OFAC SDN List Removals; OFAC SDN List Designations

Earlier this week the United States Department of the Treasury Office of Foreign Assets Control (OFAC) made a number of removals from the OFAC SDN List, or the Specially Designated Nationals List. However, at the same time that OFAC was removing parties they were also designating new SDNs under both the Foreign Narcotics Kingpin Designation Act and the Iranian Human Rights Abuses Sanctions Regulations.

The newly designated Iranian SDNs were Mohammed Reza Naqdi, commander of Iran’s Basij force and Abbas Jafari Dolatabadi, Iran’s Prosecutor General. Both of the individuals are alleged to have been responsible for or complicit in serious human rights violations in Iran following the June 2009 election unrest.

The remaining designations were targeted against the alleged cocaine suppliers of the Sinaloa Cartel. These designations focused on Colombian national Jorge Milton Cifuentes Villa (a.k.a. Elkin de Jesus Lopez Salazar) and over 70 individuals and entities in Cifuentes Villa’s organization.

It is believed that the Sinaloa Cartel is headed by Joaquin Guzman Loera (El Chapo). Guzman Loera and the Sinaloa Cartel were previously designated by OFAC. This past November, both Cifuentes Villa and Guzman Loera, were indicted on drug trafficking and money laundering charges in the U.S. District Court for the Southern District of Florida.

According to OFAC, Cifuentes Villa owns or controls 15 companies operating in Colombia, Mexico, and Ecuador that are involved in a variety of economic sectors. Amongst these companies are Linea Aerea Pueblos Amazonicos S.A.S., a recently-created airline operating in eastern Colombia, Red Mundial Inmobiliaria, S.A. de C.V., a real estate company located near Mexico City, and Gestores del Ecuador Gestorum S.A., a consulting company located in Quito, Ecuador.

Since June of 2000 over 1,000 individuals and entities linked to drug kingpins named by the President and the Department of the Treasury have been designated pursuant to the Kingpin Act.

Penalties for violations of the Kingpin Act are severe and range from civil penalties of up to $1.075 million per violation to criminal penalties. Such penalties for corporate officers may include up to 30 years in prison and fines up to $5 million.

Due to the breadth of the sanctions, a number of these individuals may have been designated for merely assisting Mr. Cifuentes Villa. Such assistance could be as innocuous as owning shares in a company owned by him. In such cases, these designated parties would be considered as Tier II kingpins. The designation has the same effect, but is made in a different manner with consultation from different agencies than in the case of a Tier I designation. Having an attorney who knows the difference between the various types of Kingpin designations could be very useful for contesting an OFAC Kingpin designation.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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