On January 20, 2025, his first day back in office, President Trump signed Executive Order 14157 (EO 14157), titled “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists.” The order marks a major expansion of the Foreign Terrorist Organization (FTO) designation framework.
This shift has serious implications for both American and international businesses. Companies and individuals that have any commercial ties to newly designated entities may now face criminal liability, even if they were unaware of the connection. Prosecutors may argue that these parties had “constructive knowledge” or that they “should have known” they were dealing with a terrorist-affiliated organization. In addition to criminal charges, those found in violation may also face significant civil penalties, asset freezes, and reputational harm.
I. Understanding “Material Support”
Federal law makes it a serious crime to provide “material support or resources” to any group designated as an FTO. As defined in 18 U.S.C. § 2339A(b), this includes any assistance such as money, services, lodging, transportation, training, expert advice, or personnel. The law does not require proof that a person intended to further terrorism. It is enough if the person knew the organization was a designated terrorist group, knew it engaged in terrorist activity, or had reason to know. See 18 U.S.C. § 2339B(a)(1). In other words, even indirect support can lead to prosecution if the facts suggest that the provider “should have known” about the group’s status or conduct.
II. Global Reach
One of the most expansive elements of 18 U.S.C. § 2339B is its jurisdictional reach. Under subsection (d)(1)(C), the United States can prosecute someone even if the alleged conduct occurred entirely abroad, as long as the individual is later brought into or found within U.S. territory. This means that foreign nationals, businesspeople, or contractors who have no connection to the U.S. at the time of the offense may still face prosecution if they later travel to or transit through the United States.
III. Which Industries Are Most Vulnerable?
Businesses operating in sectors like banking, logistics, agriculture, finance, real estate and even entertainment may now find themselves within reach of federal prosecution if they transact with entities linked to cartels. Companies involved in cross-border shipping, sourcing goods from Latin America, moving funds internationally, or structuring property deals in high- risk jurisdictions are particularly exposed. Again, the government does not need to prove intent; it is enough that a business knew or should have known that it was dealing with a designated group.
IV. Recent Case Example
On July 2, 2025, ICE arrested Mexican boxer and former world champion Julio Cesar Chavez Jr. in California for alleged ties to the Sinaloa Cartel, now designated as a FTO under EO 14157.Chavez initially entered the U.S. on a B2 tourist visa which expired in February 2024 and took part in a highly publicized fight with influencer-turned-boxer Jake Paul in Anaheim, California on June 28, 2025, despite an active arrest warrant in Mexico for organized crime and weapons trafficking.
Though U.S. Citizenship and Immigration Services made a formal referral to ICE citing Chavez as an “egregious public safety threat” on December 17, 2024, DHS law enforcement under the Biden administration indicated that Chavez was not an immigration enforcement priority and allowed his reentry to the country.
Following the Sinaloa Cartel’s designation as an FTO, the enhanced national security rationale triggered a determination on June 27,2025 that Chavez was a removable criminal alien and ultimately resulted in Chavez’s arrest only five days later. His arrest illustrates how recent FTO designations can prompt expedited removal and immigration enforcement, even for high-profile personalities and world-famous athletes.
V. Considerations For Businesses
- Which of your business activities could constitute “material support”?
- How can you enhance our due diligence, be prepared for a sudden investigation?
- If you discover that you engaged in transactions with designated FTOs, what steps can you take to mitigate and/or rectify the situation.
- Seek legal advice when exposure is uncertain.
If your business operates internationally, understanding the impact of the new FTO designations is critical. For help assessing exposure or updating compliance procedures, contact one of our experienced attorneys at EPGD Business Law in Miami, with an office in Miami, FL. Call (786) 837-6787 or email us to schedule a consultation.
