Managing Sanctions Risks in U.S.-Mexico Cross-Border Freight

By Claire O'Neill McCleskey and Naomi Maxwell

The cross-border freight industry may not sit as squarely in the sanctions crosshairs as maritime shipping, but companies that move goods by truck across the U.S.-Mexico border are still exposed to serious sanctions risks. While the Office of Foreign Assets Control (OFAC) has focused heavily on fuel theft and smuggling when sanctioning cartel networks, and the Financial Crimes Enforcement Network (FinCEN) has published multiple alerts on this issue, the risks go beyond tanker trucks. Given the Trump Administration’s intense focus on “total elimination” of drug cartels and the expanded use of counterterrorism tools against organized crime, freight companies that fail to mitigate these risks can face sanctions, civil enforcement, or even criminal prosecution.

Industry overview: According to the U.S. Bureau of Transportation Statistics (BTS), U.S.-Mexico land border freight totaled $872.8 billion in 2025, up 3.9% from 2024. 73.6% of all U.S.-Mexico freight traveled by truck in 2025, followed by rail at 10.9%, vessels at 7.7%, and air at 3.8%. According to BTS, the growth in Mexico’s trucking trade has been driven by “‘nearshoring,’ where manufacturing has shifted from Asia to Mexico to be closer to the U.S. market.” Over 7.5 million freight trucks crossed from Mexico into the United States in 2025.

Given restrictions in both Mexico and the U.S., freight crosses the border either through “transloading,” in which the cargo is unloaded from one trailer at the border to a second trailer to complete the route on the other side of the border, or direct/door-to-door where the cargo remains in the trailer/container and the truck and driver are swapped. A limited number of U.S. and Mexico companies are authorized to travel within 26 km of the border, called dray or border transfer carriers. Accordingly, cross-border freight typically involves at least three carriers. Carriers partner together like Hub Group and Mexico City-based EASO or Schneider and CSX and CPKC. JB Hunt, “North America’s largest intermodal company,” partners with Mexico-based rail companies for cross-border freight.

Organized crime risks: Companies moving goods from Mexico to the United States or who regularly do business with Mexican logistics firms face a number of cartel-related risks:

• Cartels may use companies’ trucks to smuggle contraband over the border, resulting in seizures in the United States.

• Cartels may own, control, and operate their own logistics companies in Mexico and U.S. border states, which they can use not only to transport goods but to launder money. For example, in June 2026, OFAC sanctioned several trucking companies linked to the New Generation Jalisco Cartel (CJNG), using both counterterrorism and anti-organized crime sanctions authorities.

• Cartels may threaten truck drivers and other employees of logistics companies, demanding bribes for safe passage, extorting warehouses or other assets, and even kidnapping or killing employees and hijacking trucks. A large Mexican bottling company was forced to suspend operations at warehouses in Morelos in 2024 due to threats of extortion from local organized criminal groups.

• Cartels can violently disrupt transportation corridors, ports, and roads, threatening logistics networks within Mexico.

Regulatory consequences: Freight companies that operate in or have supply chains in Mexico face a challenging business environment and must balance commercial, security, and legal risks. From a U.S. regulatory perspective, companies that fail to mitigate sanctions risks themselves can be exposed to:

• U.S. sanctions: OFAC has so far mostly targeted cartel-owned or -controlled front companies and cartel-linked individuals. However, under Executive Order 13224 (the counterterrorism authority that Treasury now uses to target groups like the CJNG), OFAC has the authority to sanction anyone found to materially assist, sponsor, or provide financial, material, or technological support for, or goods and services to or in support of anyone blocked under this authority. This means that OFAC can sanction companies and individuals found to provide any financial or other support to any of the cartels sanctioned under Executive Order 13224. This authority is broad and could easily be used to target trucking companies that have paid bribes to or otherwise had dealings with Mexican drug cartels.

• Civil monetary penalties: OFAC civil enforcement cases often lag behind Treasury’s stated foreign policy priorities, given that they take longer to develop, investigate, and finalize. But this doesn’t mean that cartel-related activity isn’t a top priority for OFAC enforcement. Particularly in light of new incentives for whistleblowers to report sanctions violations, along with longstanding OFAC policy on self-disclosure credit, cross-border freight companies must prepare for OFAC scrutiny of any activity of concern involving cartels. This scrutiny may also extend those who provide ancillary services including freight forwarding, insurance, customs brokering, and other logistics.

• Criminal prosecution: Per the memorandum from then Attorney General Pam Bondi in February 2025, the U.S. Department of Justice (DOJ) is aggressively pursuing both U.S. and foreign companies that support sanctioned cartels. Under 18 U.S.C. § 2339B, DOJ can prosecute anyone who knowingly provides “material support or resources” to a foreign terrorist organization (which includes six cartels operating in Mexico). DOJ has also pivoted its Foreign Corrupt Practices Act (FCPA) enforcement priorities to focus on foreign bribery associated with cartels, as evidenced in the recent case of the Scoular Company, which paid $10 million to resolve a DOJ investigation into bribes allegedly paid to Mexican officials to deliver goods across the U.S.-Mexico border. In another case, DOJ indictments revealed that a drug cartel used a complicit truck driver to bring methamphetamine and fentanyl from Mexico into California.

Recommendations for mitigating sanctions risks: Companies in the cross-border freight industry should take care to adopt the following risk management measures:

• Counterparty screening: At the most basic level, freight companies should screen counterparties, customers, brokers, drivers, third-party logistics providers, and any other parties against U.S. sanctions lists. Depending on the size and scale of a company’s operations, companies should consider additional due diligence, including using commercial investigative tools that provide negative news, additional ownership information, and other useful intelligence

• Shipment analysis and document review: Companies should consider the nature of a shipment (e.g., fuel, consumer goods, food), if the transport is direct or requires transloading at the border, if secure warehousing is required, and who brokered the shipment, among others factors. Companies should compare this information to available cargo and shipping documentation, including bills of lading, commercial invoices, packing lists, and certificates of origin, and consider changes or discrepancies between the actual shipment and the paperwork associated. Multiple or last-minute change to the broker, payment terms, or delivery timeframes without clear reason should trigger further review.

• Risk assessment: While the scale may vary depending on a company’s size and operations, all freight companies that facilitate U.S.-Mexico trade should conduct a risk assessment of their potential exposure to Mexican drug cartels. This includes understanding the specific risks of each Mexican state where a company operates, along with the risks associated with particular ports or transportation corridors. Any areas of heightened geographic or other risks should have corresponding enhanced controls.

• Escalation processes and internal whistleblower mechanisms: One of the most common points of failure in sanctions compliance is a lack of escalation processes for employees to raise concerns about risky or illicit activity to compliance and/or senior management. All employees should understand how and to whom they should report issues, including sensitive issues regarding insider threats or employee conduct.

• Exit policies/risk appetite statements and corresponding contractual provisions: Companies should define what they consider unacceptable risks for counterparties or suppliers beyond just the black and white “sanctioned or not sanctioned” test. Similarly, companies should adopt contractual provisions, representations, warranties, and/or termination rights that support their ability to exit problematic suppliers or counterparties who could expose them to sanctions risks.

• Training: Hand-in-hand with escalation processes, all relevant employees should undergo training appropriate to their roles regarding red flags for illicit activity, so that they can take proper action and report up the chain in the case of concerns.

• Incident response: Depending on the size and scale of a company, one person may be in charge of multiple areas of legal compliance, including sanctions. Even at freight companies with smaller compliance teams, management should have a plan in place that includes defined roles and responsibilities to respond to any sanctions or cartel-related issues within their Mexican operations or supply chain, particularly demands for bribes or extortion threats. Companies should also be prepared to respond to law enforcement inquiries or to OFAC requests for information or subpoenas.

Sanctioning Russia Act of 2026: What’s new, what’s not, and what the maritime and insurance industries need to know

By Claire Grunewald and Naomi Maxwell

Congress is currently considering a revised version of the late Senator Lindsay Graham’s legislation, the Sanctioning Russia Act. The bill, which was first introduced in April 2025 and cleared an initial procedural vote in the Senate on July 29, 2026, is designed to “bring sweeping sanctions against the enablers of Russia’s war in Ukraine” and “hold major purchasers of Russian oil and gas accountable” for supporting the war by granting the President broad new tariff authority.

Whether or not the bill will become law is unclear, but with congressional leadership interest and bi-partisan support, enactment is possible. Congress has often played a role in sanctions on Russia, and the program has typically had support from both parties, with the House voting to approve new military aid for Ukraine just last month. For regulated industries that have managed the impact of multilateral Russia sanctions for years, the question becomes what this bill would actually change if enacted, or if it will merely be symbolic.

Russia Sanctions under Biden versus Trump

Financial sanctions have played a crucial role in the global response to Russia’s invasion of Ukraine in February 2022. The Biden Administration rolled out unprecedented sanctions against Russia in immediate response to the invasion, maintaining the pressure over time through tools like the oil price cap, the imposition of secondary sanctions risks for foreign financial institutions, and the designation of third-country actors involved in Russia’s key revenue-generating industries.

Under the Trump Administration, new Russia sanctions have come to a halt. Since the start of Trump’s second term, OFAC has issued a singular Russia action targeting Russia’s two largest oil companies, Rosneft and Lukoil. While significant, the impact of this action was reduced by OFAC’s issuance of multiple General Licenses, and expanded relief during the U.S.-Iran conflict that allowed Russia to sell its oil using sanctioned vessels. As the sanctions have slowed, Russia has only grown more and more adept at evading existing restrictions.

Sanctions Highlights from the Bill

The Sanctioning Russia Act would authorize the president to impose tariffs on purchasers of Russian oil and introduce new sanctions and prohibitions across a variety of sectors of the Russian economy, including financial institutions, maritime, defense, securities, sovereign debt, energy, uranium, and oil. The bill also maintains current secondary sanctions on Iran by extending the Iran Sanctions Act of 1996 through 2031, which was set to expire this year, in line with pressure from the White House to make the bill address Iran as well. For more on the tariffs, see the Further Reading section below.

With regards to sanctions, significant portions of the bill are largely duplicative of existing targeting authorities, especially under Executive Order 14024, as amended (EO 14024). Virtually all of the major players in Russia have some restrictions or have been fully blocked, including the largest financial institutions (Central Bank of Russia, Sberbank, VTB bank, Gazprombank) and Russia’s prominent state-owned and private oil majors (Rosneft, Lukoil, Gazprom Neft, Surgutneftegas). While many provisions of the bill appear “mandatory” for the Executive Branch to implement, the bill is full of exceptions and carve-outs, as well as a broad waiver authority for presidents (as almost certainly requested by the White House in exchange for not opposing the bill). All of the authorities sunset in five years unless renewed by Congress.

Vessel Targeting: Sec. 102 of the bill introduces what, on paper, appears to be a nuanced approach to vessel targeting. Under existing authorities, OFAC sanctions vessels or fleets of vessels by identifying ships as the blocked property of persons or entities. Under this bill, Congress is seeking to authorize the identification of foreign vessels as blocked property based on vessel-specific behavior or characteristics alone, such as lacking adequate marine insurance, similar to how the EU targets vessels in Russia’s “shadow fleet.” Further, the language in 102(b)(5) implies that any foreign vessel transporting Russian energy products (crude oil, uranium, natural gas, liquefied natural gas, petroleum, petroleum products, petrochemical products, coal, coal products) could be fair game for designation.

For vessel owners, operators, and charterers, carrying Russian oil already introduces significant risk that a vessel or entire fleet could be sanctioned under U.S., UK, or EU law. This new authority grants U.S. regulators the ability to more easily target vessels involved in Russia trade, solely for exhibiting “unsafe or nonstandard maritime behavior.” While undefined, such behavior is likely to match the various red flags set out in OFAC and Price Cap Coalition guidance documents, including vessel location irregularities, false flag states and/or frequent changes, inadequate insurance, and dark or sanctionable STS activity. Understanding the full profile of vessels and counterparties prior to vessel sales, management, or fixture and implementing strong contractual controls and warranties are increasingly important to protect commercial operations and reduce likelihood of regulatory interest.

The bill also specifically calls out captains and senior crew leadership of these vessels, and authorizes sanctions against such seafarers who have “known involvement” in voyages where vessels lack adequate insurance or evades compliance with the Price Cap. However, when it comes to Russian oil trade where permissibility has been a function of purchase price and adequate documentation, “evasion” of the Russian oil price cap may not be apparent for vessel masters and crews that are not subject to U.S., UK, or EU jurisdiction. This language increases direct liability for vessel masters and crew leadership, and builds on the increasing trend from regulators to shift liability onto those crewing shadow fleet vessels in addition to owners or ship managers.

Vessel Sales: The bill also authorizes sanctions against owners, operators, and managers of those same vessels, as well as those who “transfer” vessels to the Russian Federation or use by a Russian person.

Taking specific action to limit the sale and transfer of vessels to Russia or for use by Russia to sustain its available trading fleet would be new for the United States. While OFAC could currently identify major sellers of tankers to Russia for operating in the maritime sector of the Russian economy, this new authority spells out the risk for vessel owners and brokers, and aligns with the EU’s long standing prohibitions related to vessel sales to Russia.

Insurance: The bill also directly calls out insurance industry participants, authorizing sanctions against foreign persons that the President determines knowingly “provide underwriting services or insurance or reinsurance necessary for” vessels that are used by Russia or Russian persons to move such energy products to circumvent sanctions. This even includes instances where cover is provided to vessels whose owners, operators, or managers knowingly engaged in unsafe or “nonstandard maritime behavior,” lacks adequate maritime insurance, or evades compliance with the price cap.

For insurance industry participants, “knowingly” will vary widely depending on the type of insurance product and how current policies are written when it comes to providing. As foreign financial institutions, insurance companies already are at risk of secondary sanctions under EO 14024. However, this creates a particularly heightened risk for (re)insurers and protection and indemnity (P&I) clubs providing cover for voyages to and from Russia. Enhanced due diligence at the underwriting stage and review of declarations of Russian voyages under existing policies may be warranted.

Delistings:  The bill also adds new challenges for delistings in the Russia program. The fight over flexibility between Congress and the executive branch is most apparent in Sec. 103(d), which has a provision essentially requiring all sanctions imposed under EO 14024 to “remain in effect.” Congress’s intent seems to be that Treasury could not lift any sanctions imposed under EO 14024, preventing the removal of any of the more than 6000 persons, entities, or vessels blocked under EO 14024. The President will likely seek to use the waiver in Sec 115 to set aside this limitation.

The bill also sets up Congressional review in Sec. 117 for any delistings of persons or entities designated under the bill, similar to the framework established in CAATSA. The provision requires the President to certify to Congress, specifically the Senate Banking and House Financial Services and Senate Foreign Relations and House Foreign Affairs committees, that the person being delisted is not engaging in the activity that was the basis for the designation for which they were designated and that the President has received assurances that they will not do so in the future. Congress has 30 days to review the President’s certification and can override the proposed delisting with a joint resolution of disapproval.

For designated persons, navigating the path off the U.S. sanctions list can already feel like a near impossible feat. While foreign policy is always a consideration for delistings, requiring Presidential sign off creates hurdles for OFAC’s ability to adjudicate petitions and make necessary administrative changes to designations.

Conclusion

If enacted, the President will receive new tariff authorities along with some rather duplicative sanctions authorities. At the same time, the Department of State and the Department of Treasury will receive significant obligations to begin reviewing targets and issuing designations, or issuing waivers for various sanctions provisions. For a practically dormant program, these are resource heavy tasks, all while Secretary Bessent is promising a “modernized sanctions architecture” with actions that are “aggressive and targeted, with defined timelines” to drive behavior change.

While this bill contemplates a return to “Biden-era” sanctions against Russia, it is important to note that the “escalatory pressure” and “stronger tools” necessary to implement aggressive, targeted and efficient actions against Russia exist under existing regulatory tools. Treasury and the President already have the authority to block specific vessels, apply pressure on key industries such as insurance, and target third-country buyers of Russian oil. The inactivity by the U.S. on Russia sanctions has not been a product of inability to impose new sanctions but a result of a foreign policy choice by the Trump Administration, and with the broad waiver provision, it is unlikely the passing of this bill alone will result in increased pressure from the White House on Putin.

Further Reading on Tariffs

• What’s in Lindsey Graham’s Russia-Tariffs Bill? from The Wall Street Journal.

• The Russia Sanctions Bill Would Give the President Permanent, Unnecessary, and Almost Unfettered Tariff Authority from Georgetown Law’s IIEL Policy Brief.

• Potential roadblocks ahead for Graham-led Russia sanctions bill from Politico. See also statements from Neal & Wyden and Meeks.

Clarity's Insights on Syria and Iran Published in Lawfare

Clarity Co-Founder Claire O’Neill McCleskey and Clarity Chief of Staff Naomi Maxwell co-wrote an article for Lawfare with former OFAC Chief Counsel and partner at Jenner & Block Rachel Alpert on Syria entitled: Takeaways for Iran a Year After the Syria Sanctions Rollback.  In the article, the authors explore the state of play in Syria one year after the United States terminated comprehensive sanctions and offer lessons in the “difficulties of genuine sanctions removal” as President Trump contemplates terminating all U.S. sanctions on Iran.

• On the Role of Congress: “Both chambers are full of Iran skeptics across both parties, meaning the Trump Administration would face difficulty unwinding the “web of statutes with mandatory sanctions."

• On the Threat of Snapback: “It is simply too risky to make loans or investments in major infrastructure projects based on temporary sanctions waivers when projects require multi-year or even multi-decade capital commitments.”

• On SST Overhang and the IRGC: “Because the IRGC is deeply embedded across Iran’s economy—from energy and construction to telecommunications—that exposure is difficult to avoid in practice, and it will continue to deter investment even if broader sanctions are lifted.”

• On the Importance of Banking Channels: “Syria’s reintegration into the international financial system has remained slow,” and Iran lacks “banking relationships that underpin cross-border trade.”

  
  

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Claire M. also spoke on this topic on the Lloyd’s List Shipping Podcast: “The MOU contemplated a full termination of sanctions on Iran.  That is not possible to do on a short timeline.” She explained that Syria had decisive regime change and it still took 18 months to unwind major components of the Syria sanctions program, and the Trump Administration was trying to move fast.

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