Podcast - Supply Chain Compliance in Mexico's Food and Beverage Sector

Kristina Merritt: Welcome to our “Legal Bites” podcast series.  Today, we have an opportunity to sit down with Holland & Knight attorneys Jessica Brown, Oscar Alejandro Quiroz-Chávez and Alejandro Sánchez Mújica.  Many thanks to all for joining and sharing your time with us. 

Jessica Brown: I'm Jessie Brown, a partner at the firm in the San Francisco office. For over a decade, I've worked in the alcohol beverage and food industry on regulatory compliance and litigation. A big part of my practice is making sure that highly regulated products like tequila are authentic and meet all the right standards. With that background, I'm especially excited to moderate today's discussion, which is at the intersection of international trade, agricultural investment and national security. Specifically, we're going to explore how recent U.S. legal designations targeting Mexican drug cartels are reshaping the landscape for legitimate American companies doing business in Mexico. We're going to particularly focus on the agricultural sector. Joining me are two of my esteemed colleagues who deal with these issues every day: Oscar Quiroz and Alejandro A. Sánchez Mújica. Oscar is a partner in our Mexico office with deep experience in compliance and internal investigation. I'm going to have him introduce himself shortly. Alejandro is a partner in our Mexico office as well, focusing on cross-border transactions. He has extensive work with Mexico's tequila in industry in particular, and he will introduce himself as well. So, Alejandro, let's start with you.

Alejandro A. Sánchez Mújica: Thanks, Jessica. I'm in our Monterrey office, and my practice generally centers on guiding U.S. companies through the transactional and regulatory complexities of investing in Mexico. Mexico is one of the world's largest agricultural exporters as you know, and companies from the U.S., whether they're growers, fruit processors, distributors or agricultural technical firms, see a lot of opportunity here. I help those clients structure their cross-border investments, navigate Mexican regulations and form partnerships with local businesses in ways that are both legally sound and commercially viable. A notable part of my practice involves the tequila industry, which is a big segment of Mexico agriculture and manufacturing. For example, I've worked closely with major tequila producers and with the Tequila Regulatory Council to protect the integrity of tequila production and exports. That means helping ensure that every drop of tequila bound for the U.S. meets all required standards and that the supply chain is transparent and secure. More broadly, given the evolving security environment, which, as we'll discuss today, has become a critical factor in any cross-border venture, I spend a lot of time helping companies assess and mitigate operational risks on the ground here in Mexico.

Jessica Brown: Great. Thanks, Alejandro. Oscar, how about you? Maybe you could tell us a little bit about your practice and how it plays into some of the issues we'll be discussing today.

Oscar Alejandro Quiroz-Chávez: Thank you, Jessica. I've been in the compliance and internal investigation space for more than 15 years now, advising companies on designing and updating compliance programs, leading internal investigations to address concerns on corruption, bribery, fraud and other misconduct, and assist clients running tailored due diligence on key parties and business partners to mitigate any compliance risks. These Mexican cartel designations as foreign terrorist organizations and especially designated global terrorists came down last year. I've been working closely with the folks on the white collar defense and global compliance [team] here at the firm – Willy Ferrer, Barbara Martinez and the rest of the team – to monitor what the designations mean for companies doing business in Mexico, and to translate those U.S. law developments into practical compliance measures on the Mexican side to reduce the exposure of being sanctioned. So when a company, whether it's a U.S. multinational or a Mexican business with U.S. touch points, is investing or operating in Mexico, I help them by designing and implementing internal controls, policies, conducting trainings to upper and middle management, and those third-party due diligence and investigations protocols that they need on the ground, and many to prevent bribery and corruption activity as I mentioned, and recently updating protocols to address security incidents such as extortion, theft and other organized crime-related issues. As you can imagine, the legal landscape has shifted dramatically in the past year. Companies that felt comfortable operating in Mexico that already have a decent compliance program and anti-bribery and anti-corruption policies now find their risk profile is very different. A big part of my role lately has been helping those companies anticipate and adjust to this new reality, avoiding any link or connection with individuals or companies that are related to cartels and other criminal organizations.

Jessica Brown: Great. Thank you, Oscar. So we spoke a little bit about me, but quickly, I'm a partner in our litigation and regulatory practice group at the firm. With both of you, I advise clients on complex cross-border regulatory and enforcement matters. My practice really focuses on highly regulated industries, specifically in the food and beverage space. So I've worked on tequila-related regulations in both the U.S. and Mexico and advising U.S. companies on that. I also work on tobacco, gaming, SNAP EBT compliance. So this is going to be a really fascinating discussion, I think, for how all these issues play together, and I'm excited to get us going. So, Oscar, I'm going to start off with you. Let's set the stage for some of the legal changes that have occurred recently. Specifically, I'm talking about changes in U.S. law targeting Mexican cartels. Can you explain, first of all, where we are in this and what impacts these have had on U.S. businesses that are operating in Mexico?

Oscar Alejandro Quiroz-Chávez: Absolutely. Well, here at the firm, we carried out a deep analysis of the new potential consequences that the designation of the Mexican cartels represents to many companies doing business in Mexico. And although my colleagues from the U.S. compliance team will definitely explain it better than me, I'll do my best to explain at the high business-friendly level. The biggest development was the Executive Order 14157 of last year, which was signed by Mr. President Trump, which gave the U.S. government new powers to go after foreign drug cartels by treating them the way it treats terrorist organizations. In practical terms, it allowed the Secretary of State to designate certain cartels as both foreign terrorist organizations, FTOs, and specially designated global terrorists, SDGTs, under U.S. law. After the executive order issued by Mr. Trump, the Secretary of State Marco Rubio officially designated seven organizations as FTOs and SDGTs. Those are the Cártel del Golfo, Cártel de Jalisco Nueva Generación, Cártel del Noreste, Cártel de Sinaloa, Cárteles Unidos, Mara Salvatrucha and La Nueva Familia Michoacana. Historically, the U.S. law treated drug trafficking and terrorism as separate issues. But this executive order basically says that these cartels, and I quote here, "operate as quasi-governmental entities and pose a threat to the U.S. national security beyond the reach of traditional crime." This means, in other words, that the U.S. government is now explicitly treating these cartels like terrorists.

Alejandro A. Sánchez Mújica: It's also worth noting for context that most of the cartels Oscar mentioned were already on U.S. government blacklists for drug trafficking or organized crime. So our clients have been asking, if these groups were already sanctioned as cartels, what actually changes now that they're being labeled as terrorists? And the answer is quite a lot. A terrorist designation triggers the harshest legal regime the U.S. has. It means that these cartels and their members are now subject to the same kind of manhunt and prosecution approach used against groups like ISIS or al-Qaeda. They have even fewer legal or procedural avenues to avoid asset freezes or challenge enforcement actions. Prosecuting cartel members and their support networks has become a top priority across multiple U.S. agencies, with significantly increased resources dedicated to those efforts. From a regulatory perspective, the restrictions are tighter, too. Some loopholes or exceptions that existed under trafficking sanctions, for example, certain allowances for humanitarian transactions or personal remittances, don't apply when you're dealing with a designated terrorist group. The bottom line is that the U.S. government has effectively thrown the book at these organizations. The legal framework is now both broader in scope and more stringent in its penalties.

Oscar Alejandro Quiroz-Chávez: And the practical impact on legitimate businesses is that the net has suddenly been cast much wider. Even if your company has nothing to do with illicit activity, if you operate in sectors or regions where there's a strong cartel presence, you can expect much more scrutiny from the regulators. For instance, if you are doing business in an environment where this is an identified area where these cartels have presence in different forms, the expectation is that you are implementing additional controls and making additional assessments to avoid any kind of connection with these organizations.

Alejandro A. Sánchez Mújica: Yeah, and we saw a very interesting example last year, how this heightened enforcement posture can ripple out into the business community. We had a very high-profile impact in three financial institutions last year that pretty much shook the industry. In June 2025, FinCEN used powers under the USA PATRIOT Act to impose special measures, effectively a type of secondary sanctions, against three Mexican financial institutions. FinCEN identified these banks as primary money laundering concerns tied to illicit fentanyl trafficking. In practical terms, this pretty much cut them off from the U.S. financial systems. U.S. banks were prohibited from processing any transactions involved in these institutions, and they didn't really want to touch anything that was related to these entities. For U.S. companies, this also had some consequences. Businesses that had been using those Mexican banks to handle cross-border payments suddenly found that they couldn't move their money through the usual channels. Overnight, those funds were effectively stranded. Companies had to scramble to find alternative banking partners and routes to keep their operations in Mexico running. It was a very stark reminder that in this new enforcement climate, even indirect links to a designating cartel, in this case through a bank, can pose a serious operational risk.

Oscar Alejandro Quiroz-Chávez: And we have seen recent developments happening in Mexico. The U.S. Attorney's office of the Southern District of New York unsealed an indictment charging the sitting governor of Sinaloa and other Mexican officials with conspiring with the cartel to have connections with them. And now they are facing a mandatory minimum of 40 years and up to life in prison. So this is becoming serious and enforcement actions have been very active these days.

Alejandro A. Sánchez Mújica: Yeah, and it's important to note that the business angle here is also important. Sinaloa is not just a cartel headline, it's the state with a very significant agro-industrial footprint, including tomato, fresh produce and other export-oriented sectors that supply U.S. buyers. An indictment of this magnitude against the sitting governor and senior state law enforcement officials dramatically increases the contextual exposure of any company that sources from, ships through or otherwise does business in Sinaloa. Counterparties, banks and U.S. regulators are all going to be looking at Sinaloa-related transactions with a much sharper lens going forward, which means companies operating in or with that state should be revisiting their risk assessments and third-party diligence right now.

Jessica Brown: So it sounds like what's happening is there are specific regions in Mexico that really have, I would say, targeted cartel violence. And I can imagine some of our listeners who are sort of private U.S. corporations are thinking to themselves, why do I care and or my company doesn't operate there and so I don't really need to be concerned about it. One of the focuses of this particular podcast, right, is sort of talking about some of the agricultural sectors that could be impacted or even investments in those particular sectors by legitimate U.S. businesses. So I'm curious, and maybe Alejandro, you can share this with some of our listeners, but from your perspective, which agricultural product or crop in Mexico has been most heavily affected by cartels? And why do you think that's the case?

Alejandro A. Sánchez Mújica: Thanks, Jessica. If I had to single one particular agricultural product out, I'd say the avocado industry has been hit the hardest by cartel interference. In particular, the western state of Michoacán, which grows the lion's share of Mexico's avocados and is the avocado capital of the world, has seen significant cartel activity. It's home to some of the cartels Oscar mentioned previously. And avocado by itself is very unique in that it doesn't necessarily need any type of processing. So long as they cultivate it and transport it, it's easy money for a lot of these cartels. The reason for the focus on avocado is that they're pretty much considered green gold. The global demand for avocados – especially from U.S. consumers, sometimes heightened during the Super Bowl – has skyrocketed over the past decades. Avocados generate billions in revenue, and Michoacán avocados are prized. That kind of money is a magnet for organized crimes. Cartels, as you know, are always looking for ways to diversify their income and launder money. And an industry as lucrative and fast-growing as avocados presents an irresistible target. They don't have to grow or process the avocados, as I mentioned, to profit. They can just extort the producers and packets or control parts of the supply chain and make a fortune.

Oscar Alejandro Quiroz-Chávez: Right. And the same happens also with other products such as agave or tomatoes, lemon, potatoes, you name it. So these cartels have a different variety of tactics. For instance, you have to look at the geographic concentrations in regions with a strong cartel presence or any multi-layered supply chains and three-party dependencies, extortion and coercive measures against companies to avoid business disruption. And there's also cartel influence on local authorities and public officials. So they all also muscle into supply chain. So they control – for instance, you were mentioning, Alejandro – local tracking routes so they're [the] only shippers [that] can transport the goods out of certain areas. In some cases, for instance, they have established firm companies that have produced buyers or even exporting firms, which allows them to launder drug money through the trade of perfectly legal commodities. They'll even try to monopolize related sources, think of like farmland or water rights in key growing regions. So cartels' presence can be anywhere. That's the challenge that companies doing business in Mexico now are facing. And so the environment creates a very complicated minefield. You may have a completely legitimate Mexican supplier who is trying to run a business, but a supplier could be forced to pay off [a] local cartel to keep operating, for instance, or perhaps the distributor or a middleman in your supply chain has close ties to a cartel. The scary part is that under U.S. law, if any of your business transactions, even indirectly, involve a designated cartel, you could be violating U.S. sanctions or anti-terrorism laws. It doesn't matter if you didn't intend or didn't know. Once your money or your product cross paths with one of these groups, you can be subject to sanctions. That's a clear-cut issue.

Alejandro A. Sánchez Mújica: Exactly, Oscar. I think the way business needs to be performed in Mexico has changed a lot. Under the U.S. sanctions laws administered by OFAC, any property or funds that belong to a designated cartel are effectively radioactive. If a person or a company has control over those assets, even momentarily, even unknowingly, those assets can be frozen or seized by U.S. authorities. And if a company engages in transactions with these groups, it faces severe penalties. We're talking about serious stuff. We're taking about criminal charges or civil fines that can reach millions of dollars for violations. What's more, under civil enforcement actions, there's something called strict liability. That means a company can be held liable, even if it didn't know and had no intention to deal with the cartel. If it happens, you're on the book. Period. So the risk calculus for [a] U.S. company buying, say, avocados from Michoacán has fundamentally changed. It's sadly no longer enough to assume that your Mexican business partners are good actors and leave it at that. Now you have to verify it. You need very robust compliance and monitoring systems in a place to catch any red flags in your supply chain. And you need contingency plans in case something goes wrong. And that's, I think, a good segue to what we'll cover next: the kinds of systems and practices that companies should be implementing to protect themselves.

Jessica Brown: Thanks, Alejandro and Oscar. I mean, I think a lot of this is a little scary for U.S. companies. And so I'm glad that we're going to sort of dive right into what U.S. companies should be doing about cartel impacts. One thing I wanted to raise, too is, yes, we've been talking about the physical attributes of the agricultural sector – that is avocados, tomatoes, things that are tangible. But one thing, I think that's come out and we've all discussed is that there are legitimate U.S. investment funds, private equity, who are coming to invest in these funds that could potentially have cross-border investments, right? And so I think a lot of what we're discussing stretches beyond just the physical agricultural product and goes really into do you know who you are dealing with financially as funds and investments start to diversify? Have you done the due diligence on your company side to make sure that you can trace where your funds are specifically going, who's investing them and so on. So that we don't dissuade anyone from doing business in Mexico, because I think that the focus of this podcast is really to encourage people to do business there. I think it's a good opportunity to pivot to, you know, what do you wish U.S. companies doing business in Mexico really understood about how cartels can impact their operations? I mean, is there a common blind spot or misconception that you regularly encounter that U.S. companies can and should be aware of? Alejandro, maybe you could start us off here.

Alejandro A. Sánchez Mújica: Sure, Jessica. Yeah, this is a very difficult subject to broach, because generally when we're speaking about Mexico, we're speaking about all the opportunities and great business ideas that come to fruition down here. So it's a bit complicated to speak about these issues, but there are ways to structure operations so that they're compliant.

So I think the first big point that I'd like to highlight with some of the potential investors in Mexico is understanding the extent of U.S. legal reach, the U.S. jurisdiction. A lot of folks assume that if they're dealing with a Mexican company and everything happens in Mexico, then U.S. laws are kind of irrelevant. That is absolutely not the case. There might have been some messaging around relaxed enforcements of certain provisions, but that's not what we're seeing on the ground. If you're a U.S. company or person, U.S. laws, especially including sanctions laws, follow you overseas. Even if you're a foreign company with no U.S. presence, if your activities touch the U.S. financial systems or U.S. commerce, you could still be subject to U.S. enforcements. And I think we have a great example that's relatively recent on top of the ones we already mentioned with the FinCEN designation. In 2019, a European bank paid around $600 million to resolve a U.S. sanctions violations. This bank had no physical presence in the United States, but it had done business in U.S. dollars that moved through U.S. banks involving sanctioned parties, in that case linked to Iran. The U.S. government said that by causing those dollar transactions to be processed through the U.S., the foreign bank fell under U.S. jurisdiction and violated U.S. law. The same principle can apply to companies in Mexico. If a payment in pesos from a Mexican subsidiary happens to translate through a U.S. corresponding bank and that payment involves [a] blacklisted entity, the U.S. can claim jurisdiction. So generally U.S. companies and really any company doing cross-border business need to grasp that U.S. laws can reach across borders in ways that they might not expect.

Oscar Alejandro Quiroz-Chávez: Building on that, Alejandro, I think it's crucial to understand what U.S. law considers as material support to a terrorist organization. So under the applicable law on anti-terrorism, it's a crime to provide material support or resources to a group designated as FTO. And now that cartels and others and the FTO leads are covered, this statute is very relevant to doing business in Mexico. And what is material support? It's not just money or weapons. It can be virtually anything of value. So think of goods, services, transportation, equipment. Even advice or assistance to these organizations can be seen as material support. So U.S. prosecutors can apply this law to conduct that happens anywhere in the world, so long as there are some U.S. connection, as you mentioned. That could be a U.S. person involved or a transaction that uses a U.S. bank, as you said. So the deal struck in Mexico City that somehow provides a benefit to say, a cartel, can be prosecuted in Washington or New York. The reach is global, basically.

Alejandro A. Sánchez Mújica: And I think one of the biggest concerns or what we've been having more issue communicating to people doing business in Mexico is that the law requires that the support is provided knowingly, but that doesn't necessarily mean that you only get in trouble if you have actual knowledge. If you deliberately avoided finding out the truth, what a lot of lawyers call willful blindness, that could be enough to satisfy the knowledge requirement. In practice, this concept of constructive knowledge means that companies can't stick their heads in the sand. If there are red flags screaming that a business partner might be linked to a cartel and you choose to ignore them, then the government can say that you should have known you were providing support to a terrorist organization. In short, a good faith ignorance is not necessarily a reliable shield if you had the means to discover the truth and turned a blind eye. And this is especially relevant when we're looking at accusations from the U.S. government aimed at Mexican government officials, etc., that might entail a review of how companies are interacting with those government entities in very specific situations.

Jessica Brown: Yeah, and I think it's important to point out too, right, that these penalties for, as you say, Alejandro, cases where it's really willful blindness as opposed to intentional conduct. And it speaks to the partners that a lot of these companies may or may not have in Mexico, right? The investments that these companies make, where that money goes, being able to trace all of that, to have some sort of defensible basis to be able to assert in any kind of U.S. investigation into your business practices that you have a very clean monetary policy in place, but also that you have internal control. So we're going to go into discussing a lot of that as we kind of walk through this. We've discussed this a little bit, Alejandro, with the work that we've doing in the tequila industry, but with the arrest of the mayor of Tequila, I think there's been some concerns from the U.S. side of the border that there perhaps have been these type of extortion payments in the supply chain to keep the agave safe, to keep the business safe. And I thought maybe Oscar, you could speak to this question of extortion payments.

Oscar Alejandro Quiroz-Chávez: Sure, Jessica. And yes, that's a topic that comes up a lot in our conversations with clients, whether paying these extortion payments to these organizations can exempt from any sanctions because, as I may argue, is that the only way to do business is by paying these groups to continue with your activities. But the truth is that although it's a reality that many companies may face in certain areas in the country, the truth is that the U.S. law does not have any broad exception for that scenario. So for instance, the legal defense of the U.S. basically says, I have a choice. It's very extremely narrow. It typically applies only if you are under an imminent threat of death or serious injury at the very moment of any unlawful act and you literally have no other options. But most of the time when there's any cartel demand for money or extortion or any of those [things] that you have discussed over this conversation, is it seems like the company has systematically agreed on a certain scheme of making payments to continue doing business, and that is what is sanctioned by the U.S. law. As harsh as it sounds, those kind of extortion payments, even made under threat, can still be seen by the U.S. authorities as unlawful support to a terrorist organization. So assuming that we say we have no choice, will rarely protect a company or individual in the eyes of the law.

Jessica Brown: Right. And I think that's so important to point out because the "we had no choice defense" really speaks to, I think, the broader reputational harm that can cause some of these legitimate businesses or legitimate investment funds, I mean, it can really sort of destroy the business overnight, right? Even an unproven allegation or an investigation can lead banks or partners or customers to distance themselves from legitimate businesses. And we've seen clients who are facing contract cancelation or who are potentially seeing their market value plummet just because their name was in the same sentence as, you know, cartel or terrorist organization or what have you. I think reputational damage is extremely tough to recover from, especially in a lot of our clients' businesses where trust and transparency are really essential qualities. So I think from our perspective, it's not just a legal and compliance issue, it's really a business continuity issue as well.

So given this challenging environment, I think as we keep kind of trying to dig into what can companies do to protect themselves? And I think this is kind of the opportunity for me to pick both of your brains, Oscar and Alejandro, if you were advising U.S. business operating, investing in Mexico, indirectly investing in Mexico, seeing some of their funds going there, in the agricultural sector or elsewhere, what are some best practices you would recommend to help them avoid getting entangled in U.S. government investigations or enforcement actions? And how can companies be proactive on some of these issues?

Oscar Alejandro Quiroz-Chávez: Sure, Jessica. I think the number one thing I can tell clients is [to] build a rigorous compliance program and commit the necessary resources to it. So for instance, we know that nowadays, at least, serious or mid- to large companies have decent compliance programs in place. But the key thing now is to update those compliance frameworks to address now the FTO exposure, including revising policies and procedures to reflect what we have talked about – the material support provisions, the constructive knowledge standard – conducting comprehensive risk-based assessments that incorporate the new risk factors such as the geographic exposure, industry-specific risks that is not the same operating in the U.S. or in other jurisdictions than operating in Mexico or in LatAm. So know your counterparty profiles and the potential misuse of products or services that may be linked to cartel-influenced environments. Enhancing, for instance, the identification and escalation of cartel-related threat flags, including those, for instance, arising from geographic footprint, ownership structures, transactional patterns and other behavioral indicators. I think those are, for instance, the main things to look at it. Although, as you know, many companies are already aware of anti-bribery and anti-corruption sort of controls. But nowadays it's also important to update those measures and include these new risks that represent the designation of the cartels as FTOs. I don't know what you think, Alejandro.

Alejandro A. Sánchez Mújica: Yeah, and I think adding onto that, Oscar, it's worth noting that it's very important to maintain good relationships with all of your partners in Mexico and really understand who your business partners are and who your stakeholders are. You need to understand their supply chain, their distributors, their logistics providers, contractors or even customers. Knowing them and understanding where they're sitting will help you evaluate which of those relationships might expose you to higher risks. For example, if you're dealing with a small local subcontractor, do you really know who the ultimate owners are or where they source their materials? If not, that might be a gap you need to fill. It's generally advisable to use all the information you can have at your disposal, not just what the partners tell you, but also what you can gather from public sources, intelligence reports and the knowledge of your own in-country staff. And I think this is incredibly important because they're the ones that have boots on the ground and can pretty much give you a more comprehensive outlook of where you're working. Often your employees or local consultants will have a sense of which areas or businesses have sketchy reputations. It's worthwhile [to] incorporate that local insight. At the end of the day, they're living in that ecosystem. They generally feel comfortable with what they're doing. So whatever information you can gather from them is very valuable.

Oscar Alejandro Quiroz-Chávez: Yes, of course. And I think for that purpose it's very important to clear a set of red flags that are applicable to the local market or to the local environment, as you mentioned, and make sure that you train your team so they can spot them, whether you are in the procurement department, finance or some other relevant departments of the company that can identify any red flags and avoid any potential consequences for the company. So for instance, if a new vendor or a customer comes out of nowhere and suddenly wants to do a large transaction with the company in cash or using bank accounts in unusual jurisdictions, that's really a red flag, of course. Or if a business partner is based in a region where there's a strong cartel presence. So that's also red flags, and it's worth to conduct additional screening that you traditionally will do with other suppliers in other areas. If, for instance, due diligence reveals that the company's ownership is a PAC or includes people that you can identify clearly, that's also a red flag. Nowadays, knowing the ultimate beneficial owners of your partners and the parties is very, very important. Other examples – I can name so many, but just for illustrative purposes, for instance, there's also situations where your third party requests a business structure or payment terms that are not usual or make payments to, you know, bank accounts in countries that ha[ve] nothing to do with the transaction. So those can be indicators of efforts to launder money or any other illegal activity. So, for instance, again, training to your people involved in your procurement, sales, logistics, finance. They should be trained and be aware of these new risks that any transaction will represent to the company.

And as you said, just sort of to stress this again, is know your third parties. It's not sufficient nowadays just to do the screening on [an] international watch list or blacklist. It's also very important to actually go deeper in the screening, such as, you know, see if the shareholders are actually the ones that exercise control over the entity. If they set a domicile, for instance, just make sure that domicile exists. If they are providing any certain services or goods that they actually have the resources or they have experience or the credentials to do that and are not only a shell company that somehow is now a business part to your company. Those are the red flags that you should be aware of, and also look at the sources that you are looking or considering for screening purposes. So it is worthwhile to review what are the sources your team is using such as Office of Foreign Assets Control (OFAC) and some others from the U.S. enforcing authorities, so you make sure that you conduct a very professional and serious due diligence. And also be aware or be mindful that even though if you conduct a certain due diligence before starting a business relationship with a third party, probably that will not be the same after two or three years. So it is very important to continue monitoring any developments with that third party and continue reviewing if that company or supplier or anyone from the supply chain continues to be the same person that you started doing business with a few years ago.

Alejandro A. Sánchez Mújica: Building on that, while I generally believe that a good contract cannot protect you from a bad person or relationship, I think it's also important to build protective clauses into your contracts. Those will require your partners to comply with applicable anti-corruption and sanctions laws and gives you the right to terminate their relationships if they don't. I always say the contract is your first line of defense. It sets the tone that your company has zero tolerance for any illicit ties.

Jessica Brown: Right. And, you know, I think we've all been on the end of what happens when even everybody's best efforts don't work. So it's important to have a clear incident response plan in place, right? If there's an employee or a compliance report that flags a potential issue – maybe there's an invoice that looks suspicious or some rumor floating around about a distributor that might have a hidden owner – you should have your team ready to investigate immediately. And I think both of you have been really helpful in this rapid response on the ground to be able to do this kind of due diligence digging into the supply chain for some of our U.S.-based company clients. So, Oscar, I might turn it over to you. I thought we could sort of move into this topic that we've kind of been discussing, but traveling to Mexico on business. I think many of our listeners might be asking about business travel during this economic climate. And what I sort of want us to focus on is while the topic of this podcast has, at some instances, been a little bit doom and gloom, I think the last segment really encapsulated what the team can do to assist U.S. companies to put all of the necessary safeguards in place, to build a reporting structure, to figure out what happens on the rapid response enforcement. But just as a practical matter, if a U.S. executive or a team, right, is planning a trip to Mexico for work, what should they bear in mind given this new landscape? Do you think anything's changed in terms of travel considerations since the cartel designation? Does it depend on which part of Mexico they're visiting? What do you think?

Alejandro A. Sánchez Mújica: So I'm generally hopeful that this doesn't dissuade anyone from actually traveling down to Mexico. You know, one of the best parts of our job is that we usually get to highlight all the great opportunities and positive aspects of doing business in Mexico. It's truly a vibrant market with a lot to offer. I know whenever I've taken you or other team members down to Tequila, it's been a very, very positive experience. But there are cases where the reality in the ground is more complicated, and this is one of them. As with any major country, serious crime in Mexico tends to be concentrated in particular areas. So if you're unfamiliar with those hotspots, it's really hard to plan your travel and security effectively. The recent cartel designations have certainly upped the ante in terms of law enforcement attention, but that doesn't necessarily mean executives should be afraid to travel. It just means they need to be well informed and prepared. For example, executives should be very mindful of regional differences within Mexico. For example, visiting Mexico City or Querétaro or even Monterrey on business is generally a routine experience where you get to enjoy food and the business opportunities. These areas are considered relatively safe and are very accustomed to foreign business travelers. But sadly, traveling to other parts of Sinaloa, Michoacán, Tamaulipas or Guerrero might be a different story. Those states have known cartel strongholds and higher levels of risks. So we advise our clients to essentially overlay their travel plans on their risk assessments. If someone from your team is going to a higher risk area, that should trigger additional precautions, maybe professional security support, stricter travel protocols or even reconsidering if the trip is truly necessary. It's similar to visiting any major city anywhere in the world. You might avoid or be extra careful in neighborhoods with high crime rates. The key in Mexico is to capture the many benefits of doing business here while staying smart about where and how you operate, and to do that you need to be informed with people that can guide you in that process.

I actually wish that everyone that listens to this could visit and go down to Jalisco and visit Tequila. It's actually a very unique experience that is very tourist friendly and is very, very worthwhile. And I highly encourage everyone to doing so.

Oscar Alejandro Quiroz-Chávez: Yeah, and I think from a compliance perspective, traveling to Mexico on a business trip, it's just probably a few additional recommendations. I mean, the bottom line is you don't want to have any inadvertent interaction with any cartel-linked person or entity, right? So make sure, for instance, to know the agenda, know the people that you're going to meet in those events or business meetings. So there's no surprises that you're dealing now or in front of a person that you don't know or somehow represents a risk or a trap to your person or to your company, right? So you also should be briefed on the specifics or risk of the region that you are visiting. As we were mentioning, some of the major cities are, you know, pretty much safe. The problem may come or the risk may be higher if you're traveling to smaller cities that you have to take the road, and for those type of situations, it's of course recommendable to be informed in advance about safety conditions and so on. But so far, as long as you have your schedule well informed to the company, that the people in Mexico also can help you, I think you're going to be safe in traveling to Mexico for doing business.

Jessica Brown: And I guess what I'm hearing is that it's wise for traveling executives to take really the same approach that we've been counseling throughout this podcast in terms of knowing where your partners are, having eyes wide open. And to that and really try to document activities in the context that you made during the trip, if months later, for example, the company's hit with some kind of audit or regulator or a bank asks, hey, what were you doing in such and such a place? You want to have a clear record of where you went, who you met with, what business was discussed, kind of basic documentation. And I think overall for this particular segment, it's important to, again, just encourage our clients to feel safe, to reach out to us if we can help with the due diligence on the front end, the enforcement risk and any type of enforcement activity that could come about. We are there for our clients, and I think it's been really amazing and wonderful to work cross-border with both of you.

So Oscar and Alejandro, thank you so much for sharing your insights with our listeners. I think especially in sectors like agriculture that the opportunities for U.S. businesses in Mexico are as strong as ever. And the legal and compliance environment has changed. As we've discussed, the U.S. government is taking an aggressive stance, and what used to be considered best practice a few years ago has become an absolute necessity today. Having robust compliance and due diligence in place is no longer optional. It's really essential for anyone operating in or with Mexico.

Kristina Merritt: With that, we’ll wrap things up for this episode of our podcast.  If any of our listeners have ideas for an episode or if you might want to be a guest, we would love to hear from you. Thanks!