Recent OFAC designations implicate Ecuador’s maritime networks: Top points

The United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated 15 Ecuador-based individuals and entities and identified ten vessels as blocked property. According to OFAC, the designated parties and vessels are linked to maritime cocaine trafficking networks associated with Los Choneros, Los Lobos, the Sinaloa Cartel, and the Jalisco New Generation Cartel (CJNG).

Companies with operations, counterparties, vessels, shipments, financing, insurance, fuel, seafood, logistics, or other business relationships connected to Ecuador or the broader Latin American maritime sector are encouraged to review their sanctions risk in light of the recent OFAC action. Affected companies could face OFAC civil penalties, potential exposure under material support statutes, and civil claims under the US Anti-Terrorism Act. In addition, companies are encouraged to consider updating sanctions screening procedures, conducting enhanced due diligence, and assessing who actually owns or controls their counterparties.

In this alert, we discuss the recent OFAC designations and their practical implications for compliance.

Overview

OFAC has continued to designate individuals, entities, and criminal organizations linked to terrorism and transnational narcotics trafficking in the Western Hemisphere. Since early 2025, it has taken nearly 30 actions against more than 300 individuals and entities allegedly associated with cartels and transnational criminal organizations.

Although the US does not maintain a comprehensive sanctions program specific to Ecuador, OFAC has designated individuals, entities, and property in the country under Executive Orders (EOs) 14059, “Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade,” and 13224, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism.” These measures have created sanctions risk in the fishing and maritime sectors, particularly where legitimate businesses may be used to facilitate narcotics trafficking, money laundering, or activities related to Foreign Terrorist Organizations (FTOs). The August 2026 designations underscore the importance of evaluating not only named counterparties but also vessels, intermediaries, beneficial owners, and related commercial networks.

Key developments

August 20, 2026: Operation Pacific Viper designations

The principal designated or identified individuals, entities, and vessels include:

• Alfonso Mero Mero, his sons, and his family’s company Arcasdenoe, S.A., which OFAC alleges used fishing vessels to transport cocaine from South America to Mexico


• Julio Javier Mero Franco, who OFAC alleges provided support to Los Choneros and coordinated cocaine shipments from Ecuador to Central America and Mexico


• Jimmy Leonidas Alarcon Holguin, who owns or controls six Ecuadorian fishing-related entities


• Ten fishing vessels, including Todos Vuelven, Arca de Noe III, and Conquista, which OFAC alleges supported cocaine-laden go-fast vessels near Manta, Ecuador

These actions were taken as part of Operation Pacific Viper, a US Coast Guard counternarcotics campaign in the eastern Pacific Ocean, and could lead to future designations in the maritime sector.

September 4, 2025: Designation of Los Choneros and Los Lobos as FTOs and SDGTs

In September 2025, the US Department of State designated Los Choneros and Los Lobos as FTOs and Specially Designated Global Terrorists (SDGTs). Those designations could increase the legal and compliance risks associated with transactions involving parties linked to these groups. Beyond OFAC sanctions, providing material support to these organizations could potentially create exposure under 18 U.S.C. § 2339B and civil claims under the US Anti-Terrorism Act.

Broader trends in Latin America

The Ecuador-related action is part of a broader regional sanctions trend. Recent OFAC and State Department actions related to CJNG, the Sinaloa Cartel, Brazil’s Primeiro Comando da Capital, and Comando Vermelho may underscore the importance of expanding screening and due diligence beyond Ecuador, particularly where counterparties operate in jurisdictions with an active cartel presence.

Legal and compliance implications

Sanctions exposure and blocking obligations

Civil liability for sanctions violations may arise even in the absence of knowledge or intent regarding the prohibited conduct. US persons and companies subject to US jurisdiction are required to block and report property or interests in property of designated persons. This obligation extends to companies owned, directly or indirectly, 50 percent or more by one or more blocked persons, even if those companies do not appear separately on OFAC’s list. Although control alone does not trigger OFAC’s 50-Percent Rule, it remains a relevant due diligence consideration.

Absent authorization, OFAC generally prohibits US persons and companies subject to US jurisdiction from engaging in transactions involving blocked property or blocked persons. This prohibition can apply to transactions within the US, transactions that transit the US, and dealings involving US persons or US financial institutions.

FTO-related risk, material support, and secondary sanctions

Risk is potentially heightened when a designated organization is also an FTO. Criminal or civil exposure may arise if a company knowingly provides material support that benefits the organization. Material support may include money, financial services, transportation, lodging, personnel, or other services. OFAC authorization also does not necessarily eliminate separate criminal or civil risks related to material support for an FTO.

Further, foreign financial institutions may face secondary sanctions risk for knowingly conducting or facilitating significant transactions on behalf of persons designated under EO 13224.

Sector-specific risk and compliance

OFAC’s action demonstrates how seemingly legitimate fishing businesses can be used as logistical platforms for narcotics trafficking networks. Companies that charter vessels, purchase seafood, or provide marine fuel, insurance, trade finance, or logistics linked to Ecuador’s coastal fishing industry may face heightened risk.

Recent OFAC enforcement actions, including OFAC’s February 2026 settlement with IMG Academy, reflect the expectation that companies with international operations or relationships screen customers, counterparties, beneficial owners, vessels, and intermediaries.

Relevant red flags include complex ownership structures, high-risk jurisdictions, commercially unreasonable terms, involvement of family members or intermediaries, indirect control structures, and evasive responses regarding the role of a blocked person.

Practical compliance considerations

Companies with operations, counterparties, or transactions connected to Ecuador or the broader Latin American maritime sector are encouraged to consider the following risk-based measures:

• Review and update sanctions screening procedures to incorporate the 15 designated individuals and entities, the ten vessels identified as blocked property, and the associated aliases and vessel identifiers.


• Conduct enhanced due diligence on Ecuadorian or Ecuador-linked counterparties in the fishing, maritime, fuel, insurance, seafood, logistics, and trade finance sectors, including a review of who actually owns or controls the counterparty.


• Screen vessels and counterparties during onboarding and relationship renewals, as well as in connection with payments, shipments, claims, and sanctions list updates.


• Report blocked property to OFAC where appropriate and preserve related records.


• Assess potential material-support risk involving FTOs before providing funds, goods, services, transportation, fuel, insurance, or logistics in jurisdictions with an active cartel presence.


• Consider submitting a voluntary self-disclosure to OFAC if potential sanctions violations are identified.

Going forward

Companies are encouraged to monitor OFAC and State Department guidance and enforcement developments, including any general licenses, FAQs, or additional designations related to Ecuador's maritime sector or Operation Pacific Viper, and update screening and escalation protocols accordingly.

For more information, please contact the authors. In addition, please see DLA Piper’s National Security and Global Trade practice.

Leer este artículo en español.