The Most Expensive Part of the Deal Was Not on the Term Sheet

In my experience across cross-border M&A transactions in Latin America and the Caribbean, pre-acquisition financial crime due diligence is consistently the most under-resourced component of deal due diligence. This is not a small company problem. It is often the largest, most sophisticated acquirers who leave this gap open longest.

The reasons are familiar. Deal timelines compress scope. Financial crime specialists are engaged late, if at all. There is a persistent assumption that post-close integration will surface any compliance issues missed pre-close. In my experience, that assumption has expensive consequences.

The specific legal risk is successor liability. Under the FCPA and US sanctions frameworks, an acquiring company does not just purchase the target’s assets. It inherits the target’s compliance history, third-party relationships, agent and distributor networks, and ongoing regulatory exposure. The DOJ’s M&A Safe Harbor Policy provides meaningful protection for acquirers who conduct thorough pre-acquisition due diligence and promptly disclose issues found. It provides considerably less for those who did not look. What seems like a manageable integration issue at signing can become an enforcement matter after closing, with the acquirer now the named party.

In Latin America and the Caribbean, the risk profile has changed materially. The DOJ’s June 2025 enforcement guidelines explicitly prioritize FCPA cases with connections to cartels and transnational criminal organizations. The November 2025 TIGO Guatemala resolution illustrates why: a bribery scheme involving Guatemalan legislators where payments were funded in part by laundered narcotrafficking proceeds. An acquirer inheriting that kind of third-party exposure is not facing an isolated FCPA problem. It is facing FCPA, AML, and potentially terrorism financing liability simultaneously. Standard pre-acquisition screening rarely surfaces this. Understanding the underlying transaction structure does.

The highest-fee engagements I have worked on in my career were not fraud investigations. They were remediation projects for companies that closed deals without understanding what they were inheriting. Financial crime due diligence is not a post-close integration task. It is a pre-close risk assessment that determines what you are actually buying.

If you are approaching a cross-border acquisition in Latin America, the Caribbean, or any high-risk jurisdiction and financial crime due diligence is not explicitly scoped pre-close, the gap will not close itself after signing.