On May 28, 2026, the U.S. Department of State announced the designation of the Primeiro Comando da Capital – PCC and the Comando Vermelho – CV as Specially Designated Global Terrorists and is intention to designate both as Foreign Terrorist Organizations (“FTOs”), under the Section 219 of the Immigration and Nationality Act. The FTO designations will take effect on June 5, 2026, upon its publication in the Federal Register.

U.S. Secretary of State Marco Rubio said in a statement that until then, they will be named as Specially Designated Global Terrorists (“SDGTs”), under the Executive Order 13224, which hampers their ability to make financial transactions as they are regarded as a threat to U.S. citizens.

The measure significantly expands the enforcement tools, financial sanctions, and international cooperation mechanisms applicable to these organizations, with potential implications for companies with operations, supply chains, commercial partners, or financial flows subject to U.S. jurisdiction.

The U.S. Department of Justice had already signaled, in its 2026 guidelines, that cases involving corruption connected to transnational criminal organizations constitute a top enforcement priority under the Foreign Corrupt Practices Act (FCPA). The formal designation of PCC and CV as FTO and SDGT consolidates and amplifies the level of regulatory scrutiny and enforcement for companies with operations in Brazil.

In view of the transnational reach of these organizations and the extraterritorial effects, of the U.S. sanctions regime, and given that the designations take effect within days, any company with a nexus to U.S. jurisdiction is advised to conduct a preliminary assessment of their exposure to regulatory risks (with reputational and financial consequences) arising from direct or indirect commercial relationships with individuals or entities potentially linked to the designated organizations. The designations produce immediate and far-reaching extraterritorial effects, regardless of any changes to Brazilian domestic law.

Legal Effects of the Designation

The U.S. sanctions and counterterrorism regime applies to legal entities and individuals subject to U.S. jurisdiction – including U.S. incorporated companies, their subsidiaries and affiliates, issuers listed on U.S. stock exchanges, and any company that conducts transactions through the U.S. financial system or in U.S. dollars.

The FTO and SDGT regimes, while distinct in their normative basis and enforcing authority, produce complementary and successive effects in the present case. The SDGT designation, based on Executive Order 13224, and enforced by the Office of Foreign Assets Control (“OFAC”) of the Department of the Treasury, has been in effect since the May 28, 2026 announcement and authorizes the blocking of assets and interests subject to U.S. jurisdiction, while also restricting transactions involving the designated organizations.

The FTO designation, governed by Section 219 of the Immigration and Nationality Act, which will take effect on June 5, 2026, and will be enforced by the DOJ and the FBI, broadens the restrictions applicable to knowingly providing resources, services, or any form of material support to designated organizations.

The term “material support” is interpreted broadly by U.S. authorities and may encompass not only direct financial assistance, but also the provision of services, logistical support, operational facilitation, supply of goods, commercial intermediation, or any other form of assistance to a designated organization, regardless of the intent of the parties involved, should connections be identified. In practice, this raises the standard of diligence expected of companies in assessing third parties, commercial partners, and operational flows potentially exposed to the risk of direct or indirect connection with sanctioned entities.

The risk extends to the financial system, as the SDGT designation allows for the immediate blocking of assets in the U.S. and the restriction of access to the American financial system for companies whose commercial partners have ties to the designated organizations.

Effects and Impacts on Companies

The designation reinforces the need to strengthen compliance programs, internal controls, and third-party due diligence procedures, particularly in sectors and operations with greater territorial, logistical, or financial exposure.

Companies with operations in Brazil should consider enhancing their due diligence on suppliers, third parties and business partners beyond traditional sanctions lists, incorporating background checks, negative media searches, corporate structure analysis, identification of ultimate beneficial owners, and verification of presence in high-risk regions, as well as their ongoing risk monitoring efforts.

In M&A transactions and strategic investments, scrutiny of corporate structures, financial flows, and reputational exposure is expected to become increasingly relevant in light of anticipated heightened international enforcement.

Companies are also advised to review their accounting controls, anti-money laundering policies (AML/CFT), contractual compliance clauses, and internal reporting and investigation protocols to address the new risks identified in their operations.

For a more in-depth analysis of the regulatory context, please refer to our previous client alert: Global Perspectives on Enforcement and Compliance Risks: The Impact of the Designation of Criminal Organizations in Brazil as TCOs.

For more information, please contact Saud Advogados.