This move has sparked sharp criticism, particularly from Mexico’s President Claudia Sheinbaum, who objected to the lack of consultation and announced constitutional reforms aimed at defending national sovereignty and cracking down on arms trafficking. She proposed, for example, to include a paragraph in the Mexican Constitution affirming that Mexico would not accept any intervention, intrusion, or other foreign action that undermines its national integrity, independence, or sovereignty.

Although not fully unprecedented, given the designation of the Nordic Resistance Movement (NRM) in June 2024, which is classified as a terrorist or criminal organization depending upon the country, most FTO designations target more “traditional” terror groups. Until now, no companies were targeted for materially supporting the NRM under the FTO designation, but this and the listing of the cartels certainly open the door to such action.

Moreover, beyond the political back-and-forth, the designations have far-reaching implications—particularly for the compliance and due diligence sectors.

What Does FTO Status Mean in Practice?

An FTO designation significantly broadens US enforcement capabilities by making it a federal crime to provide any form of “material support” to these organizations—including funding, logistics, housing, training, weapons, or even seemingly unrelated business services. Before such designation, US agents needed to justify a specific threat to a US citizen: Now any link to an FTO is grounds for investigation with such designation allowing authorities to use tools typically reserved for fighting more traditional terror groups, including freezing assets, whether traditional or cryptocurrency wallets, blocking financial networks, and ramping up surveillance and intelligence-sharing.

While likely intentionally vague, “material support” can encompass a wide range of activities from logistical assistance and financial aid to training, shelter, weapons, and forged documents. However, how that definition is applied often hinges on political will. This has serious consequences, particularly given how embedded cartel activity is in certain countries, particularly Mexico, including:

Broader Liability: Individuals and businesses not directly involved in illegal activities could face prosecution for knowingly or unknowingly aiding cartels and their affiliates. For example, a trucking company or a real estate agent could be targeted for unknowingly transporting cartel-linked goods or facilitating property purchases with illicit funds.

Similarly, US and multinational firms operating in cartel-dominated areas, whether geographical locations or business sectors, may face asset freezes or other charges given that many routinely pay extortion fees and other payments to cartel affiliates to produce, transport, and sell goods. Such payments now mean engagement with an FTO and not “only” an organized criminal group.

For the same reason, migrants, who are also often forced to pay cartels for safe passage, could now face prosecution. It is unclear if this threat may be utilized as part of the ongoing efforts to reduce illegal crossings into the US, but the possibility is clearly there to use.

Economic Impact: Given the cartels’ previously noted deep entanglement with the Mexican economy, legitimate businesses may find themselves inadvertently exposed or unable to do business. This would significantly broaden the pool of defendants given the material support clause and place many in the uncomfortable position of choosing not to pay, which can risk violence or the general inability to do business, or continuing to do so and facing potential legal ramifications as a result of the FTO designations.

What has changed?

Before cartels were designated as FTOs, their criminal liability was primarily addressed through laws targeting organized crime, drug trafficking, and related offenses such as money laundering, homicide, and kidnapping. The focus was on their involvement in common criminal activities, with penalties imposed mainly under national or international statutes aimed at combating organized crime. Authorities pursued these groups chiefly for drug trafficking, smuggling, corruption, and acts of violence.
However, once a cartel is officially designated as an FTO, the scope and severity of their criminal liability expand significantly. They become subject to anti-terrorism laws, which carry harsher penalties and allow for special legal procedures alongside enhanced investigative and prosecutorial powers. The violent acts committed by these groups are no longer seen solely as organized crime but can be classified as acts of terrorism. This shift enables authorities to implement stronger measures to freeze assets, limit funding sources, and target not only cartel members but also their supporters and financiers. Investigations may now include charges related to international terrorism, which can severely undermine the cartel’s ability to operate on a global scale.

Geopolitical Challenges

While the FTO designation is intended to elevate pressure on transnational criminal networks and expand the legal toolkit for disrupting cartel operations, it also introduces a complex array of geopolitical risks. These risks extend beyond law enforcement and counter-terrorism into the realms of international diplomacy, regional stability, legal norms, and global security.

One of the most immediate and consequential challenges arising from the FTO designation is the strain it places on US relations with Mexico. The latter strongly opposes the designations, viewing them as an infringement on its national sovereignty and a potential pretext for unilateral US military action within its territory. This tension could threaten ongoing bilateral cooperation on critical issues such as border security, immigration, and counter-narcotics, while further strain already increased tensions related to trade. It also could complicate intelligence-sharing and joint enforcement operations at a time when such coordination is perceived as essential for effectively combating organized crime, drug trafficking, and illegal entry into the US.

Indeed, concern of such designation providing a legal basis for direct US military action against these groups is not necessarily an exaggerated concern. Targeted strikes against targets on the FTO list is far from unprecedented globally since the war on terror expanded but would be in Mexico or in the territory of other “friendly neighbors”. Unilateral action, even if confined to the immediate border area, could provoke diplomatic fallout that exacerbates the potential ramifications from only increased tensions that were noted above, as well as retaliatory violence from cartels that could destabilize already fragile areas and even unintentionally empower rival criminal organizations.

At the same time, given that FTO status has been traditionally reserved for ideologically motivated groups with political or religious goals, applying this label to more profit-driven criminal enterprises like drug cartels blurs the conceptual and legal lines between criminality and terrorism. While both may use violence and coercion and although terror groups often find themselves involved in criminal enterprises as a means of fundraising, their motivations and organizational structures often differ significantly. While many terrorist groups engage in drug trafficking and organized crime as a means to raise funds, these are primarily driven by ideological, political, or religious goals, i.e. seeking to change or influence governments, societies, or policies through fear and violence. Criminal organizations, on the other hand, tend to be primarily motivated by profit and economic gain, and are typically structured on efficient control of illegal markets, prioritizing secrecy, and minimizing exposure to law enforcement.

While Mexican cartels are not ideologically aligned with global terrorist movements, they are adaptive and opportunistic. In the face of increased pressure and potential decreased revenue, they may seek or expand existing ties that can counter such losses, including those with state or non-state actors that have a vested interest in undermining US influence, such as arms traffickers, corrupt regimes, or terror-linked organizations. Moreover, the FTO label is likely to motivate cartels to adopt an even more decentralized and clandestine structures, making them harder to track and dismantle.

Cartel Reach

Today’s cartels are no longer just drug traffickers but are economic and political players with diversified portfolios ranging from illegal mining, fuel theft, and extortion, to money laundering and even infiltration of government infrastructure.

Take the Sinaloa Cartel, for example. Alongside controlling a significant portion of the fentanyl trade, often via Chinese chemical suppliers and laundering networks, it has embedded itself in Mexico’s agricultural and water management sectors. Cartel-linked “taxes” — protection payments, for example — are levied on basic staples like avocados and tortillas, with violent consequences for non-compliance.

Their reach extends from small-town tortilla shops to multinational logistics chains, making it extremely difficult to distinguish cartel-linked businesses from legitimate ones—especially in sectors like construction, farming, hospitality, and trucking. In other words, the likelihood that companies operating in certain countries and certain sectors have exposure to the cartels without being aware of the fact is exceedingly high, with ignorance not a particularly strong argument to make when confronted with potential prosecution by the US government.

Implications for Compliance and Due Diligence

This evolving threat landscape demands a complete rethink for financial institutions, compliance teams, and risk managers. Here’s what’s at stake:

1. Expanded Liability and Litigation Risk

As mentioned above, the relatively broad definition of “material support” under the FTO designation can open a range of businesses operating in certain countries and sectors to potential prosecution. Financial institutions, for example, could face lawsuits under the Anti-Terrorism Act (ATA) for facilitating transactions, whether intentionally or not, with FTO-linked entities. While historically aimed at foreign banks tied to Middle Eastern or Russian groups, the new designations expand that risk to US institutions and regional and local partners.

One of the key risks is likely to be the level of exposure to the more obvious and known sectors in which these organizations operate. Traditionally, cartels controlled limited territories and specialized on a single product, usually cocaine. The new criminal elites now traffic multiple products across extensive markets and regions. These illicit activities are less profitable than drug trafficking but they have become increasingly attractive because they generate relatively stable incomes at lower risk. In other words, cartels are playing a growing role in the region’s economies, from infiltrating seaports to extorting small businesses and expanding their political power.
The Sinaloa Cartel, for example, which is one of the two cartels believed to be primarily responsible for drug trafficking into the US, wields influence that goes beyond just narcotics and human smuggling to extortion, illegal mining, and oil theft, as well as legitimate businesses as a means to launder money.
Criminal groups have reportedly even infiltrated the public water system in Sinaloa, placing members or those with connections to their organization into offices that oversee irrigation. On Mexican farms, as another example, criminals are embebed in all stages of the supply chain, from production and processing to storage, transportation, and distribution.
Even at a more localized level, cartels have their hands in various sectors, including, among others, fishermen, chicken vendors, construction companies, trucking services, gas stations, and those that produce a staple food in the country: the corn tortilla. Reports suggest that tortilla shops that refuse to comply with payment demands can face violent repercussions, including becoming the target of arson or gunfire.

2. Review of Compliance

When it comes to enforcement and prosecution related to such new designations, the simplest and most cost effective method of sending a message that the Trump administration is serious about utilizing the FTO label to pursue criminal organizations is to target the “low-hanging fruit”. In other words, finding large, known corporations who have clear and expansive exposure to the known sectors or regions with cartel involvement, such as agriculture, and placing the bullseye on them.

For these reasons, companies and institutions that fail to adapt will increase their risk exposure, including to criminal and civil ligation (the latter under the ATA). Even for those with already robust compliance frameworks, a review to ensure that potential cartel exposure is sufficiently considered should be prioritized. Indeed, even when cartel-affiliated individuals or businesses are not explicitly named, their previously-discussed entrenchment in certain regions and sectors means that increased scrutiy should be levied across all stages of the supply chain and for all transactions that carry cartel-specific red flags.

This includes, but is not limited to, identifying high-risk geographical areas, such as border cities of Mexico and other regions where cartel activity is extensive, integrating this understanding of higher risk locations with known higher risk sector, and mapping out complex ownership structures to ensure no connections to designated entities and to allow for thorough vetting of any connections to such higher risk sectors and regions.

Conclusions and insights for the sector

By labeling cartels as FTOs, the U.S. government has expanded the tools at its disposal—transforming what were once complex criminal investigations into matters of national security. The designation empowers authorities to treat financial or logistical interactions with these groups as federal crimes, even when no clear criminal intent exists. The burden of compliance, therefore, no longer rests solely on avoiding direct involvement in illicit trade; it now includes avoiding any form of “material support,” however indirect or unintended.
For the compliance sector, this reclassification means that businesses with even tangential exposure to high-risk sectors and locations must now consider how deeply cartel influence may run through their operations, clients, or supply chains. Indeed, the notion that legitimate companies can operate in cartel-dominated areas must be reconsidered with the new lens of FTO designation.

On May 21 in Baar, Switzerland, Roi Lavi and Lev Yuriditsky participated in a panel discussion hosted by the Commodity Trading Club and WISTA Switzerland. They explored how global shifts are transforming commodity trading and trade finance and concluded the evening with a networking event, where lively conversations continued among industry peers.

We extend our sincere thanks to Sqope board member and ESG Advisor Roger H. Hartmann, and to Murat Seitnepesov of the Greater Caspian Association, whose support helped make the event a success.

This act has, since 1977, criminalized US individuals and entities engaging in bribery of officials to obtain or retain business, while also mandating transparent accounting provisions on publicly traded companies to prevent the concealment of such payments. Referred to by a prominent NGO as the “crown jewel in the US’s fight against global corruption”, the executive order offers a contrasting account of the FCPA, describing it as barring citizens and businesses from engaging in “routine business practices in other nations”. This forms part of his broader agenda to prioritize American economic interests, in this case by reducing regulatory constraints on US businesses operating globally.

During the 180-day suspension, US Attorney General Pam Bondi will review existing FCPA investigations and the act itself. Her directive is to issue updated guidelines or policies “to adequately promote the President’s […] authority to conduct foreign affairs and prioritize American interests, American economic competitiveness […], and the efficient use of Federal law enforcement resources.” Indeed, the executive order includes provisions allowing Bondi to extend the review period for an additional 180 days if she deems it appropriate.

Future FCPA investigations and enforcement actions are also to be governed by the guidelines or policies she eventually issues.

Despite some media sources interpreting the executive order as the President “green-lighting bribery” or raising the spectre of a “wild west” of corrupt deal making, our assessment, in the short- to medium-term at least, is that there will be little to no change in corporate practices. However, KYC responsibilities could be affected in the long-term should the FCPA ultimately undergo significant alterations or even repeal.

Near-Term: Why US Corporate Practices Are Unlikely to Change

There are several reasons why our clients should not expect to see any radical changes by US companies during this initial review period.

Firstly, the FCPA is suspended but not repealed, while also featuring a five-year statute of limitations.  Indeed, Congressional legislation like the FCPA can only be repealed by another act of Congress; an executive order cannot repeal such a law. While Trump’s Republican Party does have a small majority in both branches that comprise thet legislature — the US House of Representatives and Senate — at the time of writing there are no indications that the Trump administration is pursuing a total repeal.

Moreover, the FCPA’s anti-bribery provisions have a five-year statute of limitations, along with a six year requirement for its Books-and-Records provisions, which “require publicly traded companies to maintain accurate and transparent records that fairly reflect their transactions”. Consequentially, even if Bondi’s updated enforcement guidelines and policy significantly changes how the Department of Justice (DoJ) pursues infractions, that would relate only to Trump’s DoJ.

In other words, violations committed during this period could theoretically be prosecuted by a new administration after the next elections in four years’ time. Guidelines issued by the current Attorney General do not constitute law and can be easily overridden or revoked by the next president.

Secondly, anti-bribery legislation in other countries will still impact companies with international operations. Regardless of the FCPA’s suspension, US companies with international operations must continue to comply with the relevant laws of the foreign jurisdictions in which they operate — where they exist, at least — or they can still face fines and prosecutions. While there is no EU equivalent to the FCPA, it did adopt several related regulations and directives in May 2024, including AMLD 6 and AMLR, which require EU member states to treat bribery as a predicate crime to money laundering, which is then prosecuted in accordance with the Member States’ domestic criminal code.

France, for example, passed its Sapin II Law in December 2016, which was designed to bring France in line with international anti-bribery standards such as those included in the FCPA or the UK Bribery Act 2010. Bribery is also criminalized under the Swiss Criminal Code, covering, since 2016, private commercial bribery in addition to that of public officials.

Finally, the executive order does not mention the Security and Exchange Commission (SEC). Jurisdiction over FCPA violations is divided between the DoJ, responsible for criminal enforcement, and the SEC, responsible for civil enforcement. The latter includes the accounting provisions and civil anti-bribery violations for all publicly traded companies on US stock exchanges and those required to file periodic reports with the SEC. While Trump’s executive order addressed the DoJ, it says nothing about the SEC and, as such, even during this period of suspension and review, remains able, at least statutorily, to pursue civil enforcement of FCPA violations.

Long-Term: How Changes to the FCPA May Impact KYC Duties

Should American companies and interests sense that their enforcement climate has permanently changed, whether through repeal of the FCPA or cross-party consensus around a significantly weakened version, where would we likely see changed business practices emerge? And, importantly, how would such developments impact their know-your-client (KYC) duties vis-à-vis American clientele?

Across the EU, US corporate entities and individuals who operate there or do business with EU entities would still be limited by the relatively strict anti-bribery legislation across the union’s more developed economies. Thus, any changed business practices would more likely be seen in jurisdictions with inconsistent application of laws, lax enforcement, and political interference.

Key examples include India, the UAE, and Saudi Arabia, as well as certain southern and southeastern European nations that are regularly flagged by prominent corruption-focused NGOs as lacking both consistent enforcement  in cases of foreign bribery, as well as transparency and accountability in their public sector contracting practices. Under such a scenario, US companies would face fewer restrictions when competing for contracts or establishing business relations and may feel more comfortable resorting to measures previously been out-of-bounds.

At the same time, while such practices would likely  pose a legal risk to the American entity in question, the suspicion or allegations of foreign bribery would impact EU-based clients already engaging in or seeking to do business with such entities. At the very least, this would legally necessitate enhanced KYC measures.

In Switzerland, for example, those dealing with entities that faced or were convicted of engaging in foreign bribery would be required to follow enhanced due diligence procedures, including ongoing transaction monitoring and reporting to the Money Laundering Reporting Office Switzerland (MROS) if their client’s assets are suspected to be linked to bribery or corruption. Similarly, in France, articles contained with Sapin II require companies to carry out risk-mapping and integrity assessments of third parties, with companies failing to conduct proper due diligence when engaging with high-risk entities facing the possibility of being held liable for failing to meet their anti-corruption obligations.

What to Look Out for in the Months Ahead

The 180-day suspension of FCPA enforcement, which could be prolonged by the Attorney General, will be accompanied by a review whose findings will offer the first clear indication as to how far the Trump administration intends to push its deregulation of US companies’ international practices. As discussed, we do not expect even significant changes to FCPA enforcement guidance to immediately impact American corporate practices in the short to medium term.

However, if the current administration begins signaling that full repeal of the act may be pursued during this period in which the Republican Party maintains control of the bicameral legislation and the presidency—which, as of writing, it has not—a lasting shift in US American corporate practices on the global stage could be possible, assuming, of course, that such a repeal would have sufficient votes to pass.

They have been targeting maritime traffic as a response to the Israel-Palestine conflict in support of Palestine, with initial attacks targeting ships with ties to Israel and its citizens.

That said, there have been numerous confirmed attacks on vessels of varying origins with limited, if any, actual ties to Israel. The attacks target vessels transiting through the Bab al-Mandab Strait, the chokepoint between the Red Sea and the Gulf of Aden, forcing the shipping industry, which relies on the trade passage, to undertake longer, and more costly routes to contend with rising insurance and security costs and fluctuating oil prices as a result. With nearly 15% of global seaborne trade transiting through the Red Sea, markets have been affected but it is likely that oil and Liquified Natural Gas (LNG) prices will remain supported unless tensions escalate.

Please click here to read the full article, complete with citations, which was published by our partner, Commodity Trading Club, in their Q4 2024 magazine.

UK sanctions on vessels & the Kremlin-affiliated ‘shadow fleet’

On July 31st, the UK implemented the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2024. Despite the wordy and complicated name, the amendments further specified the criteria for direct sanctions on maritime vessels.

Specifically, they amended regulation 57F, which stated that a vessel may be sanctioned for ‘any activity whose object or effect is to destabilise Ukraine or undermine or threaten the territorial integrity, sovereignty, or independence of Ukraine, or to obtain a benefit from or support the Government of Russia.’  Thus, such activity now includes the transport of dual-use goods, military goods, oil and products that originated in Russia, or any other goods or technology that can be deemed to support Moscow’s war efforts in Ukraine.

This effort came after the UK announced the month prior, on June 13, that it would impose sanctions on Kremlin-affiliated vessels, designating four oil-transporting vessels that were part of its ‘shadow fleet’, along with two vessels that had shipped weapons from and to Russia.

These were the first-ever sanctions on Russian-affiliated vessels by the UK, taking effect on the date of the above amendments.  In practice, this means that the vessels are barred from entering the UK’s ports and can be subject to detention by British authorities. Also in June, the EU followed in the UK’s footsteps, sanctioning 27 vessels as part of its 14th sanctions package against Russia. This included three vessels of the four above-mentioned vessels in the ‘shadow fleet’ that the UK had also designated.

But what exactly is the ‘shadow fleet’? According to UK estimates, it’s a group of around 600 vessels, that are unofficially linked to the Kremlin and transport high volumes of oil and oil products from Russia to other destinations, circumventing Western sanctions, including the oil price cap imposed by the G7.  Indeed, British  government stated that just three of the vessels later designated in September, including Nicolay Zuyev, NS Asia, and Zaliv Aniva, had collectively carried more than $5 billion worth of Russian oil since February 2022.

Moreover, for obvious reasons the vessels that make up this fleet engage in concerted efforts to evade detection and detention by Western authorities. Such deceptive shipping practices (DSPs) include both static and dynamic methodologies, such as GNSS manipulation, referring to the falsification of a vessel’s location, or the use of multiple flags.  As it stands, the UK has designated 37 vessels as of last month, 25 of which are part of the ‘shadow fleet’.  These designations, one after another, coupled with the regulation amendments blatantly indicate that the UK has this ‘shadow fleet’ in its sights and that it is doing what it can to minimise Moscow’s ability to circumvent Western  sanctions on oil and other goods via maritime transport.

Sanctions on individuals

The UK government also amended Regulation 6 (designation criteria) to include additional activities for which a person may sanctioned.  The definition of ‘involved persons’, which refer to individuals essentially supporting Russia’s invasion of Ukraine, now includes the category of “persons owning or controlling, directly or indirectly, or working as a director (whether executive or non-executive), trustee or other manager or equivalent of, an entity” that is deemed to support the invasion. Such a change will likely be used to impose secondary sanctions on executives of companies —whether Russian or not — deemed to be contributing to the conflict on the side of Moscow.

Indeed, the UK’s June announcement that designated the maritime vessels also named seven individuals. These include Russian national Yuri Olegovich Denisov, CEO of the Russian financial services company Moscow Exchange Group PJSC — and a very minority shareholder at least as of 2021 — and Latvian/Israeli dual national Mark Blats, CEO of Israeli tech company Texel F.C.G. Tech 2100 Ltd.  The HM Treasury’s official notice explained their inclusion as due to their status as directors or equivalent of entities conducting business in a “sector of strategic significance” to the Russian government. Their associated companies were also designated.

It seems likely that there were also additional justifications for their designations not mentioned in the announcement. The US Office of Foreign Assets Control (OFAC), for example, stated that not only was Blat’s company connected to the Russian defence industry, but he is also an associate of Russian arms dealer Igor Zimenkov and a business partner of Belarusian national Aliaksandr Zaitsau, both of whom were already sanctioned by the US.

While the UK’s maritime designations, whose list has consistently grown over the last several months, clearly indicates that they have the ‘shadow fleet’ in its sights, its combination with the regulation amendments show that the British government is doing what it can to minimise Moscow’s ability to circumvent Western  sanctions on oil and other goods. With widespread and, in some cases, justified criticism that Western sanctions regimes against Russia aren’t as effective as they could be, including because of sometimes blatant circumvention efforts, these are the kind of concrete steps that are seen as able to help address this gap.

With this in mind and given the pace of the designations of particularly the maritime vessels, we can expect the UK’s sanctions lists to grow, especially targeting those that hold executive positions at companies deemed to be even indirectly supporting Russia’s war efforts in Ukraine. This also means that those who may be at risk of such designations will not be the “usual suspects” who have clear and direct connections to the Russian government, making enhanced due diligence, particularly focused on indirect exposure to the Russian government, Russian state-owned entities (SOEs), and even Russia generally, ever more important.

The two events were held on 21 February and 6 March 2024, with dozens of participants joining for drinks, appetizers, and discussion on the knock-on effects of the conflict between Israel and Hamas on the financial sector, including on shipping, regional relations, terror financing concerns, and more. Managing Director for Europe was joined in Geneva by COO Miriam Goldman and CIO Lev Yuriditsky and in Zurich by Miriam and Head of MENA Desk Khaled Hassan.

It was a pleasure to work with the CTC and we hope to work together to host additional interesting events in the future.

The bill was also introduced to the US House of Representatives by Florida Republican Maria Elvira Salazar, who chairs the House Subcommittee on the Western Hemisphere.

Cruz argued that sanctions are applicable in this case since the Fernández de Kirchner administration was highly corrupt during her presidential term from 2007 to 2015 and undermined the country’s rule of law and political institutions. He further states that the Fernandez de Kirchner administration placed Argentina’s institutions at the service of Iranian-linked terrorist organizations.

The CASES bill is based on Fernández de Kirchner’s criminal conviction for supervising a bribery scheme to defraud public funds, along with family members and close associates. However, Cruz’s argument that Argentina is associated with Iranian-linked terrorist organizations is more difficult to support, as the case is still ongoing. This stems from a controversial 2013 Memorandum of Understanding (MoU) that the Fernández de Kirchner administration signed with Tehran, which, according to her detractors, would have shielded Iran from its accused role in a 1994 attack against a Jewish community center in Buenos Aires.

The alleged collusion was being investigated by special prosecutor Alberto Nisman, who was subsequently found dead under unclear circumstances the day before he was scheduled to present his findings to Congress. The “Memorandum with Iran Case” was dismissed by a lower court that was purported to be politically linked to the Kirchners but last week it was ordered to be reopened by a court of appeals.

Some of Cruz’s arguments are aligned with Argentina’s judicial system. Last year, the Federal Court sentenced Fernandez de Kirchner to six years in prison and a lifelong ban on holding public office after she was found guilty in a fraud case involving 51 public contracts in Santa Cruz, the Kirchner’s stronghold in the Patagonia region, during her and her late husband Néstor Kirchner’s various national administrations between 2003 and 2015. According to the conviction, the Kirchner’s benefited from the construction company ran by Lázaro Báez, a close associate with no previous experience in the sector. Fernandez de Kirchner temporarily cannot be detained due to her position as vice president, which grants her political immunity until December 2023 and the Supreme Court is expected to review her appeal next year.

Indeed, following her two-term presidency, Fernandez de Kirchner was investigated multiple times on around a dozen charges related to corruption. However, only two other cases in addition to the above-mentioned conviction for fraud, are expected to go to trial next year, namely, the “Hotesur Case”, which involves an alleged scheme to launder the money obtained by the public contracts awarded to Lázaro Báez through a chain of hotels owned by the Kirchners, and the “Notebooks Case”, a purported large-scale corruption system that involved the biggest infrastructure firms in Argentina.

Sanctions are one of the most preferred foreign policy tools utilized by the US in response to various geopolitical issues worldwide, and Latin America is no exception. However, in this case, multiple media outlets and think tanks reported that Fernandez de Kirchner accused Cruz of being politically and economically motivated, including allegedly related to her decision to renegotiate the contracts of companies that operate in Vaca Muerta, one of the largest gas reserve fields in the world. Other outlets indirectly suggest that Cruz’s request for sanctions could also be related to Argentine Economy Minister Sergio Massa’s strategy for the country’s USD 44 billion bailout loan with the International Monetary Fund (IMF).

Despite this and arguments that such imposition of sanctions may be counterproductive by providing evidence that supports her own narrative regarding Cruz’s motivations, this would not be the first time that the US considered sanctioning senior officials still holding office in countries with whom the US amicable relations. Senior Paraguan officials, for example were sanctioned in January 2023 for their “involvement in systemic corruption that has undermined democratic institutions”. Former President Horacio Cartes, former Vice President Hugo Velázquez, and several companies owned by Cartes were designated pursuant to Executive Order 13818, which was issued to tackle human right abuses and corruption cases outside of the US that threatened the stability of international political and economic systems. According to the US Department of State, Cartes and Velázquez, along with other politicians, engaged in systematic corruption, including widespread bribery, through which they expanded their political and economic power while undermining Paraguay’s political institutions. Both are reportedly under investigation by the local prosecutor, but the cases remain open.

This serves as a not-so-distant example of proposed sanctions levied against senior Latin American officials for similar reasons to those presented by Cruz vis-à-vis Fernández de Kirchner  and her associates. That said, similar to most sanctions, these moves are, indeed, quite likely to be politically motivated and potentially even geared toward domestic consumption than efforts to effect real change. Indeed, such efforts have and will draw attention to Cruz, while currently serving considerably unclear US national or international policy interests, a fact that remains true whether or not the CASES bill passes.This is true whether or not the CASES bill passes and is implement. Of course, it remains to be seen whether the CASES bill will succeed.

With sanctions targeting nearly 80% of the total banking assets in Russia and major banks like Sberbank and VTGB Bank, and with several institutions cut off from the SWIFT international payment system, the effects on the Russian economy and its financial system can already be seen. Most significantly, trust in and the value of the ruble has collapsed, triggering rising prices — which are liable to affect even locally produced items like wheat — and attempts by the population to withdraw cash before they no longer can.

The above is despite efforts by Putin over the past eight years to make the country as “immune” as possible to sanctions. Although he built-up the fourth largest foreign currency reserve in the world — valued at about  USD 630 billion — as such a buffer, the US, UK, EU, and Canada’s  sanctions on the Russian Central Bank has largely deprived Putin the access to the funds he planned to use for both the war in Ukraine and to prop up the economy in the face of the predicted global financial response.

As the invasion continues, we expect divestment to continue, as companies distance themselves to reduce both moral and financial exposure while additional countries impose and expand sanctions against Russia.