On June 4, 2026, Crowell Partners Caroline Brown and Anand Sithian hosted the ACSS New York Chapter at the New York office for an in-person panel discussion titled “Renewed Focus on Cartels, Transnational Criminal Organizations, and Foreign Terrorist Organizations: Compliance Challenges for Financial Institutions and Multinationals.” The sold-out event brought together practitioners from the financial crime compliance community for a timely and substantive conversation at the intersection of sanctions, narcotics trafficking, and AML risk.

The panel featured Crowell’s Caroline Brown alongside Ray Donovan, former Special Agent in Charge of the DEA and lead agent in the capture of Joaquín “El Chapo” Guzmán, now CEO of Stack21 Solutions, and Joe Twinem, former OFAC and FinCEN official and Global Sanctions/AML Strategy Leader at BNP Paribas.  Howard Spieler, Citibank, moderated the panel discussion.

The audience reflected a broad cross-section of the financial crime ecosystem, bringing together sanctions and AML compliance professionals from major global financial institutions, attorneys from leading law firms, professionals from the Big 4 and advisory firms, and specialists from compliance intelligence and data companies.

The panel tackled the most pressing questions facing compliance professionals today, including the implications of cartel Foreign Terrorist Organization (FTO) designations for sanctions and AML exposure, the deepening role of Chinese and Indian networks in the fentanyl supply chain, and how OFAC, FinCEN, and allied regulators are deploying sanctions to disrupt trafficking networks. Panelists also offered practical guidance on identifying red flags linked to cartel activity and narco-financing, and closed with a candid discussion about whether the existing sanctions toolkit is equal to the scale of the threat.

Following the program, guests enjoyed a post-panel quiz before networking over drinks and appetizers. Thank you to our panelists, attendees, and the ACSS New York Chapter for making this event such a success.

The Office of the United States Trade Representative (USTR) has issued a Notice of Determination and Request for Comments, finding that certain of Brazil’s acts, policies, and practices are actionable under Sections 301(b) and 304(a) of the Trade Act of 1974. If adopted as proposed, USTR would impose additional tariffs of 25% on Brazilian-origin goods, subject to specified exemptions.

At the specific direction of the President, USTR initiated the investigation on July 15, 2025, covering six distinct issue areas: (1) digital trade and electronic payment services; (2) unfair, preferential tariffs; (3) anti-corruption enforcement; (4) intellectual property protection; (5) ethanol market access; and (6) illegal deforestation.

Interested parties submitted over 295 comments and rebuttal comments, and USTR and the Section 301 Committee convened a public hearing on September 3, 2025, during which witnesses provided testimony and answered questions. On July 15, 2025, the Trade Representative also requested consultations with the Government of Brazil pursuant to Section 303(a) of the Trade Act, 19 U.S.C. § 2413(a), with consultations held on April 15 and 16, 2026.

Based on information obtained during the investigation and in consultation with the Section 301 Committee, the Trade Representative determined that certain Brazil’s acts, policies, and practices in each of the six issue areas are unreasonable or discriminatory and burden or restrict U.S. commerce, and are therefore actionable. The specific findings span a broad range of conduct:

  • Brazilian courts have issued secret orders directing U.S. social media companies — including X, Meta, and Google — to remove political content and suspend user profiles, with X barred from operating in Brazil from August to October 2024 and Rumble suspended since February 2025;
  • Brazil’s central bank, acting as both regulator and owner/operator of the national instant payment system Pix, mandates its use by financial institutions with more than 500,000 accounts and requires that Pix be displayed no less prominently than competing payment services;
  • Brazil maintains preferential trade arrangements with Mexico and India covering hundreds of tariff lines at rates between 10 and 100 percent lower than the most-favored-nation (MFN) rate applied to competing U.S. exports;
  • In September 2023, Brazilian Supreme Court Justice Dias Toffoli annulled all evidence in a key leniency agreement arising from Operation Car Wash — the largest transnational corruption scheme in history — leading to the annulment of more than a hundred cases in Brazil;
  • Brazil has remained on USTR’s Special 301 Watch List since 2007, with ongoing failures to address counterfeiting, biopharmaceutical patent pendency, and widespread online piracy;
  • Brazil reinstated tariffs on imports of U.S. ethanol in 2017 — currently set at 18% as of February 2023 — causing U.S. ethanol exports to Brazil to fall from a peak of $761 million in 2018 to $96 million in 2025; and
  • As Brazil has failed to enforce its environmental laws, deforestation has become systemic, with reports indicating that between 2023 and 2024, approximately 91% of deforestation in the Amazon was illegal.

USTR also noted an important limitation in its digital trade findings: on the facts gathered to date, it is not making findings at this time with respect to the actionability of measures relating to the Brazilian Supreme Court’s June 26, 2025 decision or restrictions on transfers of personal data outside Brazil.

Pursuant to Sections 301(b) and (c) of the Trade Act, the Trade Representative proposes to impose tariffs of 25% on all goods of Brazil, with exemptions for certain goods including informational materials, donations, accompanied baggage, all articles and parts of articles subject to Section 232 tariffs, and certain raw materials and products identified in the Annex — including products that could cause economy-wide disruptions if subjected to the additional tariffs, goods that cannot be grown or produced in sufficient quantities in the United States, and articles for which additional tariffs may not contribute substantially to the elimination of Brazil’s actionable practices.

USTR specifically seeks comment on the proposed tariff coverage and exclusions, including whether particular tariff subheadings should be added or removed in light of domestic supply needs, alternative sourcing, potential supply-chain dislocations, and whether tariffs would be practical or effective in addressing the challenged practices. USTR also invited views on U.S. engagement with Brazil in the context of the ongoing Special 301 review.

USTR specifically seeks comments on the proposed tariff coverage and exclusions, including whether particular tariff subheadings should be added or removed in light of domestic supply needs, alternative sourcing, potential supply-chain dislocations or economy-wide disruptions, and whether tariffs would be practical or effective in eliminating the challenged practices. USTR also invited views on U.S. engagement with Brazil in the context of the ongoing Special 301 Review, USTR’s annual review of whether U.S. trading partners adequately protect and enforce intellectual property rights.

The comment period opened on June 1, 2026; written comments are due by July 1, 2026; requests to appear at the public hearing, along with a summary of testimony, must be submitted by June 22, 2026; and the public hearing will be held on July 6, 2026, at the U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Written comments must be submitted through the USTR online portal at https://comments.ustr.gov/s/ under docket number USTR-2026-0331, and hearing participation requests must be submitted under docket number USTR-2026-0397.

Crowell & Moring, LLP will continue to monitor this proceeding and advise clients on developments and the potential impact to businesses and importers sourcing goods from Brazil.

On June 2, 2026, the U.S. Trade Representative (USTR) announced a landmark set of enforcement actions under Section 301 of the Trade Act of 1974, targeting 60 economies worldwide for failing to prohibit the importation of goods produced with forced labor. This is one of the most sweeping forced labor-related trade enforcement actions in U.S. history. USTR has proposed new tariffs ranging from 10% to 12.5% on all products from these economies. Interested parties may file public comments, due by July 6, and the USTR has scheduled a public hearing on July 7 before final implementation. Companies sourcing from any of the 60 affected economies should assess exposure immediately.

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On June 3, 2026, the White House issued an Executive Order (“Strengthening Customs Enforcement”) that directs the U.S. Department of Homeland Security (“DHS”) and U.S. Customs and Border Protection (“CBP”) to take a series of actions intended to combat customs fraud, transshipment, forced labor imports, duty evasion, and other trade-related violations. While many of the directives will require future rulemaking or policy changes before becoming effective, the Order signals a significant increase in customs enforcement and scrutiny of foreign importers.

Key directives include:

1. Increased scrutiny of foreign importers of record

The Order identifies foreign importers of record as an enforcement concern and directs CBP to develop enhanced requirements for foreign entities importing goods into the United States. These requirements may include:

  • Increased bond requirements;
  • Additional disclosures regarding ownership and business operations;
  • Disclosure of affiliations and beneficial ownership;
  • Information regarding anticipated import volumes and U.S. assets.

2. Restrictions on informal entry procedures

The Order directs CBP to revise regulations so that foreign importers of record are no longer eligible to use informal entry procedures and instead must utilize formal entry processes.

3. Creation of an importer “good standing” requirement

CBP is directed to establish standards under which importers must remain in good standing to continue importing merchandise into the United States. Importers that fail to meet those standards could face restrictions on import activity.

4. Enhanced enforcement against customs fraud

The Order emphasizes enforcement against:

  • Transshipment schemes;
  • Country-of-origin evasion;
  • Undervaluation;
  • Misclassification;
  • Forced labor imports;
  • Other customs violations.

5. More stringent penalty policies

CBP is directed to revise penalty mitigation practices and establish a minimum mitigation threshold under which importers generally would remain responsible for at least 50 percent of assessed penalties absent exceptional circumstances.

6. Additional legislative proposals

DHS must submit recommendations to the President within 45 days regarding further legislative changes that could strengthen customs enforcement authorities.

Practical Implications

The Executive Order does not itself impose immediate new compliance obligations on importers. Instead, it directs DHS and CBP to develop regulations, procedures, and policies implementing the Administration’s enforcement objectives. However, the Order clearly signals increased scrutiny of foreign importers of record and suggests that companies importing into the United States through non-U.S. entities should closely monitor forthcoming regulatory developments.

Key Takeaway: BIS’s latest guidance closes an ambiguity created by the AI Diffusion Rule rollback, confirming that the original 2023 license requirement for advanced computing items exported to Country Group D:5 and Macau-headquartered entities remains in full force – regardless of where those entities are physically located.

On May 31, 2026, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued guidance clarifying that the license requirement for advanced computing items – first established on November 17, 2023 – continues to apply to entities that are subsidiaries of companies headquartered in Country Group D:5 (i.e., “U.S. Arms Embargoed Countries”) or Macau, even when those entities operate outside of D:5 or Macau destinations. The guidance directly addresses industry confusion following BIS’s May 2025 announcement that it would not enforce the new compliance requirements introduced by the AI Diffusion Rule.

Background: The original license requirement was introduced on November 17, 2023, implemented as an end-user control under § 744.23(a)(3) of the Export Administration Regulations (“EAR”), 15 CFR Parts 730-774. It applied to advanced computing items classified under Export Control Classification Numbers (“ECCNs”) 3A090.a and .b, 4A090.a and .b, and related .z paragraph items. In January 2025, the AI Diffusion Rule transferred the requirement for “.a” items from § 744.23(a) into § 742.6, establishing a new worldwide, destination-based license framework. When BIS announced non-enforcement of the AI Diffusion Rule’s new compliance requirements in May 2025, it created uncertainty in the trade community about whether the underlying, pre-existing entity-based controls had also been suspended.

Scope of BIS’s Guidance: The guidance makes clear that the answer to the suspension question is: no. A license requirement continues to apply under § 742.6(a)(6)(iii)(A) of the EAR to all destinations outside the United States for advanced computing items when such items are destined for entities headquartered in – or whose ultimate parent company is headquartered in – Country Group D:5 or Macau. Because this requirement predates the AI Diffusion Rule, BIS’s non-enforcement policy applies only to destination-based controls for transactions that do not involve such D:5 or Macau-headquartered entities. Exporters should continue to seek BIS licenses for qualifying transactions, unless a license exception under § 740.2(a)(9)(ii) is available. Separately, bona fide data center operators engaged in activities consistent with the EAR are not required to cease ongoing use, storage, disposal, or servicing of advanced computing items on the basis of this guidance, until further notice from BIS.

Exporters of advanced computing items should ensure their compliance programs account for the entity-based nature of this control.  This includes conducting rigorous end-user diligence, including ultimate beneficial ownership analysis, to identify D:5 or Macau headquarters structures across their customer base, regardless of where those customers physically operate. License applications should be submitted in accordance with Part 748 of the EAR, and companies assessing potential past non-compliance should evaluate voluntary self-disclosure eligibility under § 764.5 of the EAR.

Crowell will continue to monitor BIS guidance and rulemakings related to advanced computing export controls and their impact on industry.

Businesses affected by the Strait of Hormuz crisis are likely to be navigating both sides of the contractual liability equation: seeking to enforce protections while simultaneously trying to limit their own exposure. This balancing act will feel familiar to those who managed supply chain disruptions during the Covid pandemic or in response to Russian sanctions. But the scale of uncertainty and the severity of the current situation make it particularly challenging to chart a clear path forward. This note provides an overview of the English-law issues that have arisen in this current crisis and is relevant for companies and legal counsel seeking to understand and mitigate contractual risk in their supply chains, including for shipping, energy, commodities, and construction.

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Key Takeaway: ATF’s latest final rule closes a regulatory gap left by the Export Control Reform (“ECR”) initiative, acknowledging that the Department of Commerce now shares jurisdiction alongside the Department of State over items on ATF’s United States Munitions Import List (“USMIL”).

On May 6, 2026, the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) published a final confirmatory rule updating its regulations to reflect changes stemming from the ECR initiative. The rule adds references to the U.S. Department of Commerce (“Commerce”) alongside existing references to the U.S. Department of State (“State”), acknowledging what has been true for several years: both agencies share jurisdiction over defense articles on ATF’s USMIL.

A central component of ECR was the transfer of certain items from Categories I–III of the U.S. Munitions List (“USML”) to the Commerce Control List (“CCL”), administered by Commerce’s Bureau of Industry and Security (“BIS”). As a result, beginning in March 2020, State and Commerce divided export and temporary import jurisdiction over items that also appear on ATF’s USMIL.

Background:  The Arms Export Control Act (“AECA”) authorizes State to regulate the export and temporary import of defense articles through the International Traffic in Arms Regulations (“ITAR”), 22 CFR Parts 120–130, with controlled items enumerated on the USML. The AECA separately grants ATF the authority to regulate the permanent import of defense articles, which ATF administers through the USMIL, 27 CFR Part 447.

Beginning in 2009, the ECR initiative sought to transfer less sensitive items from the USML to the CCL under the Export Administration Regulations (“EAR”). In March 2020, USML Categories I–III–covering Firearms, Guns and Armament, and Ammunition–were transferred to the CCL for export control purposes. These items, however, remained on the USMIL and subject to ATF’s permanent import regulations. ATF’s regulations had not been updated to reflect this restructured framework, referencing only State’s authority under the ITAR–a gap this final rule now closes.

Scope of ATF’s Final Rule: The rule amends key provisions in 27 CFR Part 447 to add references to Commerce alongside State. First, the articles-in-transit provision at § 447.46 now reflects that temporary import and export transactions involving USMIL articles may fall under the jurisdiction of either agency. Second, at §§ 447.53(a)(3) and 447.53(b), the rule clarifies that articles temporarily imported under a valid authorization from either State or Commerce are exempt from ATF’s permanent import permit requirements.

Importers of firearms, ammunition, and related articles on the USMIL should ensure that their compliance programs account for authorizations from both State under the ITAR and Commerce under the EAR when seeking exemptions from ATF’s permanent import permit requirements.

Crowell will continue to monitor rulemakings related to AECA defense articles and their impact on industry.

On April 30, 2026, the DOJ announced the launch of the Fraud Oversight through Careful Use of Statistics initiative (FOCUS) to increase coordination between the Department and the growing host of data miners who sift through publicly available government data to identify patterns of alleged fraud. The launch of FOCUS highlights a growing trend in False Claims Act (FCA) enforcement: civilian data miners with access to public data — but no other connection to the alleged defendants — are filing almost as many qui tam complaints as company insiders.

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The EU has adopted its 20th package of sanctions in connection with Russia’s ongoing war against Ukraine, resolving a prolonged internal political deadlock that had been caused by vetoes from Hungary and Slovakia. The package amends Regulations 833/2014, 269/2014, and 765/2006 and the respective Council Decisions and Implementing Regulations. The texts entered into force on 24 April 2026.

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On April 14, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Venezuela General License 56, “Authorizing Commercial-Related Negotiations of Contingent Contracts with the Government of Venezuela” (GL 56), and Venezuela General License 57, “Authorizing Financial Services Transactions Involving Certain Venezuelan Banks and Government of Venezuela Individuals” (GL 57). OFAC also issued one Venezuela-related Frequently Asked Question (FAQ), FAQ 1248. 

These actions represent the latest steps in a continuing U.S. policy of progressively opening channels for commercial and financial engagement with Venezuela, extending the series of general licenses that OFAC has issued since early 2026 across the energy, petrochemical, minerals, and infrastructure sectors.

General License 56

GL 56 broadens the authorization for U.S. persons to conduct commercial-related negotiations of contingent contracts directly with the Government of Venezuela, covering sectors and transaction types that extend beyond those addressed in earlier licenses. Like predecessor licenses such as GL 49A and GL 55, GL 56 permits the negotiation and entry into contingent contracts, but requires that the performance of any such contract remain expressly contingent upon separate authorization from OFAC. GL 56 also incorporates limitations that mirror those in other recently issued GLs (e.g., requirement for commercially reasonable terms, no dealings with foreign adversaries or other sanctioned persons).

General License 57

GL 57 addresses the financial services dimension of Venezuela-related transactions, authorizing “financial services” transactions involving (1) certain Venezuelan banks, and (2) individuals who are blocked only because they deemed to be part of the “Government of Venezuela” as defined in Executive Order 13884.

The Venezuelan banks with which transactions are authorized by GL 57 are: (1) Banco Central de Venezuela; (2) Banco de Venezuela, S.A. Banco Universal (Banco de Venezuela); (3) Banco Digital de los Trabajadores Banco Universal C.A.; and (4) Banco del Tesoro, C.A. Banco Universal (Banco del Tesoro). The authorization also applies to entities owned 50% or more by one or more of these banks.

OFAC provides a broad definition of “financial services,” including nearly all standard banking-related activities, in particular: “maintaining, operating, or closing of accounts; loans; transfers; transfers of funds; banking services; money transfer services; collection; presentment; promise; order; consignment; the acceptance of deposits; insurance; guarantees; cash withdrawals; check services; Automated Clearing House (ACH) transfers; wire transfers; debit card, prepaid card, Automated Teller Machine transactions, and any other payments as defined under the Uniform Commercial Code Article 3-602; the issuance and use of payment cards and digital wallets; currency exchange; U.S. dollar-denominated banking, payment, and correspondent account services; services in connection with the collection, forwarding, processing, or receipt of funds or remittances; services in connection with the processing or receipt of salary, pension, annuity, payroll, and other employment-related payments or benefits; transfers of funds sent through mobile money, mobile wallets, digital bank accounts, credit cards, debit cards, online payments, or other digital technology; related safety, fraud-prevention, screening, authentication, cybersecurity, and security services and technologies; investments; securities; and commodity futures or options.”

GL 57 contains a “Note 2” explaining that U.S. financial institutions that process GL 57-authorized transactions may rely on the originator or beneficiary of a funds transfer with regard to compliance with GL 57, provided that the processing financial institution does not know or have reason to know that the transaction is not in compliance with GL 57.  This appears to reduce compliance burden on correspondent and intermediary banks involved in transactions with these entities.

GL 57 also contains a “Note 3” explaining that nothing in GL 57 excuses compliance with obligations under the Bank Secrecy Act (BSA) and related FinCEN regulations, signaling that OFAC is aware of FinTech and other novel forms of payment activities in Venezuela, and seeks to ensure that such market participants are properly assessing whether such activities separately comply with the U.S. Bank Secrecy Act (BSA) and related laws, and perhaps in particular that BSA-regulated institutions continue to determine if any Venezuela-activity warrants the filing of a Suspicious Activity Report (SAR).

FAQ 1248

OFAC issued FAQ 1248 to clarify the reporting requirements in General Licenses 46B-48A, 50A-52, and 54 should be completed by the parties engaged in the primary authorized activity. Parties that are only indirectly involved or providing services ancillary to the primary authorized activity are not required to file reports. For example, a company providing services for the generation of electricity in Venezuela under GL 48A would need to report such activities pursuant to that license, but a bank processing payments related to those services does not also need to provide a report.

Practical Implications

The practical implications of these new actions are significant.

For commercial sector participants, including trading companies, logistics providers, and project developers, GL 56 widens the gateway for preliminary engagement with the Government of Venezuela, permitting structured negotiations and the entry into contingent investment or commercial arrangements without requiring a specific license at the outset.

For GL 57, this authorization is particularly significant for U.S. banks, FinTechs, digital asset companies, and other financial intermediaries that process payments, maintain correspondent accounts, or provide other financial services in connection with Venezuela-related activity authorized under the broader suite of Venezuela general licenses.

Additionally, many entities interested in new opportunities in Venezuela pursuant to the other OFAC-issued general licenses found themselves limited by which financial institutions would process their payments. OFAC’s issuance of GL 57 provides significantly more assurance to U.S. and other financial institutions that there are at least four banks in Venezuela with whom they can legally transact and it establishes a clearer legal basis needed to support the expanding scope of authorized commercial activity in Venezuela.

FAQ 1248 reinforces this distinction as well: parties conducting the primary authorized activity bear the reporting obligations under the applicable general license, while banks and other service providers processing related payments do not. This clarification reduces compliance friction for financial institutions supporting the growing range of permitted Venezuela dealings.

Crowell will continue to monitor for new and updated OFAC guidance on Venezuela.