Crime
Ex-OFAC Official Warns Companies About Hidden Cartel Risks
Former Office of Foreign Assets Control (OFAC) compliance head Claire McCleskey has issued a stark warning to companies operating in Latin America and the Caribbean about the hidden risks posed by criminal organizations. Speaking to InSight Crime, McCleskey highlighted that many firms are unaware they could be indirectly supporting cartels through their supply chains. McCleskey, now co-founder of Clarity Compliance Consulting, emphasized during her tenure at OFAC that companies often have contractors and subcontractors who unknowingly pay extortion fees or engage in illicit activities to protect their operations. This indirect exposure places these businesses at risk without them realizing it. "The danger lies one step removed from the actual company," she explained. Another critical issue McCleskey raised is the reluctance of many firms, particularly those outside the United States, to actively seek out and address potential risks within their supply chains. She noted that while banks and large multinational corporations are more proactive in this regard, smaller or less exposed companies tend to avoid risk assessments due to compliance costs and unpredictable enforcement measures. McCleskey also pointed out a significant discrepancy between how terrorist groups and cartels operate. The counter-terrorism playbook was designed for organizations capable of causing massive damage with minimal resources. In contrast, cartels are deeply integrated into legitimate businesses, making them harder to detect and isolate using traditional anti-terrorist tools. She cited the example of Mexican criminal organizations like the Jalisco Cartel New Generation (CJNG), which benefit from fuel smuggling that involves tax fraud rather than drug trafficking. Furthermore, McCleskey predicted an increase in designations by OFAC and potentially even civil or criminal cases against companies found to be materially supporting these cartels. She stressed that the priorities of OFAC and the Department of Justice will reveal much about future enforcement actions. According to her analysis, Iran remains a significant focus for OFAC alongside narcotics trafficking. Since February 2025, the U.S. State Department has designated 21 organizations in Latin America as Foreign Terrorist Organizations (FTOs). These designations aim to increase scrutiny and penalties on entities involved in criminal activities, but McCleskey’s insights suggest that companies must be more vigilant about indirect risks within their supply chains. McCleskey's warnings underscore the need for enhanced due diligence and proactive risk management strategies among businesses operating in regions plagued by organized crime. The implications of these designations could reshape how companies approach compliance and security measures moving forward, potentially leading to stricter regulations and enforcement actions against those found complicit with criminal organizations.