As I have noted numerous times on this blog not all designations made under the Foreign Narcotics Kingpin Designations Act (“Kingpin Act”) are not the same. There are two tiers of parties designated under the Kingpin Act; namely, Tier I Kingpins and Tier II Kingpins. Tier I Kingpins are those parties identified by the President of the United States that are deemed to be the significant foreign narcotics trafficker. Tier II Kingpins are those parties designated by the United States Department of the Treasury as parties providing assistance or support to the narcotics trafficking activities of a significant foreign narcotics traffickers (i.e., a Tier I Kingpin).

Both designations, the Tier I Kingpin and the Tier II Kingpin, carry the same consequences of resulting in the blocking of all assets falling under U.S. jurisdiction during the pendency of the designation and a prohibition on U.S. persons dealing with the designated party. So what’s the significance of the designation? Well there are a couple of differences from a procedural viewpoint, but the one which I intend to highlight in this posting is of the delegation of authority from the President to Treasury in order make a decision on whether a Tier I Kingpin designation should be sustained or rescinded pursuant to a request for reconsideration of that designation made in accordance with 31 C.F.R. 501.807.

In cases, where Treasury, and more specifically, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) is to make a decision on the reconsideration request of a Tier I Kingpin, the President of the United States must actually delegate the authority over to OFAC to make that decision. In other words, there is no blanket delegation of authority over to OFAC from the beginning of the process, but rather it occurs shortly before OFAC renders a decision on the reconsideration request. This delegation is published in the Federal Register and typically comes a few weeks prior to the decision on the reconsideration request.

The point here is that when you are dealing with a process as opaque as the one surrounding removal from the OFAC SDN List, its wise to pay attention to the Federal Register. There always seems to be tidbits of information in there that don’t necessarily show up on the OFAC website which may be useful in addressing an OFAC SDN reconsideration matter. For example, if you see a delegation of authority from the President to OFAC under the Kingpin Act, it may mean a decision on a Tier I designation is forthcoming. While it doesn’t mean the reconsideration is going to be accepted, it does offer some comfort in knowing that a decision will be made.

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@ferrariassociatespc.com.