Financial Crime Compliance Amid a Changing Landscape

The Trump administration’s early policy actions have reshaped key elements of the financial crime compliance landscape by introducing new sanctions regulations, expanded designations of foreign terrorist organizations (FTOs) and specially designated global terrorists (SDGTs), and revised currency transaction reporting requirements under the updated geographic targeting order (GTO), effective Sept. 10, 2025.

For financial services organizations, the implications are immediate: Compliance teams should interpret and adapt to these changes with precision and agility. Doing so requires strengthening sanctions screening, know your customer (KYC) and due diligence processes, risk assessment methodologies, transaction monitoring frameworks, and currency transaction report (CTR) processes. By integrating adaptive, risk-based strategies into these core functions, organizations can maintain regulatory alignment and operational integrity amid shifting expectations and an increasingly complex enforcement environment.

Given the evolving compliance landscape, financial services organizations should review and adapt their compliance programs to address changes in key areas of AML and sanctions compliance affected by recent regulatory updates to maintain alignment with new regulations.

As sanctions policies and compliance expectations continue to evolve, organizations can remain proactive by updating sanctions screening procedures and reinforcing risk-based AML and countering the financing of terrorism (CFT) programs to meet emerging regulatory standards.

Financial services organizations should screen newly designated cartel members and their aliases against customer repositories, contractors, and counterparties, while also considering entities indirectly owned by blocked persons under the Office of Foreign Assets Control’s (OFAC’s) 50% rule. Special caution should be taken in sectors where the cartels exert influence, such as agriculture, transportation, and real estate.

Additionally, organizations should confirm that their sanctions screening vendors regularly update screening lists and conduct system testing to verify accurate identification and blocking of newly designated entities in compliance with evolving sanctions requirements. Financial services organizations should not rely solely on their vendor to update sanctions screening lists and should implement periodic testing processes to confirm that new updates are included in a timely manner.

KYC and due diligence

Tailoring KYC and enhanced due diligence (EDD) procedures to comply with SDGT- and FTO-related requirements demands that organizations implement risk-based controls aligned with evolving compliance obligations. Due diligence questionnaires used during onboarding should capture industry-specific red flags and unusual business behaviors, especially in cartel-influenced sectors like agriculture, transportation, restaurants, and real estate. For instance, organizations should ask detailed questions about the source of funds and wealth, particularly in cash-intensive industries, as well as geographic areas of operation, beneficial ownership, political or criminal associations, and the rationale for corporate structures. Additional questions should address cross-border activity, rapid or unexplained growth, high-value cash transactions, and the use of intermediaries – all common indicators of cartel involvement.

High-risk products, such as trade finance, cross-border wire transfers, and virtual assets, require enhanced onboarding, real-time monitoring, and periodic customer revalidation due to their vulnerability to terrorist financing. Customer types like not-for-profit organizations, charities, and cash-heavy businesses merit greater scrutiny regarding funds sources, beneficial ownership, and transaction legitimacy. Finally, retrospective reviews of prior relationships and transaction histories are critical to uncover latent exposure to newly designated FTOs or SDGTs that might have been undetectable during earlier onboarding.

Risk assessments

Organizations should conduct a comprehensive reevaluation of their AML, OFAC, and sanctions risk assessment methodologies to assess whether they cover evolving geopolitical and sectoral threats, including new SDGT and FTO designations. This reassessment should place increased emphasis on sanctions considerations, including changes to country-specific risk ratings, emerging typologies used to evade sanctions, and expanded enforcement priorities targeting terrorism networks, organized crime, and other state-sponsored threats.

Specifically, financial services organizations should reevaluate geographic risk exposures and inherent risk ratings, particularly in regions such as Central and South America and Cuba, which the current administration has scrutinized for potential money laundering, terrorism financing, and cartel involvement. Risk assessments should be updated to reflect the heightened regulatory expectations tied to these jurisdictions, incorporating current sanctions regimes, advisories, and typologies.

As new threats emerge, organizations should evaluate the effectiveness of existing mitigation controls and introduce supplemental controls to be included within the risk assessment. These updates should feed directly into the organizations’ residual risk ratings.

Transaction monitoring

To further mitigate the risk of noncompliance with the administration’s new regulations, organizations must implement adaptive transaction monitoring systems capable of detecting red flags tied to cartel-related financial activity. These systems should target sectors with heightened exposure to organized crime, especially where goods and funds move opaquely.

Advanced analytics and behavioral monitoring can reveal patterns linked to front companies or trade-based money laundering. Organizations should also improve their detection of financial anomalies, including pricing irregularities, unusually high margins, or large-volume trades that conflict with a customer’s known business profile.

Training

Staff should receive ongoing training to address the updated sanctions regulations and emerging financial crime risks defined by the current administration, including cartel-linked money laundering typologies. Training should highlight specific red flags, such as rapid fund movements through high-risk corridors, use of front or shell companies in sectors like agriculture or logistics, and economically irrational transactions.

Training programs should also emphasize evolving sanctions screening obligations, including timely identification and escalation of newly designated individuals and entities, especially those tied to cartels or subject to OFAC’s 50% rule. Practical guidance should require sanctions screening vendors to maintain up-to-date sanctions lists and conduct periodic testing and validation to verify the effectiveness and accuracy of sanctioned-party detection and blocking mechanisms. Additionally, the curriculum should equip staff to apply risk-based KYC and EDD protocols aligned with current regulatory expectations, particularly for SDGTs, FTOs, and sectors prone to illicit network exploitation.

CTR thresholds specific to MSBs

To comply with the Financial Crimes Enforcement Network’s recently extended GTO, effective Sept. 10, 2025, through March 6, 2026, money services businesses (MSBs) operating in designated ZIP codes and counties along the U.S.-Mexico border in Arizona, California, and Texas must align compliance programs with the new $1,000 CTR threshold (an increase from the previous $200 CTR threshold). To begin, MSBs should assess current cash aggregation systems to determine if they can be adapted. Collaboration with vendors might be necessary to evaluate feasibility. If automation is viable, MSBs should implement periodic testing, governance, and reconciliation to ensure proper CTR filings. In the absence of automation, manual reconciliations might be required as a control measure.

With lower thresholds than the standard $10,000 CTR threshold, MSBs likely will see increased CTR filing volumes. They should assess staffing levels to make sure CTR-related functions are adequately resourced, particularly if manual processes are used. Regular reporting to the board is essential to keep leadership informed about compliance updates, regulatory impacts, and staffing capacity.

As regulatory expectations evolve, MSBs should deliver targeted staff training on identifying threshold-triggering transactions and detecting structuring attempts. They should also implement or enhance quality assurance frameworks to validate CTR accuracy. Management reporting should include key performance and risk indicators aligned with the new obligations.

Strengthening compliance

An effective financial crime compliance framework depends on an organization’s ability to anticipate and adapt to regulatory change. The expansion of sanctions programs, new designations of cartel affiliates, and evolving expectations around AML and CFT controls require more than procedural updates. They demand a culture of vigilance and accountability.

Financial services organizations that demonstrate a consistent commitment to transparency, responsiveness, and control effectiveness can better meet regulatory standards and strengthen their compliance and operational resilience.