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The U.S. government’s decision to designate multiple Mexican drug cartels and two international criminal gangs as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs) marks a significant shift in how these groups are targeted. While this does not necessarily signal an immediate escalation in military or law enforcement operations, it provides U.S. agencies with stronger legal tools to disrupt cartel activities—particularly their financial networks. This designation falls under Executive Order 13224, a counterterrorism measure enacted after 9/11 to cut off funding for groups that support or commit acts of terrorism.
A primary effect is increased pressure on cartel finances. Law enforcement can now freeze assets, block transactions, and prosecute individuals and entities that provide material support—knowingly or unknowingly. Businesses operating in Mexico must scrutinize their financial dealings to avoid exposure, as failure to comply could result in criminal prosecution rather than just fines.
The impact on anti-money laundering enforcement is also significant. Historically, financial institutions have faced fines for processing illicit cartel funds, but this designation raises the stakes. For example, in 2012, HSBC settled with U.S. authorities for nearly $2 billion after laundering money for criminal organizations. Now, similar cases could result in jail time for executives and complicit financial actors.
This move is designed to weaken cartel operations by cutting off funding and increasing legal risks for enablers. Compliance measures will need reassessment, and enforcement actions are likely to intensify as authorities leverage this designation to dismantle the economic infrastructure supporting these violent organizations.
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