DLA Piper Puerto Rico

Written by: Nereida Melendez-Rivera, Sonia Torres Pabón, Antonio Cardenas Arriola, Isabel Lecompte The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has announced significant new sanctions targeting two major Mexican criminal organizations – Carteles Unidos and Los Viagras – along with seven affiliated individuals. These actions are part of a broader US government effort to disrupt the operations of cartels responsible for violence, drug trafficking, terrorism, and widespread extortion, particularly in Mexico’s agricultural sector. In this alert, we highlight the designated entities and individuals targeted by the sanctions. In addition, we discuss legal and compliance implications and set out key takeaways for companies that may be exposed to risk from the sanctions. Background on the sanctioned organizations Carteles Unidos Carteles Unidos originated in Michoacán, México as a defensive alliance against the Jalisco Nueva Generación Cartel (CJNG). It has since evolved into a major criminal enterprise. Its activities include large-scale drug production and trafficking, extortion, arms smuggling, and violent confrontations with both rival organizations and authorities. The group is primarily active in central and western Mexico, but its influence is expanding transnationally. The US government has designated Carteles Unidos as a Foreign Terrorist Organization (FTO) and a Specially Designated Global Terrorist (SDGT), and it is subject to extensive US sanctions due to its involvement in illicit activities. Los Viagras Los Viagras is a Michoacán-based criminal organization involved in trafficking methamphetamine and cocaine. In its conflict for control of Michoacán, Los Viagras has recently allied with CJNG, one of the two Mexican cartels primarily responsible for the supply of illicit fentanyl into the US. Furthermore, Los Viagras has extorted avocado and citrus growers, cattle ranchers, and entire towns to generate revenue. Los Viagras has also conducted kidnappings and attacked Mexican security forces. Sanctioned individuals The following individuals have been sanctioned for their affiliation with the above-mentioned organizations: Juan Jose Farías Álvarez (“El Abuelo”) Luis Enrique Barragán Chavez (“Wicho”) Alfonso Fernández Magallón (“Poncho”) Edgar Valeriano Orozco Cabadas (“El Kamoni”) Nicolás Sierra Santana (“El Gordo”) Heladio Cisneros Flores (“La Sirena”) César Alejandro Sepúlveda Arellano (“El Botox”) Legal and compliance implications As a result of the sanctions, all property and interests in property of the designated entities and individuals within the US or in the possession or control of US persons are now blocked and must be reported to OFAC. US persons are generally prohibited from engaging in transactions involving these blocked persons or their property. Entities that are owned 50 percent or more, directly or indirectly, by one or more blocked persons are also subject to these restrictions. Violations of these sanctions can result in significant civil or criminal penalties. OFAC may impose civil penalties on a strict liability basis, which means that a violation can result in penalties even if there was no intent to violate the sanctions. Financial institutions and other parties may also face secondary sanctions for facilitating significant transactions with designated persons. Key considerations In response to potential violation of these sanctions, entities may consider the following actions: Reviewing all third-party relationships to identify potential exposure or risks related to the newly sanctioned organizations and persons Conducting enhanced due diligence on business relationships and transactions involving México, especially in regions or industries known to be affected by cartel activity Updating and strengthening compliance protocols, particularly for operations and transactions involving Latin America and México Monitoring for additional designations and regulatory changes, as the enforcement landscape is evolving rapidly and new sanctions may be announced at any time In addition, foreign financial institutions should be aware of the risk of secondary sanctions for knowingly facilitating significant transactions for or on behalf of designated entities or persons. For guidance on risk mitigation and compliance strategies, please contact the authors. Leer este artículo en español.