Cartels, Corruption and Compliance: Navigating Risk and Opportunity in Mexico’s Business Landscape

The prospects of doing business in Mexico have changed drastically since US President Donald Trump re-assumed office in January 2025. His administration has imposed and walked back tariffs on Mexico, designated several of the country’s major drug cartels as terrorist organizations, and suspended enforcement of the Foreign Corrupt Practices Act (FCPA).

These developments have affected Mexico’s status as an ideal nearshoring hub for the US, and may well lead to supply chain relocations. However, what of the companies still active in Mexico, or those who have commercial partners there?

Alongside US policy changes, Mexico has unveiled a large industrial plan that seeks to attract large scale foreign investment to the country. The intersection of these factors leaves a complex operating reality for companies in Mexico – one which brings with it risks, but also opportunities if managed appropriately.

Cartel Designations: Elevating Risk

Since taking office, Trump has focused more on “FTOs” than “FTAs” in Mexico. Using the impact of migrants and drug smuggling on the US, Trump has threatened extensive tariffs on Mexico, upending the USMCA free trade agreement (FTA), and in February 2025, designated eight major cartels in Latin America as foreign terrorist organizations (FTOs). These include Mexico’s major cartels, such as the Sinaloa cartel and Jalisco New Generation Cartel (CJNG), which operate across large swathes of the country.

The designation of cartels as FTOs poses operational concerns for international businesses in Mexico, particularly financial institutions. It opens up the possibility of criminal investigations and civil legal proceedings against any company which provides “material support” to FTOs, including even simple financial services transactions. Notably, the FTO designations have both a strong extra-territorial component (allowing US authorities to pursue events that have occurred wholly outside the US) and allow the US Treasury to freeze and seize domestic assets linked to wrongdoing.

As cartels have grown more powerful, they have diversified their business operations and invested in hitherto legitimate businesses. For example, the Sinaloa cartel and CJNG have reportedly invested in key assets and enterprises such as real estate, internet services, and fuel sales. They have further impacted local business through extortion and bribery of local government. The result? Over the last two decades, cases have emerged of individuals with seemingly legitimate business records being linked to cartels – either knowingly or unknowingly. This can be a particular risk area for established business figures, who are so embedded in local business communities and supply chains that they become exposed to organized crime risks.

The Intersection with FCPA 

Trump’s executive order (EO) to suspend criminal enforcement of the Foreign Corrupt Practices Act (FCPA) – which prohibits the bribery of foreign officials – adds another dimension to the FTO designation of cartels.

The EO may persuade companies to lessen their focus on anti-corruption, however there are still plenty of incentives for companies to have well-designed ABC programs, including the enforcement of other regulatory frameworks (including civil prosecution in the US) and reputational risks.

Additionally, a permissive attitude toward corruption attracts precisely the type of organized crime exposure that the new FTO designations will target. It may signal a workplace culture in which individual employees can be targeted for extortion and bribery from both public officials and organized crime groups, extending corruption and employee safety risks throughout an organization. Subsequently, if cartels have the perception that they can affect and infiltrate companies’ local operations through corruption and extortion, this may lead to transactions that could be deemed “material support” under the FTO designations. What’s more, these types of links may be pursued with greater zeal by a US Department of Justice refocused on organized crime.

Mexico’s Attractions: Investment Plan & Stability

Amid this backdrop, in January 2025 Mexican President Claudia Sheinbaum presented Plan México, a national development plan which aims to attract USD 100 billion annually in foreign investment by 2030. Plan México focuses on five major sectors of the economy, including consumer goods, automotive manufacturing, information technology, tourism, and energy. Additionally, in February 2025, Sheinbaum’s administration announced new tax incentives to further attract foreign investors. Amongst other perks, these allow for the immediate deduction of newly acquired fixed assets within the period between 2025 and 2030.

Contrary to the current volatile political situation in many other Latin American countries, Mexico’s political landscape is relatively stable, after the ruling MORENA party and its allies swept to large victories in presidential, legislative and local elections over the last year. While there is disquiet about MORENA using this power to introduce controversial reforms – not least, a decision to have federal judges be elected by popular vote rather than via internal judicial processes – international companies have continued to invest large sums in Mexico in recent months, no doubt partially motivated by its stability.

Opportunities for Doing Business in Mexico

Where does all this leave prospects for doing business in Mexico? Despite the risks of tariffs, exposure to FTOs, and a change in the anti-corruption enforcement framework, Mexico remains an attractive investment proposition. This is not just in sectors that intersect with the US economy: tourism is continually rising, and Sheinbaum is seeking to attract greater private investment in the country’s domestic energy sector, including in renewables.

While the topics of compliance have changed given US policy changes, the trick to operating successfully in Mexico will lie in maintaining and re-focusing existing due diligence and risk management processes. Naturally, this will include paying close attention to any counterparty exposure to organized crime, but – as spelled out above – also encompass anti-corruption and reputational due diligence. Not only will this help safeguard companies and employees from bribery and crime risks, but it will also maintain best operating practices, and help businesses navigate investor expectations and ever-changing international laws.