U.S. designation of PCC and CV as terrorist organizations: impacts for Brazilian companies

On May 28, 2026, the U.S. State Department announced the designation of the Brazilian criminal organizations Primeiro Comando da Capital (PCC) and the Comando Vermelho (CV) as Specially Designated Global Terrorists (SDGTs), effective immediately, along with its intention to classify these organizations as Foreign Terrorist Organizations (FTOs), effective June 5, 2026. Although this is a measure pertaining to foreign law, it could present repercussions for Brazilian companies and significant economic and legal impacts across a range of sectors.

These designations stand in contrast to how organizations like the PCC and CV are treated under Brazilian law, which draws a distinction between criminal groups (which essentially aim to profit economically from crime) and terrorism, which is generally politically motivated. Nonetheless, companies operating in Brazil – particularly those with international exposure – will need to assess their risks and strengthen their internal controls and risk management frameworks in light of the potential impacts of this decision. In this context, the U.S. government’s decision underscores the importance of practices already recommended and supported by Brazilian legislation itself.

Risks for Brazilian companies

The measure adopted by the United States poses both direct and indirect risks to Brazilian companies.

Direct risks arise from potential exposure to investigations, sanctions, and criminal penalties under U.S. law for individuals and legal entities that have provided ‘material support’ to these organizations. The concept of ‘material support’ is broad and may encompass any tangible or intangible assets, including financial transactions and the provision of goods and services.

U.S. law also allows U.S. nationals who are victims of acts of international terrorism committed, planned, or authorized by FTOs to bring civil lawsuits for damages in the United States. Such actions may result in treble damages and attorneys’ fee awards, not only against those directly responsible but also against companies and organizations accused of complicity through the provision of substantial assistance to the FTO.

Indirect risks may arise from more stringent requirements imposed by counterparties – such as investors, financial institutions, and business partners with global operations – as well as from the commercial, financial, and reputational consequences of any suspected ties to the PCC or CV. These effects are not limited to U.S. counterparties; companies in other jurisdictions also tend to tighten their legal risk management and compliance measures when dealing with companies located in territories where FTOs operate.

The SDGT and FTO designations have resulted in these organizations being added to the SDN (Specially Designated Nationals and Blocked Persons) list maintained by OFAC (Office of Foreign Assets Control), the agency responsible for administering the U.S. international sanctions regime. The PCC had already been on the OFAC list since 2021, having been added under regulations targeting illicit drug trafficking. For persons subject to U.S. law, this prior designation already permitted the blocking of assets and prohibited any business dealings with the organization.

In all cases, it is important to note that a thorough assessment of the scope, risks, applicable scenarios, and enforcement criteria under the U.S. legal framework should be carried out with the assistance of legal counsel qualified to advise on matters of U.S. law.

Practical recommendations for Brazilian companies

This new scenario directly affects the anti-money laundering and counter-terrorism financing (AML/CTF) practices already in place in Brazil. For legal entities operating in regulated sectors under Article 9 of Law No. 9,613/1998, these measures highlight the need, for example, to review and prioritize controls, recalibrate risk monitoring parameters, and refine escalation procedures to identify transaction risks involving individuals or entities potentially linked to the PCC or CV.

For companies not previously subject to specific AML/CTF regulatory requirements, these designations make it advisable to strengthen due diligence practices and integrity programs. On a day-to-day basis, attention should focus on key compliance activities, including counterparty screening, identification of shareholders and ultimate beneficial owners, supplier and client risk assessments, and the integration of standard AML/CTF controls into integrity frameworks – including monitoring for suspicious transaction patterns.

As part of preventive response actions to this new risk scenario, the following measures are also recommended:

• Assess exposure to risks of infiltration by criminal organizations: map direct and indirect risks based on criteria such as industry sector, specific markets, geographic footprint, scope and composition of the supplier and client base, contracted intermediaries, donations and sponsorships, financial operations, and government contracts. Heightened attention is warranted for sectors with significant cash flows, complex supply chains, or operations in segments historically vulnerable to exploitation by criminal organizations, as well as for operations in higher-risk regions such as known narcotics trafficking routes.
• Enhance preventive due diligence practices: review onboarding criteria and the ongoing monitoring of suppliers and business partners – including by consulting the OFAC SDN list – expand ultimate beneficial owner identification, and verify corporate affiliations and reputational standing. Warning indicators include, for example, opaque corporate structures, inconsistencies in registration data, and commercial transactions that deviate from standard patterns or lack a clear business rationale.
• Enhance screening and audit processes: adapt screening and pre-engagement audit practices to capture, identify, and assess red flags potentially linked to criminal organization activities, drawing on publicly available information about law enforcement investigations and organized crime operations, as well as internal records or intelligence from fraud prevention and financial crime units, where applicable.
• Review staff training and awareness: provide guidance to departments that interface with suppliers and clients – including sales, procurement, finance, logistics, and sustainability – on red flags, indicators to monitor, and escalation protocols. Risk often manifests through off-book payments, intermediaries with no clear commercial purpose, informally mandated suppliers, extortion, or donations and sponsorships that lack transparency.
• Document decisions: when potential connections arise with individuals or entities presenting a heightened risk profile, or when alerts flag transactions suspected of money laundering or organized crime financing, ensure proper documentation of the analysis conducted, the response taken, the response time, the responsible parties, and the underlying rationale behind the decision.

Compliance with Brazilian Law: Standards, Limits, Obligations, and Parameters

The U.S. government’s designation does not make the PCC and CV terrorist organizations under Brazilian law. In 2025, during the proceedings of Arguição de Descumprimento de Preceito Fundamental (ADPF) No. 1178, Justice Flávio Dino confirmed that under Brazil’s Federal Constitution, foreign laws, executive orders, court decisions, and administrative acts do not take immediate effect in Brazil without prior recognition or homologation by a competent authority, or processing through formal international cooperation mechanisms.

Brazil has no administrative mechanism for recognizing and listing terrorist organizations, although it has ratified international treaties that expressly designate certain terrorist groups by name. Under domestic law, terrorism is defined as criminal conduct under Article 2 of Law No. 13,260/2016, encompassing the acts set forth therein when motivated by xenophobia, discrimination, or prejudice based on race, color, ethnicity, or religion, and committed with the intent to cause social or generalized terror, thereby endangering persons, property, public peace, or public safety.

Nevertheless, Brazilian legislation already provides for various legal and regulatory mechanisms aimed at combating the illicit activities of criminal organizations such as the PCC and CV – particularly Law No. 9,613/1998 (Anti-Money Laundering Law), Law No. 12,850/2013 (Organized Crime Law), and, more recently, Law No. 15,358/2026 (Anti-Factions Law). Brazilian companies must remain vigilant about their compliance with these obligations within Brazil’s territory.

These laws already establish various mechanisms that prohibit material, financial, logistical, or informational support to criminal factions – whether through the criminalization of money laundering (Article 1 of Law No. 9,613/1998), the offense of financing a criminal organization (Article 2 of Law No. 12,850/2013), or the recently enacted offense of aiding structured social dominance under Article 3 of the Anti-Faction Law. Moreover, the Brazilian Criminal Code authorizes the prosecution of any person who willfully provides material assistance to another’s criminal acts.

Accordingly, Brazilian legislation requires or strongly recommends that companies adopt adequate internal controls to mitigate risks related to money laundering, organized crime, and criminal factions, particularly where their operations may be vulnerable to infiltration by criminal organizations. Brazilian companies should remain alert to these risks and consider implementing the safeguards described above, taking into account the requirements and implications of Brazilian law.

For more information on this topic, please contact Mattos Filho’s Compliance & Corporate Ethics and White Collar Crime practice areas.