The designation of the PCC and Comando Vermelho by the American government creates real operational consequences for the Brazilian financial system, regardless of the political debate
There are decisions that divide opinions and there are decisions that, regardless of the division, create immediate legal obligations for those operating in the market. The announcement made by the American State Department, effective June 5, 2026, that the PCC and the Red Command will join the list of terrorist organizations in the United States, is both things at the same time.
The political debate will continue. The legal clock is already ticking.
From a technical point of view, the decision is well founded. Both organizations have evolved into structures that use systematic violence as an instrument of pressure on the State, dominate territories and operate transnational trafficking networks that, according to the State Department’s own statement, already reach American territory. When a criminal organization crosses this border, the distinction between organized crime and terrorism ceases to be functional.
The question that interests business law, however, is not that. This is what this designation means for the Brazilian financial system as of June 5th.
Two regimes, one problem
The American designation operates through two complementary mechanisms. The first is the classification as a Foreign Terrorist Organization (FTO), which makes it a crime in the United States to provide any form of material support to members of these organizations. The second is classification as a Specially Designated Global Terrorist (SDGT), which activates the sanctions regime administered by OFAC, the US Treasury’s Office of Foreign Assets Control, with freezing of assets and prohibition of transactions with those designated.
“Material support” is defined broadly in US law: it includes money, financial instruments, financial services, expert advice, transportation and facilities. The breadth of the definition is relevant because it does not protect those who have an indirect relationship with a designated member without knowing it.
For the Brazilian financial system, the SDGT/OFAC regime is the one that generates the most immediate consequences. It works on the basis of objective civil liability: for civil penalties, the American authority does not need to prove that the institution knew about the prohibited transaction. It is enough that the transaction took place involving a blocked person or entity. This does not mean that any Brazilian bank is automatically subject to this regime as if it were an American person. But it means that operations in dollars and links with correspondents in the United States expose Brazilian institutions to blockades, investigations, termination of relationships and, depending on the jurisdictional connection, to relevant sanctioning consequences.
The point of vulnerability that no one is discussing
Every Brazilian bank that carries out transactions in dollars depends on American correspondents to settle these transactions. It is the basic architecture of the international payments system, and it is precisely at this point of contact that risk materializes.
If the American correspondent identifies, in a transaction routed by the Brazilian bank, a connection with an individual or entity included on the OFAC list, he or she may have to block or reject the transaction, depending on the structure of the transaction and the applicable sanctioning framework. The block is not necessarily surgical. It may involve the entire transaction, not just the suspected amount. And while the investigation takes place, the Brazilian bank is left with no satisfactory explanation to give to the corporate client who was waiting for that payment to be settled.
There is also a technical aggravating factor. OFAC applies the 50% rule: an entity owned, directly or indirectly, by 50% or more, alone or jointly, by one or more blocked persons, is treated as blocked, even without appearing individually on the list. The rule speaks of ownership, not control: mere control without this level of participation does not generate automatic blocking. But OFAC recommends caution even in these cases, as the entity may be designated in the future.
The list changes. A counterparty that was regular last week may be blocked today if one of its partners was newly appointed.
What’s at stake for the bank and its customer
The bank that does not review its KYC processes and screening systems before June 5th will operate in a risk zone with its American correspondent. But the one who will feel the operational impact first is not necessarily the bank. It is the financial director of the exporting company who will call the treasury asking why the payment has not been made. It is the fintech’s CFO who will discover that his dollar account has been preventively suspended while the correspondent investigates a transaction that, in the end, had nothing to do with PCC or Comando Vermelho.
This is the real cost of not acting before the effective date: it is not necessarily a formal penalty. It’s the operational shutdown, the embarrassment with the customer and, in the end, the explanation to the board about why the risk wasn’t mapped before.
What legal can do before June 5th does not require a compliance restructuring. Requires diagnosis. The first move is to activate the compliance area to review the transaction screening processes in light of the new list of nominees, paying attention to the 50% rule in the shareholding structure of counterparties. The second is to map the portfolio of corporate clients and politically exposed people with geographic or sectoral connections to regions with greater penetration of these organizations. The third, often overlooked, is to proactively communicate with the US correspondent bank about the measures being taken. No correspondent wants to discover the problem during a transaction. Whoever arrives first with the information controls the narrative and preserves the relationship.
The American decision was technically justified. The problem it creates for the Brazilian financial system is equally real. And unlike the political debate, this problem has an expiration date.
*This text does not necessarily reflect the opinion of Jovem Pan.
