Through the Trump administration’s ongoing repriotization of regulatory enforcement areas, one notable change is its increasing use of Foreign Terrorist Organizations (FTO) and Specially Designated Global Terrorists (SDGT) designations. Most notably, on February 20, 2025, the U.S. Department of State desginated eight Latin American crime groups, including Tren de Aragua (TdA), Mara Salvatrucha (MS-13), Cartel de Sinaloa as FTOs an SDGTs. This follows Attorney General Pam Bondi’s February 5, 2025, memorandum on “Total Elimination of Cartels and Transnational Criminal Organizations,” which became a new FCPA focus over conventional white-collar crimes that do not involve such a terorrist connection. So what exactly are FTO/SDGT designations, how different and powerful sanctions tools are they?
As for FTOs, the Secretary of State desginates (1) foreign organizations that (2) engage in terrorist activity or retain the capability and intent to engage in terrorist activitiy or terrorism that (3) threaten the security of U.S. nationals or national security of the United States as FTOs in accordance with section 219 of the Immigration and Nationality Act (INA). The legislative origin of the FTO designation goes further back to the Antiterrorism and Effective Death Penalty Act of 1996, in response to the bombings of the World Trade Center and Oklahoma City. A designated FTO is inadmissible to and removable from the U.S., its assets are blocked, and it is unlawful for a person in the U.S. or subject to the U.S. jurisdiction to knowingly provide “material support or resoruces” to a designated FTO; the “material support” statute can be expansively interpreted and may have exposure to secondary sanctions with its extraterritorial scope. When a FTO is designated by the DOS, it is also added to OFAC’s SDN list.
SDGT is a largely similar counter-terrorism sanctions tool, though targeting a wider range of entities, including terrorist groups, individuals acting as part of a terrorist organization, and other entities such as financiers and front companies. SDGT is designated by the DOS or DOJ. An SDGT designation is made under the authority of the Executive Order 13224, issued by the President Bush as a response to the attacks on September 11, 2001. Additionally, any transaction by any U.S. person or within the U.S. that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions in the Order is prohibited and may be subject to civil and criminal penalties.
A case in point well demonstrating the interplay between FTO and SDGT and additional consideration of its impact on humanitarian-related activities is the terrorist designation of Ansrallah, commonly known as the Houthis, a political movement and militarnt group in Yemen. During his first term, President Trump designated Iranian-backed Ansrallah as a FTO in January 2021. President Biden, however, subsequently revoked Ansrallah’s FTO status over concerns that humanitarian aid to Yemeni people would be impeded. As Ansrallah attacks on vessels in the Red Sea and the Gulf of Aden, they were redesignated as an SDGT in January 2024. (It is noteworthy that SDGT is generally considered to be more flexible whereas FTO, of which designation and revocation criteria are legally defined, is more severe due to FTO’s “material support” statute’s long-reaching hook and requirements for financial institutions to freeze and report the designee’s assets. SDGT’s revocation is also flexible as the geopolitical situation deescalates and is more allowing for humanitarian carve-outs.) In March 2025, the Trump administartion redesiganted Ansrallah as a FTO.