US Crackdowns on Drug Cartels: What LATAM Companies Must Know Before Doing Business in the United States

Author: Yoel Molina, Esq., Owner and Operator of the Law Office of Yoel Molina, P.A.

30 December 2025

US Crackdowns on Drug Cartels: What LATAM Companies Must Know Before Doing Business in the United States

If you run or advise a Latin American company and you sell into the US, raise capital here, bank here, move cargo through Miami, or even pay vendors in dollars, you are—whether you like it or not—inside the blast radius of US counter-narcotics enforcement. Over the last few years, the US has shifted from chasing only cartel kingpins to also targeting the business enablers in their orbit: vendors, logistics partners, shell companies, brokers, and money-movement networks. That means legitimate LATAM companies can get caught in the gears if their counterparties touch cartel activity—sometimes without realizing it.

Let’s cut through the noise and lay out what’s actually happening, why it matters to you, and how to protect your company.

The enforcement landscape,

Sanctions are the spear tip. The Treasury Department’s Office of Foreign Assets Control (OFAC) uses two primary tools against narcotics traffickers:

The Foreign Narcotics Kingpin Act (31 C.F.R. Part 598). It blocks the assets of designated traffickers and forbids US persons from dealing with them. Civil and criminal penalties are severe, and enforcement is effectively strict liability on the civil side. If you transact with a designated party—even unintentionally—you can still face penalties.
Executive Order 14059 (Dec. 15, 2021) created a modern sanctions program targeting any foreign person involved in the global illicit drug trade and its facilitators (precursors, pill-press equipment, brokers, money launderers). Regulations live at 31 C.F.R. Part 599. This sits alongside, and sometimes overlaps with, the Kingpin regime.

In 2025, OFAC and the broader US government doubled down on cartel-related sanctions designations—especially factions of the Sinaloa Cartel (including “Los Chapitos”) and related networks—while highlighting that hundreds of individuals and companies tied to Sinaloa have been designated over time. The message is clear: facilitators are fair game.

Small, “normal” businesses are not immune. OFAC has sanctioned seemingly mundane companies (think retail chains or pharmacies) when they were tied to cartel finance. If you think “we just sell consumer goods, we’re low risk,” think again.

Follow the money. FinCEN—the US financial-intelligence unit—has zeroed in on Chinese Money Laundering Networks (CMLNs) that move cartel proceeds using remitters, mirror trades, crypto, and third-party payments. FinCEN’s 2025 advisory spells out typologies and red flags every bank (and by extension, every corporate treasury that wants to keep bank accounts open) should be watching.

Supply-chain pressure is real. DOJ and Treasury have targeted the precursor-chemical to pill-press supply chain feeding fentanyl manufacturing in Mexico—often through PRC-based firms. If your procurement or logistics touches chemical inputs, lab equipment, dies or presses, you need export-control and sanctions diligence baked in.

Why this hits LATAM companies doing business in the US

Sanctions exposure doesn’t stop at the border. Even non-US companies can be designated under E.O. 14059 if they materially support the drug trade. One designation and you’re cut off from the US financial system; your US dollar payments freeze; your US customers and banks must walk away. There is no “we’re not American” shield.
Strict-liability risk for US-touching transactions. Your US subsidiaries, US-dollar payments, US-based staff, or use of US banks all bring you within OFAC’s reach. On the civil side, OFAC doesn’t need to prove intent; it needs to prove you did the prohibited transaction. Penalties can reach into the millions per violation.
Bank de-risking is ruthless. Miami-Dade and South Florida banks carry heavy BSA/AML obligations and are reacting quickly to FinCEN’s fentanyl and CMLN advisories. If your payments look like TBML (trade-based money laundering)—round-amount invoices, third-party payers, mis-matched shipping docs—expect enhanced due diligence, account closures, or frozen wires.
Corporate Transparency Act (CTA) still matters for foreign-registered entities. As of spring 2025, US-formed (“domestic”) companies are exempt from BOI reporting under an interim rule, but foreign entities registered to do business in a US state still must file BOI under updated deadlines, subject to litigation whiplash. Many LATAM companies operating in Florida fall into that “foreign reporting company” bucket. Miss a filing, and you’ll compound your bank and compliance headaches.

The highest-risk patterns we see (and what triggers them)

Third-party and pass-through payments. A buyer in Mexico asks you to accept payment from an unrelated “consulting” entity in another country. Banks flag this as classic CMLN/TBML behavior.
Over/under-invoicing or strange pricing. Values don’t line up with market norms; the declared value shifts at the last minute; the goods class change to a higher-value proxy. Banks and customs call this a red flag.
Precursor equipment and chemical inputs. Pill presses, die molds, lab glassware, certain reagents—if your supply chain touches these, assume you’re in a heightened sanctions/export-control zone.
“Normal” retail suppliers with abnormal cash or crypto flows. Cartel proceeds often re-enter the economy through ordinary retail businesses. If a counterparty has unexplained liquidity, be wary.

Practical playbook for LATAM companies (built for Miami-Dade reality)

1) Treat OFAC screening as a revenue-protection function, not a checkbox.

Screen every counterparty and its beneficial owners against the SDN list at onboarding and before payment. Automate daily rescreening—designations drop without warning. Make sure your tool covers Kingpin [SDNTK] and E.O. 14059 [ILLICIT-DRUGS-EO14059] tags. Follow OFAC’s five-pillar compliance framework: management buy-in, risk assessment, internal controls, testing, training.

2) Build a TBML firewall around trade flows.

Adopt a standard set of trade integrity controls: match invoices to transport docs and insurance; escalate round-number invoices; require that payer = named buyer; ban third-country payers without pre-approval; sanity-check unit prices and HS codes; verify end-use/end-user for sensitive equipment. FinCEN’s fentanyl-finance analysis provides concrete red flags you can codify into SOPs.

3) Clean up payment architecture.

Use transparent banking rails. Kill off informal remitters, nested correspondents, and “friend of a friend” intermediaries. If a customer can’t pay you directly from a named corporate account that matches the contract, it’s a risk event—full stop. FinCEN’s CMLN advisory is explicit about the patterns banks are trained to spot.

4) Contract for compliance.

Bake sanctions/AML representations and warranties, audit rights, and termination-for-sanctions clauses into your US-facing contracts. Require counterparties to certify they’re not owned/controlled by, or acting for, any SDN or E.O. 14059 designee and agree to immediate notice upon list changes. (Your future self will thank you when a designation hits mid-contract.)

5) Map beneficial ownership and file what’s required—especially if you’re a foreign registrant in Florida.

If your LATAM parent or affiliate is registered to do business in Florida (or any US state), confirm whether it’s a foreign reporting company under the CTA and, if so, file BOI on time under the current interim rule. Banks in Miami are already asking for BOI receipts in KYC packages.

6) Train your front line (sales, logistics, AP/AR) to spot red flags.

Compliance can’t be a silo. Teach commercial teams the exact patterns that trigger bank escalations or OFAC exposure—then empower them to pause shipments or payments.

7) Keep a live sanctions risk register.

Quarterly, identify your “top 20” counterparties by payment volume and geography. For each, document: screening results, ownership trace, payment routing, and any red flags plus disposition. This is what regulators and banks will ask for first.

8) Have an incident game plan.

If you discover a hit (or even a close match) to an SDN record, stop transactions immediately, preserve records, and consult counsel on whether to file a voluntary self-disclosure with OFAC. Early, disciplined response often reduces penalty exposure under OFAC’s guidelines.

What’s changed recently (and why you must adapt)

Broader use of E.O. 14059 has expanded the target set beyond traffickers to facilitators across the supply chain. Expect more designations against front companies, chem suppliers, brokers, and logistics nodes—especially those tied to Sinaloa factions like Los Chapitos.
CMLNs are a top enforcement priority. FinCEN’s 2025 advisory puts banks on notice; that means more questions for you, more transaction holds, and more KYC refreshes until your controls prove out.
BOI reporting now laser-targets foreign registrants. Even with domestic companies exempted by the interim rule, foreign companies registered to do business in US states must report BOI under updated deadlines—an especially common posture for LATAM groups operating through Florida. Banks and counterparties will expect compliance receipts.
Supply chain chokepoints are under the microscope. DOJ has brought high-profile cases against PRC-based chemical suppliers and equipment distributors feeding Mexican labs. If your purchases even rhyme with these categories, adopt export-control and end-use diligence now.

Miami-Dade realities

PortMiami and MIA are major arteries for LATAM trade. Banks headquartered or operating here live under intense AML scrutiny and are quick to exit relationships that create CMLN/TBML exposure. Local enforcement task forces (HSI, DEA, FBI, CBP) are active across cargo hubs and financial corridors. If your Florida operation gets tagged as “high risk,” you’ll feel it in slower payments, more freezes, and tougher onboarding—long before an agency ever knocks on the door.

A simple, durable compliance stack (start this month)

Risk assessment refresh focused on: (i) counterparties in Mexico and PRC-adjacent supply chains; (ii) third-party payers; (iii) chemicals/equipment; (iv) crypto touchpoints.
Tooling: enterprise-grade sanctions screening (daily), trade-doc matching, and payment-flow analytics to catch third-party or mirror payments.
Procedures: hard bans on third-party payers without legal sign-off; playbooks for price anomalies and HS-code mismatches; escalations tied to FinCEN red flags.
Records: keep searchable files for 5+ years—screening logs, ownership charts, KYC packs, and shipping/payment matches.
Governance: a cross-functional sanctions committee that meets monthly (Legal, Compliance, Treasury, Sales/Logistics) and reports to the CEO/Board.
External alignment: confirm your bank’s risk appetite; pre-clear unusual payment routes; get your BOI filings done if you’re a foreign reporting company.

Bottom line

Enforcement is smarter, faster, and more network-focused than ever. If your LATAM business touches the US, your real risk isn’t a midnight raid—it’s a bank off-boarding you on 10 days’ notice because your payments or counterparties look like cartel finance on paper. Build the controls now so you can confidently keep selling, shipping, getting paid, and growing in the US.

For legal help navigating US sanctions, AML, and trade compliance—as well as contracts that actually protect you—contact Attorney Yoel Molina at admin@molawoffice.com, call (305) 548-5020 (Option 1), or message via WhatsApp (305) 349-3637.

Key sources referenced

OFAC counter-narcotics and E.O. 14059 authorities and regs.
OFAC compliance framework and enforcement posture (strict-liability civil regime).
Recent sanctions actions against Sinaloa factions and facilitators.
FinCEN advisories on fentanyl finance and Chinese Money Laundering Networks red flags.
Corporate Transparency Act updates affecting foreign reporting companies.
Illustrative designations of “ordinary” businesses tied to cartel finance.