Daniel and Sombra Negra
We always knew that Daniel did bad things while in the army. In this episode we discover what's exactly he did. He was a member of Sombra Negra (Black Shadow) which was a real organization in El Salvador, and still exists to this day.
Members of Sombra Negra were Police officers and Military personnel who got fed up with high crime rate and decided to take matters into their own hands. So, they formed a vigilante group that went after hardened criminals and gang members. That would make them (Daniel included) good guys, right?
The only problem with SN was the way they killed those criminals - they tortured them first. This detail is probably what's bothering Daniel so much that he kept asking people for forgiveness throughout the episode.