The Shifting Sands of Sanctions: How US Efforts to Disrupt Latin American Drug Cartels are Evolving
The US government is intensifying its use of sanctions against drug trafficking organizations in Latin America, but a critical question looms: are these measures truly effective? A recent report by Bruce Kay, published by InSight Crime, highlights a growing trend – a shift from targeting high-profile kingpins to focusing on the broader networks that enable the drug trade. This approach, although theoretically promising, faces significant hurdles in implementation.
From Kingpins to Networks: A Strategic Pivot
For years, US sanctions in the region concentrated on dismantling cartels from the top down, aiming to cripple them by removing their leaders. Although, as the article points out, this strategy often resulted in fragmentation rather than collapse, with drug flows continuing unabated. A growing consensus within agencies like the DEA suggests a need to treat these organizations as complex financial and logistical networks, requiring a more nuanced approach.
This shift is reflected in the increasing use of sanctions under the counter-terrorism framework, leveraging tools previously reserved for designated terrorist groups. The broadening of designations to include categories like Specially Designated Global Terrorist (SDGT) and Transnational Criminal Organization (TCO) allows the Office of Foreign Assets Control (OFAC) to target a wider range of actors – money launderers, chemical suppliers and shell companies – involved in the drug trade.
The Rise in Entity-Based Sanctions
The data reveals a significant increase in sanctions targeting entities rather than individuals. In 2025, OFAC focused heavily on Mexican criminal groups, hitting shell companies linked to the Sinaloa Cartel and businesses – hotels, spas, real estate firms – allegedly used to launder money for “Los Chapitos.” Similar actions were taken against networks connected to the Cartel Jalisco Nueva Generación (CJNG) and the Cartel de Santa Rosa de Lima (CSRL), including fuel smuggling operations.
Beyond Mexico, Venezuela saw a near tripling of sanctions designations in 2025, including the designation of the “Cartel de los Soles” as a foreign terrorist organization. OFAC also targeted shipping companies and vessels involved in circumventing oil sanctions, aiming to disrupt the financial flows supporting the Venezuelan government.
The Application Gap: Where Sanctions Fall Short
Despite the increased volume of sanctions, the article underscores a critical limitation: a lack of effective enforcement. While sanctions can block assets and prohibit transactions, actual seizures and disruptions linked directly to these measures remain limited. OFAC collected only $266 million in civil penalties in 2025, and global recoveries from money laundering and sanctions violations fell to $940 million – a significant drop from previous years.
A key factor contributing to this gap is insufficient staffing within OFAC. The agency’s budget and personnel have not kept pace with the expanding scope of its mandate. The network-based approach requires more in-depth investigations and relies heavily on the cooperation of the private sector, particularly financial institutions.
Pro Tip: Financial institutions are often hesitant to proactively flag suspicious transactions due to the costs and potential reputational risks involved. Stronger incentives and clearer guidance from regulators are needed to encourage greater compliance.
The Cartels’ Adaptability: A Constant Game of Cat and Mouse
Drug cartels are remarkably agile, constantly adapting to evade sanctions. As illustrated by the case of Sumilab, a chemical supplier sanctioned in 2023, organizations quickly create new shell companies and relocate operations to circumvent restrictions. This “whack-a-mole” dynamic highlights the need for a more proactive and anticipatory approach.
The rise of cryptocurrencies further complicates matters, providing cartels with alternative channels for moving funds outside the traditional financial system. The decentralized nature of crypto exchanges and the weaker regulatory framework surrounding them make it more demanding for OFAC to track and intercept illicit transactions.
Looking Ahead: Potential Future Trends
Several trends are likely to shape the future of US sanctions policy in Latin America:
- Increased Focus on Digital Assets: Expect greater efforts to regulate and monitor cryptocurrency transactions linked to drug trafficking.
- Enhanced International Cooperation: Collaboration with Latin American governments will be crucial for effective enforcement.
- Greater Use of Data Analytics: Leveraging data analytics and artificial intelligence to identify patterns of illicit financial activity.
- Targeting Enablers: Focusing on professionals – lawyers, accountants, and real estate agents – who facilitate money laundering for cartels.
FAQ
Q: Are sanctions effective in combating drug trafficking?
A: The effectiveness is debated. While sanctions can disrupt financial flows, their impact is limited by enforcement challenges and the cartels’ adaptability.
Q: What is the role of the private sector in enforcing sanctions?
A: Banks and other financial institutions play a critical role in identifying and reporting suspicious transactions.
Q: What are TCO and SDGT designations?
A: TCO stands for Transnational Criminal Organization, and SDGT stands for Specially Designated Global Terrorist. These designations allow OFAC to target a wider range of actors involved in illicit activities.
Did you know? The US Treasury has sanctioned over 300 targets for involvement in drug trafficking activities in the past two years.
Explore more insights into international crime and security at InSight Crime.
