By Darryl Wegner, Managing Director, Former FBI Senior Executive
Key Takeaways
- Recent U.S. policy shifts in Latin America require businesses to enhance regulatory compliance and third-party risk assessments.
These changes include classifying certain cartels as Foreign Terrorist Organizations, which significantly expands enforcement scrutiny. - Financial institutions and multinational companies must help strengthen AML and KYC protocols to address evolving enforcement priorities.
National security directives now impact even indirect business dealings with designated entities in Mexico and Latin America. - Timely response to FinCEN 314(a) requests can help reduce exposure to civil and criminal penalties.
Companies should prepare internal teams and audit trails to align with heightened investigative powers under national security laws.
A wave of recent U.S. policy changes is reshaping the operating environment for businesses with ties to Mexico and Latin America. In addition to wide-reaching tax reforms introduced under the administration’s “One Big Beautiful Bill,” new national security directives and criminal enforcement priorities are redefining corporate compliance obligations abroad. Among the most significant developments is the designation of certain cartels and transnational criminal organizations (TCOs) as Foreign Terrorist Organizations (FTOs) — a shift that carries serious implications for companies engaged in international trade, finance or logistics.
These changes collectively raise the bar for corporate accountability, particularly when it comes to due diligence, third-party risk management and internal controls. For businesses operating in or with partners across the region, the evolving landscape demands more than basic compliance. It requires proactive, enterprise-level strategies to detect risk exposure and maintain regulatory readiness across functions.
Key Policy Changes
A Shift in Enforcement Mindset: By categorizing cartels and TCOs alongside terrorist organizations responsible for American casualties, federal agencies adopted a posture that prioritizes total elimination over selective enforcement. Recent guidance makes it clear that corporate dealings as simple as vendor or third-party payments which indirectly touch these organizations will now be viewed through a national security lens, a significant departure from previous policy.
Enhanced Investigative Powers: Designating cartels and TCOs as FTOs allows the government to leverage national security authorities, such as the Financial Crimes Enforcement Network’s (FinCEN) Section 314(a) Requests, which enable federal agencies to seek information from financial institutions about potential money laundering or terrorist financing. These requests compel all financial institutions to search their records for accounts or transactions involving designated entities or individuals. Institutions must respond within two weeks or risk civil and criminal penalties. This mechanism dramatically increases law enforcement’s ability to detect and trace illicit financial connections, often well before companies even realize their exposure.
What This Means for Your Business
For financial institutions and companies operating in or with partners in Mexico and Latin America, the implications are clear: compliance and due diligence programs must be robust to address the expanded risk environment and policy changes. Even inadvertent connections to designated entities can trigger significant legal and reputational consequences.
To remain compliant and mitigate risk, financial institutions and companies with operations, vendors or partners in Mexico and Latin America should take immediate steps to:
- Evaluate third-party relationships for hidden exposure to designated entities.
- Reassess anti-money laundering (AML) and know your client (KYC) policies and procedures in light of the shifting risk landscape.
- Update compliance and due diligence protocols to address elevated national security scrutiny.
- Implement financial controls and audit trails that align with DOJ expectations and expanded use of FinCEN’s authorities.
- Prepare internal teams to respond swiftly to enforcement inquiries or 314(a) requests.
- Complete a forensic analysis to quantify potential exposure and build a documented record of good-faith compliance efforts.
How We Can Help
The Forensics, Litigation and Valuation team at PKF O’Connor Davies has deep experience navigating complex regulatory and enforcement matters. We assist clients by evaluating and enhancing internal controls, assessing critical risks, conducting data analysis and forensic reviews, investigations and quantifying economic exposure.
Our Global Reach
Through our Latin America Desk, we connect specialists from our New York City base with skilled counterparts in more than 40 offices throughout Latin America and the Caribbean, including Mexico, Colombia, Chile, Brazil, Argentina, Puerto Rico and the Dominican Republic.
We provide exceptional guidance and customized solutions integral to managing risk and success for businesses, individuals and organizations throughout the U.S. and Latin America. In addition, clients have access to accounting, audit, tax and business advisory expertise at more than 400 office locations in 150 countries on five continents through our role as the lead North American member firm in PKF International, a global network of independent accounting and advisory firms.
Contact Us
If you have any questions or need assistance facing these regulatory and enforcement risks, please contact your PKF O’Connor Davies client service team or:
Darryl Wegner,
Managing Director
dwegner@pkfod.com | 212.867.8000
Thomas Pannell, CPA, CFE
Partner
tpannell@pkfod.com | 332.910.7935
Victor Peña, CPA, CGMA
Partner
vpena@pkfod.com | 646.449.6380
Rachel L. DiDio, CPA
Partner
rdidio@pkfod.com | 954.947.3941