US Terrorist Designations of Brazilian Criminal Groups Raise Compliance Risks for Companies

The designation of two major Brazilian criminal organisations as foreign terrorist organisations by the United States is creating new compliance challenges for companies operating in Brazil and across Latin America.

 The US designation of the Primeiro Comando da Capital (PCC) and Comando Vermelho (CV) took effect recently, marking the first time Brazilian criminal organisations have received the foreign terrorist organisation designation.

 The move has implications beyond traditional sanctions screening. Companies with Brazilian operations, contractors, suppliers or other third-party relationships may now face additional obligations involving ownership checks, transaction monitoring and escalation of payments associated with territories controlled or influenced by the groups.

 The US Department of the Treasury has separately taken enforcement action against individuals and companies linked to PCC. On 1 July 2026, Treasury’s Office of Foreign Assets Control sanctioned two Brazilian nationals, three Brazilian companies and a Portuguese company over alleged links to the criminal organisation and its money-laundering activities.

 Many existing corporate compliance programmes are primarily designed to identify bribery, corruption and conventional sanctions risks. The new designations introduce another layer of screening.

 Companies may need to determine whether vendors, subcontractors or other business partners have ownership or financial connections to designated organisations.

 The issue can become particularly complicated in areas where criminal organisations exert influence over legitimate commercial activity.

 US law also broadly defines material support and resources, potentially creating exposure involving financial services, currency and certain payments made under coercive circumstances.

 For companies with US connections, transactions involving Brazil may therefore require closer scrutiny even when the underlying business relationship appears legitimate.

 Traditional anti-bribery due diligence typically focuses on payments to government officials and other corruption indicators. The new risks require companies to look more closely at beneficial ownership, criminal-organisation affiliations and potential links to designated entities.

 Companies operating in affected areas may need to expand third-party questionnaires to include screening for transnational criminal organisations and foreign terrorist organisations.

 Existing counterparties may also require renewed screening. A supplier or business partner that passed due diligence when it was initially onboarded could subsequently become subject to sanctions or develop links to a newly designated entity.

 Companies may also need specific escalation procedures for payments made under duress or in response to extortion, rather than treating such transactions as ordinary third-party risks.

 The designations can also create overlapping reporting and disclosure obligations for companies subject to US regulation.

 Material-support disclosures, Office of Foreign Assets Control requirements and Securities and Exchange Commission disclosure obligations can involve different deadlines even when they arise from the same underlying transaction or relationship.

 For publicly traded companies, the designation of entities to sanctions lists can also raise additional disclosure considerations.

 The Brazil designations form part of a wider US effort against transnational criminal organisations in the Western Hemisphere.

 The Treasury Department said in July that PCC had expanded its operations internationally and identified the organisation as a significant threat involving drug trafficking, bulk cash smuggling and money laundering.

 For companies operating across Latin America, the developments mean compliance programmes may need to account for a broader range of risks than conventional anti-bribery and sanctions screening.

 Companies with exposure to Brazil may need to incorporate ongoing monitoring of beneficial ownership, sanctions designations and relationships with higher-risk counterparties, rather than relying solely on checks conducted when new vendors are onboarded.

 The changes are also likely to place greater emphasis on co-ordination among compliance, legal, finance, procurement and risk-management teams as companies assess transactions involving Brazil and other jurisdictions affected by US designations.