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From Criminal Risk to Terrorism Liability: Why Companies With Exposure to High-Risk Regions Must Act Now
How cartel FTO designations, and their expansion through U.S. counterterrorism strategy, have reshaped corporate exposure globally
A New Enforcement Signal Companies Cannot Ignore
On May 6, 2026, the White House released a counterterrorism strategy that expands and reinforces an enforcement posture already created by the designation of major cartels as Foreign Terrorist Organizations and Specially Designated Global Terrorists, placing the dismantling of drug cartels and affiliated transnational criminal organizations at the center of American national security priorities. This is an enforcement signal that changes the calculus of corporate risk for any company with operations, partners, or supply chains that operate in, transact with, or otherwise touch high-risk or hotbed areas, including Latin America and the Middle East.
The strategy explicitly aligns cartel activity with the tools and authorities historically reserved for designated terrorist organizations, including sanctions, material support statutes, and coordinated military and intelligence action. For multinational companies, and for other companies with commercial exposure to high-risk regions, the risk is no longer theoretical or limited to traditional anti-corruption or sanctions frameworks. It is here, and it is accelerating faster than many leadership teams expected.
Why This Matters: The Terrorism Lens Shift
Business activity that once sat in a gray zone of criminal exposure can now be viewed through a terrorism lens. Indirect relationships, facilitation through third parties, or routine payments and logistics decisions may carry criminal and civil consequences …regardless of intent.
This shift builds on the foundation laid by President Trump’s January 2025 executive order directing the designation of Mexican cartels including the Sinaloa Cartel and Jalisco New Generation Cartel (CJNG) as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs). The May 2026 Counter Terrorism strategy makes clear that this is a sustained, escalating enforcement posture and deepens the administration’s commitment to addressing the nexus among drug trafficking organizations, cartel networks, terrorist financing, and designated terrorist groups, including groups such as Hezbollah.
What the Law Now Requires
Once cartels and affiliated organizations are designated as FTOs or SDGTs, the legal exposure for companies operating in affected regions or doing business with entities connected to those regions expands dramatically:
- Material Support Liability (18 U.S.C. § 2339B): Providing “material support or resources” to a designated FTO is a federal crime. The statute defines material support broadly including financial services, transportation, lodging, and expert advice. Even indirect support through supply chains, logistics, or local service providers can trigger liability.
- Narco-Terrorism Liability (21 U.S.C. § 960a): This statute makes it a federal crime to provide anything of pecuniary value to a foreign terrorist organization if the transaction relates to drug trafficking. If a company pays a cartel-affiliated logistics provider, sources materials from cartel-controlled operations, or facilitates financial transactions that benefit a cartel, it could face penalties up to life imprisonment.
- SDGT Sanctions and the OFAC 50% Rule: When individuals or entities are designated as SDGTs, all U.S. persons and entities are prohibited from transacting with them. Under OFAC’s 50% Rule, if a company is 50% or more owned by an SDGT, it is also considered blocked even if not explicitly listed. SDGT designations can occur without warning.
- JASTA Aiding and Abetting Liability: Under the Senate bill, companies may face lawsuits if they “knowingly provide substantial assistance” to a designated FTO. Any conscious, voluntary, and culpable support can lead to significant civil exposure.
The takeaway is straightforward: existing FCPA and AML compliance programs were not built for this. Companies must evaluate whether their controls meaningfully address FTO and SDGT risk, not just bribery and money laundering.
The Operational Reality Gap
The challenge for companies operating across LATAM or parts of the Middle East or companies doing business with entities in high-risk or hotbed areas is not simply understanding the law. It is reconciling that law with how business is actually conducted in regions where criminal or militant groups exert de facto control over territory, labor, infrastructure, or customs processes.
Many boards and executive teams still underestimate how quickly this policy shift changes the government’s expectations of corporate behavior. In our experience working across these regions, we see a recurring pattern: headquarters believes it has sufficient controls on paper, while the reality on the ground reflects informal workarounds, unvetted intermediaries, or security arrangements shaped by cartel influence that never surface in formal reporting channels.
This is where the gap between policy awareness and operational reality becomes most dangerous and where traditional compliance programs built around anti-bribery or sanctions screening fall short.
Five Steps Companies Should Take Now
Effective risk management in this environment requires moving beyond abstract assessments and into a defensible, evidence-based understanding of exposure. Companies should take the following steps immediately:
- Map supply chain and operational touchpoints for cartel or militant exposure. Identify every supplier, distributor, logistics partner, and service provider operating in high-risk regions or connected to entities operating in those regions. If there is a blind spot, the company may already be exposed. Comprehensive supply chain visibility is the foundation.
- Conduct intelligence-driven third-party due diligence that goes beyond standard screening. Cartels frequently use shell companies and intermediaries that appear legitimate. Intelligence-driven investigations including forensic audits, asset tracing, and background investigations, should be standard practice for any counterparty in affected regions or any counterparty with meaningful exposure to those regions.
- Assess whether existing compliance controls address FTO and SDGT risk, not just FCPA and AML. The enforcement environment has fundamentally shifted. Companies must evaluate whether their programs account for material support, narco-terrorism, and SDGT sanctions exposure, and update them accordingly.
- Close the governance gap between headquarters and regional leadership. Ensure that compliance, security, legal, and operations teams are coordinating to surface how decisions are actually made on the ground. Ask the uncomfortable questions about long-standing relationships, security arrangements, or service providers that were previously accepted as the cost of doing business.
- Engage experienced investigators to build a defensible, documented risk posture. Rather than assuming that local practices are unavoidable or that intent will protect the company, work with a team that can assess where governance breaks down, identify where cartel or militant influence is most likely to appear, and build a record that demonstrates the company understands the enforcement environment and has taken concrete steps to navigate it responsibly.
The Bottom Line: Now Is the Time
The emphasis here is not on panic or withdrawal from high-risk markets. It is on the need for companies to demonstrate to regulators, to enforcement authorities, and to their own boards that they understand the new counterterrorism enforcement landscape and have acted on that understanding.
Success looks like a leadership team that can articulate where its highest risk exposures sit, why certain mitigation decisions were made, and how those decisions align with the government’s stated counterterrorism priorities. It looks like a compliance and security posture that is documented, current, and grounded in how operations actually function not how policies are written.
In a moment when the U.S. government has made clear that it intends to use the full weight of counterterrorism authorities against cartel networks, companies with exposure to high-risk or hotbed areas, whether through operations, supply chains, logistics, financing, third-party relationships, or commercial dealings with entities in those areas, are being judged not only on what they knew, but on what they did with that knowledge.
Partnering with Guidepost Solutions allows organizations to bridge the gap between policy and practice and to move forward with a clear, defensible path in a rapidly changing enforcement landscape. Our team includes senior leaders with deep experience complex transnational investigations, including former DEA leadership and LATAM investigators with firsthand knowledge of how cartel networks operate across borders, how enforcement authorities assess risk, and where corporate exposure most often emerges in practice. Combined with our extensive on-the-ground presence in Latin America, including Mexico City, that allows us to help clients see beyond desktop diligence and generic compliance frameworks to the operational realities that matter most. In a market where many firms offer broad risk advice, Guidepost brings investigative credibility, regional fluency, and practical field-based insight that is uniquely suited to this moment.
MSU Institutional Assessment + RAMAGELLAN MonitorshipEmpire/Liberty Review