups.
Primary Money Laundering Concern. Similar to the orders that FinCEN issued in June 2025 against three Mexican financial institutions, the Trump Administration could take action against Brazilian financial institutions if they are determined to be of primary money laundering concern in connection with illicit opioid trafficking, due to the provision of financial services to PCC, CV or other illicit actors.
Operação Carbono Oculto: The Enforcement Backdrop
The recent U.S. designations of PCC and CV come against the backdrop of significant Brazilian enforcement activity against financial institutions and other companies linked to these newly designated entities. On August 28, 2025, Brazilian authorities launched Operação Carbono Oculto (Operation Hidden Carbon), involving actions across ten Brazilian states directed against a multibillion-dollar PCC money-laundering scheme involving the fuel sector. Related investigations and enforcement actions have targeted investment firms and fintech businesses.
Operation Hidden Carbon demonstrates that the risk of engaging in transactions with FTO-controlled entities is not theoretical—PCC has embedded itself in major sectors of the Brazilian economy. For example, prosecutors allege that PCC:
- Controlled over 1,000 gas stations generating BRL 52 billion (~USD 9.5 billion) in retail sales.
- Operated unlicensed fintech platforms that moved BRL 46 billion (~USD 8.5 billion).
- Managed approximately 40 investment funds holding BRL 30 billion (~USD 5.5 billion) in assets including ethanol plants, a port terminal and a nationwide truck fleet.
Based on recent enforcement activities, companies operating in Brazil, particularly in the energy, logistics, construction or financial sectors, have clear indications of the potential for exposure to PCC- or CV-linked entities. The U.S. designations of the PCC and CV as FTOs and SDGTs creates additional risk exposure for multinational companies and signals the expectation of U.S. prosecutors that companies will take appropriate measures to ensure they comply with applicable U.S. laws.
What Companies Should Do Now
The window before the June 5 effective date is narrow. Companies should consider taking immediate steps to assess and validate their existing counterparties, activities and compliance controls:
- Conduct a risk assessment to identify, given the company’s specific operations, supply chain and business partners, areas of potential direct or indirect contact or engagement with PCC- or CV-linked entities.
- Review transactions with vendors and other business partners to identify potential prior dealings with PCC- or CV-linked entities. DOJ’s Corporate Enforcement Policy rewards voluntary self-disclosure, but a delay in investigating could result in DOJ or another U.S. agency approaching a company first, preventing the company from making a voluntary self-disclosure.
- Implement enhanced due diligence protocols, including beneficial-ownership tracing, sanctions screening, adverse media monitoring and cross-referencing existing vendor networks against PCC- or CV-linked entities. As part of these protocols, companies should train employees—particularly in procurement, finance, logistics and security—to recognize red flags that may indicate counterparties have cartel or other criminal organization links.
- Upgrade anti-money laundering and counterterrorism financing controls as standard third-party screening designed for sanctions and anticorruption compliance purposes may not be sufficient to address all FTO-related risks.
How We Can Help
Akin’s team includes former senior officials from the Justice Department, Department of the Treasury and Department of State. As the Brazil-related FTO and SDGT designations create potential criminal exposure, civil litigation risk and regulatory scrutiny across multiple enforcement channels simultaneously, our Chambers-ranked white collar defense & government investigations and economic sanctions & export controls practice groups provide seamless, comprehensive representation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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