Highlights

  • Recent actions by the U.S. Department of the Treasury's Office of Foreign Assets Control, together with parallel developments in Mexico, reflect an increasingly coordinated and expansive approach to addressing the activities of Mexican cartels and their presence within legitimate economic sectors.
  • Though enforcement efforts have historically focused on narcotics trafficking and financial networks, more recent actions suggest a widening focus, with closer scrutiny of commercial industries - particularly within the agro-industrial sector in the states of Jalisco and Michoacán - where illicit actors may exert influence, extract value or integrate themselves into supply chains.

Recent actions by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), together with parallel developments in Mexico, reflect an increasingly coordinated and expansive approach to addressing the activities of Mexican cartels and their presence within legitimate economic sectors.

Though enforcement efforts have historically focused on narcotics trafficking and financial networks, recent measures point to a broader focus that includes increased scrutiny of commercial industries - particularly the agro-industrial sector in the Mexican states of Jalisco and Michoacán - where illicit actors may exert influence, extract value or embed themselves in supply chains.1

This evolving landscape stems from last year's designation by the U.S. government of major Mexican drug cartels as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs), which has materially expanded the scope of legal exposure for companies operating in or sourcing from Mexico. Under the Antiterrorism and Effective Death Penalty Act of 1996, providing "material support or resources" to an FTO - including financial services, lodging or other tangible assistance - can result in severe criminal penalties, even in situations where the support is unintentional but was provided with constructive knowledge of the organization's designation.

U.S. courts have recognized that constructive knowledge can be satisfied when the defendant deliberately ignored red flags indicating possible involvement with a terrorist organization. This standard significantly expands potential liability, as companies cannot simply turn a blind eye to suspicious circumstances and cite a lack of actual knowledge as a defense.

Expanding Focus on Agro-Industrial Activity

Recent Treasury Department measures have highlighted cartel involvement in segments of the agricultural and agro-industrial economy, including:

  • production and commercialization of agricultural goods
  • control or influence over rural land use and logistics
  • extraction of value through extortion or coercive practices
  • use of legitimate commercial channels to facilitate illicit revenue

These developments signal that U.S. enforcement authorities are becoming increasingly attentive to how cartel-linked actors may intersect with lawful economic activity beyond traditionally high-risk sectors.

Key 2026 Developments in Mexico

Tequila's Municipality Mayor Arrested for Alleged Extortion of Distilleries: Tequila's Municipality Mayor Diego Rivera was arrested on extortion charges on February 6, 2026, and for an alleged nexus with the Mexican Cartel Jalisco Nueva Generación (CJNG).2 The detention was followed by criminal complaints filed by Tequila producers who claimed they were subjected to extortion payment demands and coercive measures from local authorities.3

OFAC Focus on Commercial Structures: OFAC on February 19, 2026, sanctioned a Mexican timeshare resort linked to the CJNG and blocked 17 entities and five individuals involved in the timeshare operations. These actions underscore a continued enforcement trend toward targeting legitimate-facing business models allegedly used to generate or channel illicit proceeds, while increasing the risk of exposure to sanctions for financial institutions and other people engaging in certain transactions or activities involving such designated entities and individuals.4

Death of CJNG Leader: Mexican security forces carried out operations on February 22, 2026, resulting in the death of the leader of the CJNG.5 This development reflects a notable escalation in cartel enforcement actions and continued coordination between U.S. and Mexican authorities aimed at disrupting both leadership structures and broader operational networks.

Implications for Agro-Industry and Supply Chains

Together, these events demonstrate increasing regulatory and enforcement attention to how cartel activity may intersect with legitimate commercial operations, particularly in sectors such as agro-industry that involve:

  • geographic concentration in regions with strong cartel presence
  • multilayered supply chains and third-party dependencies
  • interaction with local authorities and service providers
  • extortion and coercive measures against companies to avoid business disruption
  • cartel influence on local authorities and public officials

As enforcement priorities continue to evolve - including through the potential expansion of FTO-related frameworks - companies operating in or connected to these sectors may face heightened scrutiny with respect to indirect or contextual exposure.

What Companies Should Do

In light of these developments, companies may consider:

  • updating compliance frameworks to address FTO exposure, including revising policies and procedures to reflect the broad scope of "material support" prohibitions and the "constructive knowledge" standard under U.S. law
  • conducting comprehensive, risk-based assessments that incorporate geographic exposure, industry-specific risks, counterparty profiles, and potential misuse of products or services within cartel-influenced environments
  • enhancing the identification and escalation of cartel-related red flags, including those arising from geographic footprint, ownership structures, transactional patterns and behavioral indicators
  • implementing robust third-party due diligence controls, including expanded beneficial ownership analysis, adverse media review, contractual safeguards and ongoing monitoring of suppliers, distributors, and other business partners
  • strengthening internal investigation and escalation protocols to ensure timely response to potential exposure, preservation of evidence and appropriate remediation measures
  • maintaining clear documentation and governance oversight of compliance efforts, including periodic updates, board-level visibility and alignment with evolving enforcement expectations

As U.S. and Mexican authorities continue to broaden the use of sanctions and FTO-related tools to disrupt cartel-linked activity, companies with operations, counterparties or supply chains connected to Mexico - particularly in the agro-industry - should expect increased scrutiny of both direct and indirect touchpoints. Proactive and risk-based compliance, supported by strong third-party controls and escalation protocols, can help mitigate exposure, preserve business continuity and position organizations to respond effectively as increased enforcement efforts evolve.