AFC POLICY
Fentanyl Act)― set off a cascade of events in Mexico, reportedly resulting in a“ run on the bank” against the two designated banks and each were placed into receivership.
On each of July 9 and August 19, 2025, FinCEN extended the effective date of the orders an additional 45 days, and they now go into effect on October 20, 2025. 10
The Treasury Department’ s actions present a host of anti-money laundering / counter-terrorist financing( AML / CTF) and economic sanctions-related legal, commercial, and practical risks and challenges for customers, counterparties and service providers of the three Mexican FIs, as well as the U. S. branches, affiliates and subsidiaries of the Mexican FIs.
Yet, in issuing and then twice extending the orders, the Treasury Department laid out a road map for Mexican banks and broker-dealers to avoid the same result. Those recommendations include:
▪ A good faith commitment to ensuring their AML / CTF and sanctions compliance programs are well-functioning and operating effectively( and making improvements where warranted);
▪ Proactively reporting touchpoints with the cartels where warranted;
▪ Promptly identifying and rooting out wrongdoing by individual employees; and
▪ Otherwise taking steps to ensure that any alleged facilitation of opioid trafficking has stopped and that there are significant controls in place to prevent recurrence.
Legal implications
The designations present unique and complex challenges for satisfying AML / CTF and economic sanctions compliance obligations. In addition, financial or other intermediaries or counterparties of FTOs or SDGTs ― and their executives and employees ― face significant criminal exposure under the U. S.’ s broad and extraterritorial material support for terrorism statute, 18 U. S. C. 2339B. In prior prosecutions under Section 2339B and / or similar prosecutions under the International Emergency Economic Powers Act( for willful violations of U. S. economic sanctions) involving non-U. S. companies, the DOJ has asserted jurisdiction in connection with a single U. S.-dollar denominated transaction transiting a U. S. correspondent bank or emails sent via a server located in the U. S. Finally, FIs and other companies and their directors or senior executives may face private party civil liability for knowingly aiding and abetting the activities of FTO- or SDGT-designated cartels where such activities injure U. S. persons, their property or business interests. Consequently, the designation of the cartels will present difficult tests for sanctions and AML compliance programs maintained by businesses engaged in commerce in Mexico.
Complicating these risks is the cartels’ reported embeddedness in certain portions of Mexican government and industry. Indeed, in certain parts of Mexico, the cartels function as quasi-governmental entities, controlling nearly all aspects of society. Extensive supply chain networks are embedded in the legitimate economy and across industries, including agriculture, chemicals, mining, financial services and transportation, as well as communications and technology.
To compound these issues, one of the areas of risk that presents particular challenges from a legal perspective is the“ Derecho de Piso,” which refers to extortion payments demanded by criminal organizations from businesses and individuals in exchange for consent to operate in territories under cartel control.
Any payments to an FTO or SDGT-designated cartels ― even if done for protection or to avoid harm generally ― would violate U. S. sanctions and could be prosecuted criminally with minimal U. S. nexus. Indeed, the DOJ’ s enforcement history in similar cases suggests that any“ duress” defense may be extremely limited and is unlikely to be available unless a defendant provided support 1) under unlawful, immediate and impending threat of death or serious bodily injury, 2) with no reasonable opportunity to avoid the situation and 3) there was a direct causal relationship between the criminal action and the avoidance of threatened harm. In other words, making multiple protection payments over time is unlikely to qualify for the duress defense. Instead, businesses must ensure robust internal controls and compliance systems to prevent unauthorized payments. If a company discovers such payments, it should immediately consult U. S. counsel to assess how to self-disclose the issue to U. S. authorities, which may mitigate penalties if done in good faith.
Legal counsel also should be sought to address reporting and compliance obligations while ensuring cooperation with relevant authorities to remediate any misconduct.
Proactive compliance actions to manage these risks
For businesses with operations related to Mexico, the FTO designations underscore the need for heightened due diligence when engaging with third parties. The following are mitigation strategies, indicators and practices for monitoring money laundering risks that can also help mitigate sanctions exposure.
30 acamstoday. org