U.S. Expands Terrorist Designations: Impact On Businesses In Mexico

Dear Clients and Friends:

In July 2026, the United States Government expanded the list of Mexican criminal organizations designated as Foreign Terrorist Organizations (“FTOs”) and Specially Designated Global Terrorists (“SDGTs”), adding the Juárez Cartel and Los Viagras. These organizations join the six Mexican cartels previously designated in February 2025: (i) the Sinaloa Cartel, (ii) the Jalisco New Generation Cartel (CJNG), (iii) the Gulf Cartel, (iv) the Northeast Cartel, (v) La Nueva Familia Michoacana, and (vi) Cárteles Unidos.

Although these designations do not directly alter the Mexican legal framework, they represent a significant development in the compliance and risk management landscape for companies operating in Mexico, particularly those that maintain connections to the United States through shareholders, investors, directors, officers, employees, financial institutions, or supply chains.

U.S. law prohibits persons subject to U.S. jurisdiction from knowingly providing material support or resources to organizations designated as FTOs. Likewise, sanctions administered by the Office of Foreign Assets Control (“OFAC”) restrict transactions involving designated individuals and entities, including entities that are owned, directly or indirectly, fifty percent (50%) or more by one or more blocked persons.

As a result, U.S. authorities are expected to increase scrutiny of certain business activities conducted in Mexico, particularly those involving payments, contractors, suppliers, transportation providers, security companies, intermediaries, and other third parties operating in regions where designated criminal organizations maintain a presence.

Against this backdrop, companies operating in sectors such as mining, energy, infrastructure, manufacturing, transportation, and logistics may face heightened legal, financial, and reputational risks if they do not maintain adequate procedures to identify and manage potential exposure arising from their commercial counterparties. This is particularly relevant for projects involving multiple contractors and suppliers, or projects located in areas that have historically experienced security concerns, extortion, or territorial control by criminal organization.

While a payment made under duress or as the result of an extortion demand does not automatically constitute material support to a designated organization, such situations should be assessed immediately and appropriately documented. The potential consequences will depend on the specific facts and circumstances involved, the knowledge of the parties, and the existence of sufficient jurisdictional nexus to trigger the application of U.S. law.

In light of these developments, companies should consider implementing and strengthening compliance and due diligence procedures applicable to contractors, suppliers, transportation providers, security companies, intermediaries, and other third parties with whom they conduct business. Among other measures, companies should appropriately identify the shareholders, beneficial owners, directors, officers, and representatives of their principal counterparties; periodically screen such persons against applicable sanctions lists; review corporate records, litigation history, investigations, adverse media, and potential connections to designated persons or organizations; and establish procedures for the prompt reporting and handling of incidents involving threats, extortion demands, requests for informal payments, or unexplained changes in banking instructions. Companies should also consider incorporating compliance representations and covenants, audit rights, and suspension or termination provisions into their contractual arrangements in order to mitigate risks associated with international sanctions, anti-money laundering compliance, and counter-terrorism financing concerns, and to enable a timely response to potential contingencies.

Particularly in projects involving a significant number of contractors or suppliers, we recommend that compliance and due diligence documentation be requested and reviewed at least 15 (fifteen) business days prior to engagement, mobilization, or the issuance of any initial payment. In our experience, the early identification of risk factors can help prevent contingencies that may ultimately jeopardize a project’s operational continuity or give rise to concerns from investors, financial institutions, or foreign authorities.

These recent designations reflect a broader trend toward increased scrutiny by U.S. authorities of economic activities that may directly or indirectly benefit criminal organizations. Accordingly, it is becoming increasingly important for companies operating in Mexico to maintain robust compliance, due diligence, and risk management programs that enable them to identify potential exposure in a timely manner and properly document the measures adopted to mitigate such risks.

At EC Rubio, we have extensive experience assisting clients with the design and implementation of due diligence procedures for suppliers, contractors, and intermediaries; conducting regulatory and compliance risk assessments; developing protocols for responding to security incidents and extortion-related events; and drafting and negotiating contractual provisions relating to international sanctions, anti-money laundering compliance, and corporate compliance obligations. The effective implementation of these measures can significantly strengthen internal controls and reduce exposure to legal, financial, and reputational risks arising from the current operating environment.

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.