The international sanctions regime imposed by the United States has been characterized by its rapid pace of change, a feature that is rarely matched in other regulatory fields. Unlike traditional judicial proceedings, inclusion of an individual or company on the OFAC (Office of Foreign Assets Control) SDN List (Specially Designated Nationals and Blocked Persons List) does not depend on a prior conviction. Rather, it is sufficient for the agency to conclude, based on intelligence and investigative information, that there are reasonable grounds to link the designated party to illicit activities or to organizations already subject to sanctions. Once listed, the company or individual bears the burden of demonstrating the absence of such links through an administrative delisting process that is often lengthy and costly. In the meantime, the designated party faces the immediate blocking of assets, a prohibition on transactions with U.S. persons, and the risk of exclusion from the international financial system.
This dynamic environment presents particular challenges for Brazilian companies engaged in cross-border operations, especially in light of the recent escalation of U.S. regulatory pressure on criminal organizations operating in Brazil. On May 28, 2026, the U.S. Department of State designated Primeiro Comando da Capital (PCC) and Comando Vermelho (CV) as Specially Designated Global Terrorists, with their designation as Foreign Terrorist Organizations (FTOs) taking effect on June 5, 2026. This classification significantly expanded the scope of liability: providing ?material support? to an FTO, which may include financial transfers, services, or any other form of assistance, became a federal crime in the United States, punishable by up to 20 years of imprisonment, regardless of the nationality of the individual involved.
The practical effects of this new regulatory framework have already become apparent. On July 1, 2026, OFAC added two Brazilian nationals, Victor Henrique de Oliveira Shimada and Stella Stefanie Nunes Henrique de Oliveira, as well as three São Paulo-based companies and one Lisbon-based company controlled by Shimada, to the SDN List due to links with the PCC. This marked the first designation of Brazilian individuals or companies since prior designations made in December 2021 and March 2024.
This case clearly illustrates the risks we have previously highlighted. Sanctions affect not only the designated parties themselves but also entities in which they directly or indirectly hold a 50% or greater ownership interest. Furthermore, liability for sanctions violations is strict, meaning that both U.S. and non-U.S. persons may face civil and criminal penalties. Particular attention should be paid to the risk of secondary sanctions: foreign financial institutions that conduct significant transactions on behalf of designated persons may become subject to restrictions on their correspondent accounts in the United States, even if they are not directly subject to U.S. jurisdiction.
The frequent use of complex corporate structures spread across multiple jurisdictions, as illustrated by the case above, involving companies in São Paulo and Lisbon controlled by the same individual, demonstrates that a purely formal review of counterparties is no longer sufficient. Companies engaged in cross-border operations, extensive supply chains, foreign exchange activities, fintech services, payment processing, and financial services must strengthen their processes for identifying the ultimate beneficial owner (UBO) of transactions, rather than focusing solely on the formally contracted counterparty. This includes:
- Mapping not only the formal registration details but also the complete ownership structure of suppliers, customers, and business partners, with particular attention to indirect holdings and layered ownership arrangements;
- Applying enhanced due diligence to higher-risk transactions, especially those involving sectors historically vulnerable to criminal infiltration, such as distribution, logistics, foreign exchange services, and digital asset platforms;
- Continuously monitoring, rather than limiting reviews to the onboarding stage, changes in ownership and control structures that could bring a counterparty closer to designated individuals or entities; and
- Documenting due diligence efforts in order to demonstrate, whether to OFAC or banking counterparties, that risk exposure has been actively and diligently mitigated.
Even an unintentional or negligent association with money laundering networks may result in inclusion on the SDN List, with immediate and potentially irreversible consequences for both reputation and business continuity.
Against this backdrop, Brazilian companies should be particularly attentive to: (i) direct or indirect business relationships with individuals or entities that may have links to the PCC, CV, or other criminal organizations; (ii) transactions involving counterparties operating in high-risk sectors; (iii) operations involving opaque ownership structures or high-risk jurisdictions; and (iv) exposure to secondary sanctions through banking or commercial relationships with designated entities.
Our Compliance & Investigations and International Trade teams are available to assist in understanding developments in the sanctions framework, reviewing compliance programs, conducting enhanced due diligence, including ultimate beneficial ownership identification?and mapping regulatory risks associated with cross-border operations
This material is provided for informational purposes only. Our Compliance and Investigations team is available to provide specific legal advice.
