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Designation of Cartels as Terrorist Organizations Rings Hollow Without AML Enforcement

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The U.S. government has embarked down a path of strategic dissonance that has left national security and law enforcement bereft of the tools they need to turn off the cartels’ spigot of illicit finance. As such, its designation of certain cartels as foreign terrorist organizations (FTOs) rings hollow in its first year. 

The FTO designation is unlikely to stop cartel financing or improve public safety without a concurrent effort to reinvest in the tools U.S. investigators need to “follow the money”. Otherwise, these organizations will stay operational – and profitable. 

Since 2025, there has been a systematic disruption and deprioritization of the fight against illicit finance within the U.S. government, in ways that undermine stated goals on cartels. Consider steps that the White House, U.S. Treasury, Department of Justice, and other agencies have taken in the past year: 

  • Gutted the bipartisan Corporate Transparency Act, which would have enabled investigators to identify the true owners of U.S. shell companies that have enabled the Sinaloa cartel and others to move millions through the U.S. financial system. 
  • Delayed the implementation of anti-money laundering (AML) rules to safeguard the U.S. private investment sector, the opacity of which has enabled cartels to allegedly move as much as $1 million a week through U.S. hedge funds. 
  • Relaxed the enforcement of AML compliance system-wide, and pardoned the worst offenders of AML compliance failures within the crypto market, despite the apparent use of these platforms for terror and cartel financing. 
  • Hobbled the federal work force through mass firings, layoffs, redeployments, and underresourcing to the detriment of U.S. investigative and prosecutorial capacity.

An FTO designation meant to deprive an organization of its resources cannot succeed in an incoherent policy environment that deprioritizes the fight against illicit finance. Following the money is the most meaningful way that U.S. officials can mitigate these transnational criminal organizations as they foment violence across the Americas and fuel the fentanyl crisis in the United States.