April 2026
New U.S. Anti-Terror Designations Increase Scrutiny of Cross Border Funds Flow from Latin America and the Caribbean
New U.S. anti-terror designations targeting certain Latin American and Caribbean transnational criminal cartels as Foreign Terrorist Organizations (FTO), or Specialty Designated Global Terrorists (SDGT), are causing companies of all sizes to re-examine how funds flow through their supply chains in the region.
Businesses operating in this expansive trade region are now subject to significant new U.S. extraterritorial criminal and civil liabilities by continuing to do business with suppliers, third party vendors and financial institutions that may have been coerced into working with the cartels, intentionally, or through their negligent KYC and AML compliance. A key aspect of the new anti-terror designations is the broad interpretation of what constitutes “providing material support or resources” to an FTO and the secondary sanction risks for “conducting or facilitating” transactions on behalf of SDGT’s–and willful blindness is not a defense.
Shortly after the U.S. Department of State designated the FTO’s and the U.S. Treasury Department designated the SDGT’s, the Treasury Department’s Office of Foreign Assets Control (OFAC) imposed secondary sanctions on numerous Mexico-based companies for their alleged support of FTO’s. These companies operate in a wide array of industries from household goods, pharma and wholesale trade to oil and petrochemicals.
This was quickly followed by the U.S. Treasury Department using FinCen to designate three Mexican financial institutions, CIBanco, Intercam and Vector, as “primary money laundering concerns,” alleging that they assisted Mexican FTO’s with laundering their cross-border payments. These designations immediately cut off these financial institutions from the U.S. banking system, compelling the Mexican Government to restructure them under its direct supervision. These actions have displaced and disrupted the honest businesses using these financial institutions, posing real reputational risks and jeopardizing their access to capital and funds transmittals.
Although many established businesses and financial institutions operating in Latin America and the Caribbean are well informed on their historic local and international KYC and AML obligations, the new anti-terrorism laws impose a new, more urgent layer of compliance review, given their severity, secondary liability, broad interpretation and extraterritorial reach. The U.S. Treasury and Justice Departments have allocated significant resources to the enforcement of these new rules and have announced them as a clear priority for the national security of the United States.
Any actor, whether it be a financial institution, supplier, trade facilitator or fintech platform, used by a business in the region could be a weak link under the new anti-terrorism laws–and that weak link could seriously disrupt or permanently terminate access to capital, including debt, equity and trade finance, as well as funds transmittal services for an honest business. This is especially true of the many new fintech platforms that middle market businesses in the region have come to rely on for their cross-border funds flow solutions. Given the wide disparity of KYC, AML and other compliance laws from country to country in the region, it is a challenge for many of these fintech platforms to ensure best-in-class compliance standards, let alone on-going compliance with the new U.S. anti-terrorism designations. Coupled with the historic practice of bad actors to launder illicit proceeds through crypto and blockchain exchanges used by many of these fintech platforms, any business relying on them for cross border funds flow solutions could be inadvertently exposed to heightened reputational, civil and even criminal risks.
Smart businesses are investing in the compliance expertise needed, on an on-going basis, to ensure that there is no disruption to their funds flow or access to capital that might be caused by these new risks. Now is the time to take a closer look at your supply chain, if any part of it happens to transit through Latin America and the Caribbean. Hedgerow can help.
Hedgerow has incomparable resources throughout Latin America and the Caribbean, with many advisors previously serving in senior positions throughout the national security establishment of the United States. Our advisors have had successful careers in the U.S. Department of War, Homeland Security and the intelligence services of the United States Army, Navy, Air Force and Coast Guard, as well the CIA and the FBI. Our in-country intelligence throughout Latin America and the Caribbean is significant. In addition, many of our advisors have years of experience in leadership positions with the Office of the United States Trade Representative, the U.S. State Department, the U.S. Treasury Department, including Fincen and OFAC, as well as the U.S. Departments of Justice, Energy, Agriculture and Commerce. All our advisors have continued to maintain excellent access and relationships with their various government departments and agencies. Hedgerow is intimately familiar with the new focus on FTO’s and SDGT’s by the Departments of State and Treasury, and their secondary liabilities.
Hedgerow provides comprehensive, independent compliance audits of a businesses’ supply chain. Our experts rigorously map all aspects of your supply chain, especially funds transmittals, to find real and reputational exposure to the new US anti-terrorism laws and designations. Our enhanced and incomparable diligence services, which combine cutting edge technology with human intelligence, will help surface the need to seek additional representations and assurances from counterparties in your supply chain, or the need to seek new counterparties. Our advisors will also provide relevant amendments to your existing KYC and AML policies and procedures to ensure that they are responsive to the new US anti-terrorism rules and designations. Hedgerow works closely with leading global law firms and can arrange for its independent compliance audit to be protected by attorney-client privilege.
To ensure on-going compliance and supervision, Hedgerow advisors can also be engaged, after their compliance audit, to serve as compliance officers in the c-suite of our clients, on a fractional basis. This ensures that your supply chain’s integrity and funds transmittal settlements are continually monitored and supported by trusted experts, who are well respected by the US Government, and who continue to have access to their former departments and agencies. Hedgerow’s unique compliance advice can even identify significant cost efficiencies by enhancing your trade settlement solutions. Hedgerow believes that compliance with anti-bribery, anti-money laundering and the new U.S. anti-terrorism laws can be turned into a competitive advantage for businesses operating in Latin America and the Caribbean, and not an undue cost-burden, if done correctly.
Hedgerow is a unique advisory firm dedicated to global middle market businesses pursuing transformative changes. Hedgerow was founded by leading experts who have worked on American national security, defence, trade and technology matters for many years. The firm has a deep and incomparable bench of strategic advisors in these areas. www.hedgerowadvisors.com