Mitigating Risks from ATA Scrutiny in a New Enforcement Regime

As multinational companies expand their operations into Mexico, the need to navigate complex legal landscapes becomes paramount. The interplay between geopolitical tensions and local criminal elements poses unique challenges. Understanding how to manage risks from ATA scrutiny in this evolving enforcement regime is crucial for safeguarding business interests.

The Geopolitical Landscape: A New Enforcement Focus

On January 20, 2025, a pivotal Executive Order was issued by the White House, marking a significant shift in U.S. enforcement strategy under the Immigration and Nationality Act (INA) and the International Emergency Economic Powers Act (IEEPA). The Trump Administration has expanded its focus to include Mexican cartels within the purview of these statutes, increasing the risks for multinationals operating in cartel-dominated regions.

Broadening the Definition of Terrorist Organizations

• The Executive Order aims to designate cartels as Foreign Terrorist Organizations (FTOs) and/or Specially Designated Global Terrorists.
• This expansion targets organizations like Tren de Aragua (TdA) and La Mara Salvatrucha (MS-13), amplifying scrutiny and the risk of prosecution for companies inadvertently linked to cartels.

Such designations expose multinationals to potential criminal and civil penalties under the Antiterrorism Act (ATA), particularly when inadvertently providing “material support or resources” to these newly classified entities.

Operational Risks for Multinationals

The designation of cartels as FTOs raises a spectrum of challenges, particularly in regions where such groups have substantial control. Multinationals face heightened scrutiny in several business operations, including:

• Payments for employee safety or the maintenance of operational sites.
• Engagements with local businesses with cartel affiliations.
• Financial transactions potentially interpreted as cartel support.

With the U.S. Department of Justice (DOJ) and Office of Foreign Assets Control (OFAC) ramping up investigations, companies need strategies to mitigate potential legal ramifications.

Expansion of Enforcement Tools

• The intersection of ATA and OFAC regulations creates a dual path for civil and criminal proceedings.
• Anticipate enhanced enforcement combining anti-money laundering laws with existing sanctions.
• New extraterritorial reach of enforcement can implicate non-U.S. companies in U.S. legal frameworks.

Strategies for Mitigating Risks

Given the heightened enforcement landscape, multinationals must adopt robust risk management strategies:

• Conduct Comprehensive Due Diligence: Implement thorough due diligence practices on partners to prevent inadvertent cartel affiliations.
• Screening and Auditing: Routine OFAC and FTO screenings, coupled with supply chain audits, to ensure compliance.
• Strengthen Vendor Management: Implement systems that monitor and control payments to business partners and suppliers.
• Communication and Compliance: Establish clear communication channels with suppliers regarding potential cartel connections and enforce compliance with legal guidelines.

These strategies are not just defensive measures; they are proactive steps to ensure business resilience against legal repercussions in the complex landscape of international business.

Legal Ramifications and Litigation Risks

The ATA provides a civil remedy for U.S. nationals affected by acts of terrorism, proposing significant financial liabilities for companies inadvertently linked to these organizations. Companies must be vigilant in recognizing these legal exposures, as civil actions can dramatically affect business operations.

Conclusion: Navigating Legal Labyrinths

In an era where the lines between geopolitical policy and corporate responsibility blur, multinational companies must stay informed and strategically agile. With the evolving enforcement climate in Mexico concerning cartels, proactive engagement and legal preparedness are essential for sustaining operations and protecting business interests. Remaining informed about these developments and continuously adapting compliance measures will be critical for companies aiming to thrive in the current international landscape.

Source: https://www.foley.com/insights/publications/2025/03/multinational-company-business-mexico-mitigating-risks-ata-scrutiny/