The U.S. Department of Justice (DOJ) has announced a shift in enforcement priorities. Under the Trump Administration, there is a particular focus on cartels and other terrorist organizations, creating a minefield of new compliance risks that could blow up in your face if you're not prepared.
If you're reading this, you probably care about keeping your company on the right side of the law. Good news: you're already ahead of the game. Bad news: there's probably work to do.
The Big Picture
When enforcement increases, your risk increases. It's time to take a hard look at your compliance program, especially around money laundering, bribery, sanctions, and trade regulations.
Are You in the Danger Zone?
Highest Risk: Financial Services
If you're in any kind of financial services — or even if you only have a trading or hedging department — you're already in the government's crosshairs.
Other High-Risk Industries
Beyond the financial industry, the following sectors are a playground for cartels and other terrorists, which means regulators are watching them like hawks:
- Transportation and logistics
- Tourism and hospitality
- Telecommunications
- Oil, gas, and mining
- Real estate
- Agriculture
Geography Matters
Right now, the spotlight is on Mexican, Central American, and South American cartels — whose tentacles reach throughout the Americas. But don't forget about terrorist networks in the Middle East and Asia — they are still on the government’s "watch list.”
The Scary Truth
Here's what is difficult: You don't have to deal directly with criminals to get in trouble.
You could be doing business with what looks like a perfectly legitimate company, but it’s actually a front, providing valuable assets or laundering money for a cartel or other terrorist organization. If a court decides your management "should have known" about the connection, you're liable. It doesn't matter if management actually knew or not — if someone in the lower ranks knew but never told anyone, that could be your downfall.
Consider also that your company could face both criminal and civil liability, making the equation all the more complicated. A good compliance program, however, will cover all of these risks.
Time For a Reality Check: Ask Yourself These Questions
Where Are You Doing Business?
- Do you have operations, vendors, or customers in Mexico, Central America, or South America? How about the Middle East or parts of Asia?
- Do you have any subsidiaries or joint ventures in regions known for harboring cartels or other terrorist organizations?
What Business Are You In
- Do you handle a lot of cash transactions?
- Do you operate in one of the high-risk sectors that cartels and other terrorist organizations find helpful?
- Do you conduct business with companies in high-risk sectors?
Who Are Your Business Partners?
- Do you have local distributors, agents, or other reps in higher-risk locations?
- Do you buy from vendors in high-risk sectors?
- How well do you know your partners — their owners, their practices, their reputation?
Your Four-Step Action Plan
Step 1: Know Your Risk Level
- Map out where you operate geographically
- Check to see if you have any departments operating in higher-risk sectors, especially if you are a big organization
- Identify your riskiest business relationships
Step 2: Get Management Buy-In
- Brief management on the risks you've identified and the actions you plan to take
- For high-risk companies, consider also briefing senior leaders and the board
- Get leadership support for the actions you need to take
Step 3: Choose Your Defense Strategy
- High-risk companies: If you don't already have it, implement formal screening ASAP. Consider hiring experts to help design your risk-mitigation procedures.
- Medium-risk companies: Focus on your highest-risk areas and beef up due diligence procedures and training. Expert guidance is still a good idea.
- Lower-risk companies: At a minimum, implement basic training and awareness programs addressing your risks.
Step 4: Stay Alert and Adapt
- Keep up with new developments and government designations
- Review your risk assessment annually
- Watch for changes in your risk profile (new locations, products, vendors, joint ventures)
- Adjust your program based on close calls and evolving risks
Help With Some Details
Play A: Beef Up Your Screening Game
- Expand your screening: Review who you're currently screening and consider casting a wider net
- Document everything: Have clear procedures for investigating suspicious matches and make sure all decisions are well-documented
- Stay current: Regularly update due diligence on existing partners, especially those in high-risk areas
- Focus: Pay extra attention to your riskiest transactions and relationships
Play B: Train Your People to Be Your Eyes and Ears
Your employees are your first line of defense. If they see something suspicious but don't report it, that knowledge can come back to haunt you during an investigation. Make it easy and safe for them to raise their hand.
Key people to train:
- Managers in high-risk operations
- Regional managers located in areas of interest to enforcement agencies
- Procurement teams
- Contract managers
- Finance and accounting staff
- Anyone who approves new vendor, distributor, or joint venture relationships
Play C: Get Your Paperwork in Order
If the government comes knocking, solid documentation of your compliance efforts could be the difference between a slap on the wrist and serious trouble.
What to document:
- Risk assessment decisions
- Staff training records
- Red flags you identified and how you handled them
- Vendor screening results and follow-up actions
- Regular testing and auditing of compliance processes
The Price of Doing Nothing
Even if you never face criminal charges, a government investigation will cost your company a lot of money. Legal fees, staff time, business disruption, and reputation damage often cost much more than proactive prevention.
Getting Expert Help
Consider bringing in compliance professionals who understand your industry's specific risks. The money you spend on expert guidance now could save you millions in legal fees and penalties later.
The Real Talk
You don't need perfect controls overnight, but you do need to take reasonable steps to understand and manage your risks. Start with the basics, focus on your most significant vulnerabilities, and build from there.
The government is serious about this. The question is: are you?
If you’re looking for help building your compliance program, don’t hesitate to reach out to us. You can reach us here on our site or email us at hello@rethinkcompliance.com. We’d be happy to help.
This guide provides general information only. Always consult with qualified legal and compliance professionals for advice specific to your situation.
Full disclosure: I am an attorney by training, and my writing style reflects it. I used my research and conclusions and then penned this post with the assistance of AI to help make it a more interesting read for everyone.
