OFAC SDN Designations and Removals in Light of OFAC’s Budget Considerations

Today the United States Department of the Treasury Office of Foreign Assets Control (OFAC) designated a number of individuals and entities pursuant to the Foreign Narcotics Trafficking Kingpin Designation Act (Kingpin Act). In addition to these designations, OFAC also removed a number of individuals and entities, most of which had been designated under the Columbia counter narcotics trafficking sanctions. As with all Kingpin Act designations, U.S. persons are prohibited in engaging in almost all forms of transactions with designated parties.

Today’s designation included four individuals and 12 entities with ties to designated Colombian national Jorge Milton Cifuentes Villa and other previously designated individuals or entities. The four individuals designated today are Colombian nationals Mauricio Barcenas Rivera, Omar Mejia Zuluaga, and Ana Maria Uribe Cifuentes and dual Uruguayan/Ecuadorian national Jesus Maria Castro. The 12 companies designated today are located in Colombia, Ecuador, Mexico, Panama, and Uruguay. Included among them are the Colombian entities AS Inversiones S.A. and T & T Andina S.A., which operate gas stations, and a Uruguayan cattle company, Genetica del Sur S.A.

According to the United States government Jorge Milton Cifuentes Villa is the head of a drug trafficking and money laundering organization closely allied with Joaquin Guzman Loera (Chapo Guzman), the alleged leader of the Sinaloa Cartel. Jorge Milton Cifuentes Villa was designated as an SDNT by OFAC in February 2011.

Guzman Loera and the Sinaloa Cartel were identified as drug kingpins pursuant to the Kingpin Act in 2001 and 2009, respectively. Both of these individuals were indicted on drug trafficking and/or money laundering charges in the U.S. District Court for the Southern District of Florida in November 2010. In February 2011, Jorge Milton Cifuentes Villa was also indicted on drug trafficking charges in the U.S. District Court for the Southern District of New York.

It may interest some to know that OFAC outsources some of their designation investigations matters to private government contractors. This is problematic as it puts very serious government matters into the hands of corporate entities whose primary objective is financial gain. It is not that I doubt the ability of such contractors to carry out thorough investigations, however, there is certainly an incentive for these parties to drag on investigations as they will profit financially from it. Also, the more designations that take place, the more need for private contractors to carry out investigations there is. In sum, there is certainly a financial incentive for private contractors to keep the designations coming and to delay investigations of designations.

The question, however, is how do you do away with the need for contractors in these types of matters in light of OFAC’s shoe string budget? If ever there was a federal agency in need of additional funds it is OFAC, or more accurately, the Treasury’s Office of Terrorism and Financial Intelligence. Until Congress authorizes more funding for this agency, the delays at OFAC we are currently seeing are unlikely to disappear and are likely to become worse.

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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