During his address to a joint session of Congress, President Trump made a powerful declaration: “Two weeks ago, I officially designated [Tren de Aragua] — along with MS-13 and the ruthless Mexican drug cartels — as foreign terrorist organizations. They are now in the same category as ISIS, and that’s bad news for them.” These actions have set the stage for financial warfare against the international drug cartels.
His first major action last month, an executive order designating international drug cartels as foreign terrorist organizations, was followed last week by the identification of the first six cartels to be designated, four of which are based in Mexico. Trump also issued a National Security Presidential Memorandum to intensify sanctions against Iran — highlight a growing reliance on economic measures to target adversaries.
The goal is clear: Use unrestricted financial warfare to disrupt criminal and terrorist networks, whether they be cartels, rogue regimes or state sponsors of terror. But while these policies signal strong intent, one question remains: Can the U.S. government enforce them effectively? A solution exists that could massively amplify government efforts by encouraging private parties to bring civil lawsuits against sanctions violators, borrowing a strategy called “qui tam” that has been very successful in other areas of law.
A qui tam provision, derived from the False Claims Act, empowers private individuals to sue violators on behalf of the U.S. government and claim a portion of the penalties collected. This system has proven effective in combating fraud against government programs, particularly in health care and defense contracting. Extending qui tam to sanctions enforcement could create a powerful market-driven incentive structure, allowing private actors — such as whistleblowers, investigative firms and compliance professionals — to pursue sanctions violators aggressively.
Instead of relying solely on under-resourced government agencies, the U.S. could deputize an army of motivated litigants to expose and punish violators. While the U.S. should effectively resource sanctions enforcement, the time and resources that it would take to ramp up such enforcement actions across the board already exist in the private sector.
Sanctions are only as powerful as their enforcement. Over the past decade, the U.S. has dramatically expanded its reliance on economic tools of statecraft, targeting multiple state and non-state actors. Despite this expansion, enforcement mechanisms have struggled to keep pace.
The Treasury Department, State Department, Department of Justice, Department of Commerce and other agencies lack the capabilities to track and penalize every violator in an increasingly complex global financial system. The administration may have the will to impose sanctions aggressively, but without significant enhancements in enforcement and greater resources, their real impact will remain limited.
Consider Iran. Despite extensive restrictions imposed on Iran for decades, Tehran has successfully circumvented sanctions through a sophisticated network of front companies, illicit oil sales and international financial loopholes. Reports indicate that, between January 2021 and today, Iran’s oil revenue has exceeded $100 billion — far surpassing the $54.7 billion to $61 billion it would have faced under the previous “maximum pressure” campaign.
These funds help finance Iran’s proxy groups, including Hamas and Hezbollah, which have contributed to significant destabilization in the Middle East. The Oct. 7 Hamas attack, for example, was fueled by Iran’s financial and logistical support, which U.S. sanctions were supposed to curtail.
Similarly, drug cartels have developed intricate methods to evade sanctions, launder funds and continue their operations. The recent executive order designating cartels as foreign terrorist organizations aims to disrupt their financial networks by imposing stricter sanctions and enabling more aggressive enforcement actions. However, history shows that banks and financial institutions have repeatedly failed to prevent cartel-linked money laundering.
In 2010, Wachovia Bank (now part of Wells Fargo) was fined $160 million for laundering billions for Mexican drug cartels. HSBC Bank USA faced a record $1.9 billion fine in 2012 for failing to implement anti-money laundering controls, allegedly allowing at least hundreds of millions to flow to the Sinaloa and Norte del Valle cartels. More recently, in 2024, TD Bank agreed to pay $3 billion to settle charges related to failures in monitoring money laundering activities tied to drug cartels. These cases illustrate how cartels exploit weaknesses in the U.S. financial sector and international financial system to sustain their operations.
Despite repeated congressional calls for stronger enforcement, the federal government has failed to sufficiently disrupt these financial flows. If the government alone cannot enforce its own sanctions effectively, it should enlist help from the private sector.
A qui tam approach could address key weaknesses in the current enforcement regime. Iran’s sanctions evasion heavily relies on oil tankers operating through opaque maritime networks, often using tactics like ship-to-ship transfers and fraudulent paperwork. If private actors were financially incentivized to track and report these operations, enforcement could become significantly more effective. Similarly, banks and financial institutions that knowingly facilitate sanctions would face increased scrutiny and financial risk.
The global financial system is vast and intricate, with violators constantly adapting to evade detection. A decentralized, incentive-based enforcement mechanism could ensure that the private sector and NGOs remain active participants in rooting out collusion and illicit activities, rather than merely relying on government audits and occasional high-profile prosecutions.
Additionally, the proposal could include expanded asset forfeiture provisions and whistleblower rewards, enabling both government and private-sector enforcers to seize assets linked to sanctions violations. Whistleblowing provisions under the Anti Money Laundering Act enacted in 2021could be applied to help shield whistleblowers from retaliation.
By incorporating sanctions-related offenses into existing forfeiture statutes, enforcement could not only become faster but also more financially self-sustaining. Seized assets, such as illicit oil shipments or frozen bank accounts, could be repurposed to fund future enforcement efforts.
Sanctions can be powerful, but only if they are truly enforced. If the U.S. is serious about using economic pressure to combat cartels, rogue states and terrorist organizations, it must move beyond government bureaucracy and embrace a market-driven approach.
A qui tam provision could be a major step in that direction — one that aligns with America’s tradition of leveraging private enterprise to achieve public policy goals. It’s time to stop letting sanctions violators operate with impunity and start making enforcement profitable.
Matt Zweig is senior policy director at Foundation for Defense of Democracies Action. He previously served in roles on Capitol Hill and at the U.S. State Department. Elaine Dezenski is senior director and head of the Center on Economic and Financial Power at the Foundation for Defense of Democracies.