Today, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced a host of new designations pursuant to the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”), as well as a number of removals from that OFAC SDN List of those formerly designated under the Kingpin Act and Executive Order 12978. This action included the designation of ten (10) individuals and nine (9) entities and the removal of thirty four (34) individuals and entities. While those removed from the OFAC SDN List today were done for a variety of reasons, the designations that were made were part of an effort by OFAC to target the financial network of the Sinaloa Cartel and it’s alleged leader “El Azul”.

It’s obvious that OFAC does indeed remove those designated under their sanctions programs from the list. This is especially true when dealing with anti-narcotics sanctions designations made under the Kingpin Act and Executive Order 12978. Whether these designations are more frequently contested by the designated parties under OFAC’s administrative reconsideration process is unclear; however, it is clear that the counter narcotics subset of the OFAC SDN List is very fluid with frequent and large scale additions and frequent and large scale deletions of both individuals and entities.

While I applaud OFAC on taking the time to review and remove those designated if the circumstances no longer warrant the designation, the fluidity described above in the counter narcotics programs can be problematic for OFAC compliance personnel. Lots of new names appearing frequently on the SDN List means that more checks have to be made by compliance personnel and that there are more potential connections to other companies that they must be concerned about. This is particularly true in countries such as Mexico and Columbia in which there are residing or present a large number of individuals and entities designated on the OFAC Kingpin List. For compliance personnel all over the world, but especially in those countries, these frequent designations create a constant stream of work…and potential headaches.

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.