Corruption has been a central focus of due diligence efforts in Latin America. Traditional assessments often concentrated solely on bribery allegations, political exposure, public procurement irregularities, and regulatory enforcement actions. While these remain important considerations, the region’s risk landscape has evolved in such a way that a broader and deeper assessment is required to ensure accuracy and completeness in determining all relevant concerns surrounding a company or individual of interest.
Organizations operating in or investing across Latin America face a growing convergence of corruption, money laundering, organized crime, and transnational criminal networks. Increasingly, enforcement authorities and compliance professionals are examining not only whether the subjects themselves have been implicated in corruption, but whether any of their business relationships and affiliated transactions may expose them to criminal risks. The U.S. Department of Justice’s June 2025 memorandum on FCPA enforcement reflects a sharpened U.S. focus on corruption-related misconduct that leverages money laundering networks, shell company structures, and transnational criminal organizations (TCOs), including where bribery schemes rely on money launderers, shell companies, or other financial facilitators used by cartels or TCOs. The memorandum specifically identifies as a primary enforcement consideration whether the alleged misconduct (1) is associated with the operations of a cartel or TCO, (2) utilizes money launderers or shell companies that launder funds for those organizations, or (3) involves foreign officials or employees of state-owned enterprises who have received bribes from such groups.
This shift reflects a wider trend across the region. Organized criminal groups have expanded beyond traditional drug trafficking activities into sectors including logistics, mining, construction, customs operations, and transportation. As a result, companies may encounter risks that are not immediately visible through limited research. Ideal and thorough due diligence now requires a deeper understanding of – and experience with – ownership structures, local political dynamics, individual sources of wealth, and potential connections to illicit networks to correctly map the wider ecosystem of potential illicit finance exposure around a company or individual. (Secretariat)
Systemic Corruption and Bribery Risks in Latin America
One case that illustrates how major corruption investigations evolve over time is the Odebrecht scandal in Peru. As many are aware, the wider Odebrecht affair, involving a Brazilian construction conglomerate that admitted in 2016 to paying large bribes across Latin America to secure public contracts, began as a relatively contained bribery and procurement case. In Peru, what first appeared to be a conventional bribery scandal grew into one of the country’s largest anti‑corruption investigations, as prosecutors spent years arresting and charging numerous individuals – including former presidents, senior government officials, and business professionals and consultants – while tracing hidden payments through shell companies, offshore vehicles, and complex financial structures. The investigation ultimately implicated multiple former heads of state and continued to generate major headlines nearly a decade later, including the October 2024 conviction of former Peruvian President Alejandro Toledo and the 2025 money-laundering conviction of former Peruvian President Ollanta Humala. These outcomes show how an initial, seemingly mundane and focused bribery probe can evolve into a more far-reaching and expansive inquiry. For due diligence professionals, the lesson is that corruption cases – not only in Latin America or worldwide – often expose deeper issues involving ownership structures, third parties, and the movement of funds through complex networks, possibly on a global scale.
“The fight against narcotrafficking in the past is equivalent to the fight against corruption today. In those days, when we fought the cartels, judges were kept anonymous for their protection. Today the most important tool is an independent judiciary. Latin America has been the perfect theater to politicize justice because politics in the region has become a business…. There exist new forms of corruption that are a lot more sophisticated than in the past, and we need to respond with adequate tools and policies at the local and international levels. Corruption in the region is a transnational organized crime operation, on top of the domestic cases happening in our countries.”
~ Fernando Carrillo, Former Colombian Inspector General (2017-2021), Americas Quarterly
Evolving Due Diligence in Latin America: Beyond Basic Checks
In the past, a due diligence review might have been enough with just the following focus:
- Has the subject been accused of bribery?
- Is the individual a politically exposed person (PEP)?
- Has the subject been involved in a corruption scandal?
- Has the subject faced any regulatory scrutiny?
While these questions remain important, the following questions should be addressed to obtain a more complete and accurate picture:
- Who really owns the company?
- Where did the individual’s wealth and/or the company’s revenue come from?
- Are there ties to sanctioned parties or criminal organizations?
- Is the subject operating in sectors vulnerable to illicit activity (i.e., mining, logistics, customs, cash-intensive businesses)?
- Are third parties, agents, or intermediaries creating any hidden risk?
- Could there be money laundering concerns even if there are no obvious allegations?
Drivers of Shifting Latin America Risk Assessments:
- Criminal organizations are increasingly infiltrating legitimate businesses. Criminal groups often use real companies to move money, win contracts, acquire assets, or disguise illicit proceeds. In March 2026, Chilean prosecutors secured convictions against 34 members of Venezuelan criminal organization Tren de Aragua’s “Los Gallegos” cell after a multi‑year investigation that treated the group as a financial enterprise as much as a violent gang. Authorities traced proceeds from extortion and human trafficking through front companies and businesses that were allegedly used to disguise or move illicit funds, alongside shell entities and cross-border financial transfers. The case illustrates how criminal organizations can exploit commercial structures and business transactions to conceal illicit proceeds, reinforcing the importance of scrutinizing counterparties, ownership structures, and transactional patterns during due diligence.
- Regulators are taking a broader view of risk. Authorities increasingly look at corruption, money laundering, sanctions, fraud, and organized crime as interconnected issues rather than separate concerns. In September 2025, Brazilian authorities launched one of the country’s largest anti‑money laundering operations against the Primeiro Comando da Capital (PCC), focusing on its financial infrastructure rather than solely its drug-trafficking activities. Investigators alleged the group laundered approximately USD 10.2 billion through fuel distributors, gas stations, investment funds, fintech companies, and shell entities, where authorities seized more than USD 235 million in assets. Investigations continued into 2026, with prosecutors expanding efforts to dismantle the group’s financial networks.
- Investors want to avoid reputational surprises. A company may have no apparent corruption ties or allegations but still present significant risk if key stakeholders have ties to criminal networks or unexplained wealth. Even without corruption allegations, investors face material risk if key stakeholders are tied to criminal networks, unexplained wealth, or opaque structures, as these links can trigger enforcement, media scrutiny, or sanctions.
As Latin America’s business environment continues to change and evolve, due diligence efforts must adapt and evolve to remain effective and beneficial. For investors, lenders, and multinational corporations, the lesson is clear: the most ideal and complete due diligence today extends beyond identifying corruption allegations against just the subjects themselves. It requires a deeper understanding of the whole ecosystem of relationships, influence, and financial activities surrounding a potential business partner or investment target. The question is no longer simply whether corruption exists; it is whether it – or even the suspicion of such activity – may serve as an entry point to larger, more serious risks.