Foreign Terrorist Organizations Designations Provide DOJ With New Civil Forfeiture Authorities And Opportunities

Civil forfeiture is becoming an increasingly important tool in the U.S. Justice Department's (DOJ) campaign against Transnational Criminal Organizations (TCOs), Foreign Terrorist Organizations (FTOs), and other sanctioned parties. This development is part of the Trump Administration's ongoing campaign against cartels and other TCOs, which most recently has involved the apparent determination that cartels are nonstate actors in a non-international armed conflict with the United States, military strikes on Venezuelan vessels in the Caribbean Sea, and the designation of the Barrio 18 a/k/a 18th Street gang as an FTO.

Civil Forfeiture Defined

Civil forfeiture actions typically begin with a seizure warrant filed by federal prosecutors that allows law enforcement officers to seize specified property that might not otherwise be reachable through the criminal justice process, such as the property of foreign terrorists or fugitives. In such applications, the government must explain how the property is connected to particular criminal violations. This basis can provide the government with the authority to seize and take control of the property for eventual forfeiture.

Such actions are a particularly useful tool for the DOJ as they do not require a criminal conviction. Instead, the government is able to bring a cause of action in rem (against the property) that was derived from or used to commit an alleged offense. In a civil forfeiture action, there is no defendant to contest the charges, and the government has a lower standard of proof in that it must only prove by a preponderance of the evidence (more likely than not) that the property is linked to criminal activity.

The terrorism forfeiture statute is particularly broad as it extends to all assets, both foreign and domestic, (1) of an individual or entity engaged in planning or perpetrating any federal crime of terrorism; (2) acquired or maintained by any person with the intent and for the purpose of supporting or concealing any federal crime of terrorism; (3) derived from or involved in any federal crime of terrorism; or (4) of an individual or entity engaged in planning or perpetrating any act of international terrorism against any international organization or foreign government.¹ Providing any direct or indirect material support to an FTO — an act for which there is no de minimis acceptable amount — is not only among the enumerated federal crimes related to terrorism but can also separately violate U.S. economic sanctions targeting FTOs. This substantially increases the possibility of civil and criminal liability and creates a separate, independent predicate for a civil forfeiture action.

Civil Forfeiture in Action

The DOJ has previously used civil forfeiture proceedings to target property linked to FTOs such as Hamas and Iran's Islamic Revolution Guard Corps (IRGC). In July 2020, for example, the DOJ filed a complaint seeking to forfeit cargo seized from four foreign-flagged oil tankers that the IRGC used to ship petroleum products to Venezuela.² The property seized included over one million barrels of petroleum that the U.S. Government eventually sold for approximately $45 million.³ Similarly, in August 2020, the DOJ announced its largest-yet seizure of cryptocurrency in the terrorism context, for funds involved in the financing of FTOs including the al-Qassam Brigades (Hamas' military wing), al-Qaeda, and the Islamic State of Iraq and the Levant (ISIS).⁴

More proceedings like these are likely as the Administration expands its anti-terrorism focus to include TCOs. With the list of FTOs rapidly expanding to include Latin American drug cartels and other related parties, such as transnational gangs with ties to foreign governments, the DOJ appears poised to leverage its civil forfeiture actions in a variety of sectors with increased exposure risk. Even in instances where there is no direct connection with an FTO, the DOJ will still have strong policy and enforcement incentives to use civil forfeiture proceedings in cases involving other TCOs — particularly those designated under longstanding sanctions programs targeting narcotics syndicates. Some of the industries facing enhanced risk include the following:

Manufacturing and Pharmaceutical Industries

The chemical manufacturing and pharmaceutical industry has already seen increased scrutiny this year given the Administration's focus on fentanyl trafficking and opioid abuse,⁵ but this scrutiny has increased even further due to the Administration's expanded anti-terrorism approach. For example, on September 3, 2025, the DOJ announced the seizure of 300,000 kilograms of methamphetamine precursor chemicals shipped from China and destined to labs controlled by the FTO-designated Sinaloa cartel in Mexico.⁶ The seized chemicals, which originated in China, included six shipping containers of benzyl alcohol, a solvent used in the manufacture of pharmaceuticals, and six shipping containers of N-methyl formamide, another liquid organic solvent. This seizure of precursor chemicals, valued at approximately $569 million, was premised on the Sinaloa cartel's FTO designation, which provided a basis for charges under the material support of terrorism statute. This aggressive pursuit of seizure and forfeiture actions under the government's anti-terrorism authority may be a warning of similar enforcement actions to come.

Financial Service Providers

Since FTOs often launder money to obfuscate the true nature, source, and/or destination of their funds, anti-terrorism enforcement actions often target the financing of terrorism by invoking material support of terrorism claims as the "specified unlawful activity" necessary to support a money-laundering charge⁷ and regulatory enforcement actions against financial service providers. The money-laundering statute itself is already far-reaching: It can apply extraterritorially, against U.S. citizens or non-U.S. citizens, and to conduct even including correspondent banking transactions,⁸ as long as there is conduct that occurs in part in the United States and the transaction or a series of related transactions involves funds in excess of $10,000.⁹ DOJ typically uses civil forfeiture actions to seize such funds, and it is now increasingly doing so on the basis of anti-terrorism enforcement. For example, on July 22, 2025, the DOJ announced the unsealing of a civil forfeiture action against approximately $2 million in cryptocurrency connected to a Gaza-based money transfer business that was involved in financially supporting the designated FTO entity Hamas.¹⁰ Recent actions by U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN) suggest that Chinese money laundering networks that provide services to Mexican cartels may be the specific focus of U.S. anti-money laundering strategies.¹¹ Understanding the nature of money-laundering schemes and of related shadow financial networks can assist companies in anticipating how the U.S. government may continue to seize cartel assets and take other steps to dismantle FTO operations.

Oil and Natural Gas Industries

On May 1, 2025, FinCEN highlighted oil smuggling activities in the oil and natural gas industry designed to generate revenue for cartels.¹² According to FinCEN, cartels are using complicit Mexican brokers in the oil and natural gas industry to smuggle and sell crude oil stolen from Mexico's state-owned energy company, Pemex, to complicit U.S.-based oil and natural gas companies operating near the U.S. southwest border. U.S. importers then sell the crude oil at a steep discount on the U.S. and global energy market before sending a significant amount of the profits back to Mexico. Throughout this scheme, cartels rely on complicit Mexican brokers and their networks of Mexican and U.S. companies, including front companies and shell companies to serve as middlemen. The nature of these schemes suggests that DOJ civil forfeiture proceedings may include actions involving oil and natural gas industries. Indeed, the DOJ has already used criminal forfeiture authority in the oil industry involving the indictment of a U.S.-based father and son who were charged with using their oil and gas company to launder the illicit proceeds of smuggled crude oil on behalf of a Mexican cartel. In that case, law enforcement authorities seized four tank barges containing crude oil, three commercial tanker trucks, and other vehicles.¹³

Meet Anticipated Enforcement with Increased Due Diligence

Corporations operating in key sectors — such as chemical manufacturing, financial services, energy, and pharmaceuticals — should pay attention to recent DOJ actions as warning signs that their assets may be at risk even if there is no direct criminal exposure. These corporations represent just a sampling of the entities that should pay particular attention to their compliance programs, supply chains, and vendor agreements in conducting risk assessments.

To mitigate such risks, companies should screen for red flags identified in FinCEN advisories and implement best practice recommendations by relevant regulators. Adequate training is essential to assist compliance officers and other key company gatekeepers to identify and report issues. Strong internal anti-money laundering policies as well as those internal policies countering the financing of terrorism are essential, and controls should be implemented to block and sever any direct or indirect links to FTOs or other sanctioned individuals and entities. Companies should also establish mechanisms for responding to any U.S. government agencies or other third parties, such as prime contractors and suppliers, and should always consult with counsel when necessary.

Footnotes

1. See 18 U.S.C. Section 981(a)(1)(G).

2. See Largest U.S. Seizure of Iranian Fuel from Four Tankers, U.S. Department of Justice (Aug. 14, 2020), https://www.justice.gov/usao-dc/pr/largest-us-seizure-iranian-fuel-four-tankers.

3. See United States Unseals Civil Forfeiture Complaint for Seizure of Iranian Oil, U.S. Department of Justice (Feb. 2, 2024), https://www.justice.gov/usao-dc/pr/united-states-unseals-civil-forfeiture-complaint-seizure-iranian-oil.

4. See Global Disruption of Three Terror Finance Cyber-Enabled Campaigns, U.S. Department of Justice (Aug. 13, 2020), https://www.justice.gov/archives/opa/pr/global-disruption-three-terror-finance-cyber-enabled-campaigns.

5. See Executive Order 14193 (Feb. 1, 2025), https://www.federalregister.gov/documents/2025/02/07/2025-02406/imposing-duties-to-address-the-flow-of-illicit-drugs-across-our-northern-border.

6. See U.S. Seizes 300,000 Kilos of Meth Precursor Chemicals Sent from China Destined for Mexico's Sinaloa Drug Cartel, U.S. Department of Justice (Sept. 3, 2025), https://www.justice.gov/usao-dc/pr/us-seizes-300000-kilos-meth-precursor-chemicals-sent-china-destined-mexicos-sinaloa-drug.

7. See 18 U.S.C. § 1956(c)(7).

8. Corresponding banking refers to a banking relationship between two banks, where one bank (the "correspondent bank") provides banking services to another bank (the "respondent bank"). This type of relationship facilitates cross-border transactions such as international wire transfers.

9. See 18 U.S.C. § 1956(f).

10. See U.S. Files Forfeiture Action Against $2 Million in Digital Currency Involved in Hamas Fundraising, U.S. Department of Justice (July 22, 2025), https://www.justice.gov/usao-dc/pr/us-files-forfeiture-action-against-2-million-digital-currency-involved-hamas-fundraising.

11. See FinCEN Issues Advisory and Financial Trend Analysis on Chinese Money Laundering Networks, Financial Crimes Enforcement Network (Aug. 28, 2025), https://www.fincen.gov/news/news-releases/fincen-issues-advisory-and-financial-trend-analysis-chinese-money-laundering.

12. FinCEN Issues Alert on Oil Smuggling Schemes on the U.S. Southwest Border Associated with Mexico-Based Cartels, Financial Crimes Enforcement Network (May 1, 2025), https://www.fincen.gov/news/news-releases/fincen-issues-alert-oil-smuggling-schemes-us-southwest-border-associated-mexico.

13. See Father and son indicted for providing material support to Mexican cartel engaged in terrorism, U.S. Department of Justice (May 30, 2025), https://www.justice.gov/usao-sdtx/pr/father-and-son-indicted-providing-material-support-mexican-cartel-engaged-terrorism.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.