Last week the Government Accountability Office (“GAO”) published an interesting report on the Foreign Terrorist Organization (“FTO”) designation process. It’s rare to get a glimpse into the actual process of imposing sanctions so we were pretty excited to see this come out. While the report’s use is somewhat limited given the focus on FTOs, it’s safe to assume that the process is not fundamentally different across agencies.

FTO designations are handled by the State Department pursuant to the § 219 of the Immigration and National Act (“INA”) as amended by § 302 of the Antiterrorism and Effective Death Penalty Act of 1996 (8 U.S.C. § 1189). State follows a six-step process in determining whether an FTO designation is warranted.

• First, they conduct an equity check with other agencies to ensure that there are no reasons to delay a designation.
• Second, State compiles an administrative record consisting of both classified and open source information that serves as the evidence behind a designation.
• Third, the Department of Justice and Treasury review the administrative record and provide their approval through letters of concurrence.
• Fourth, the Secretary of State makes a final decision on whether to issue a designation. Fifth, pursuant to §219(a)(2) of the INA (8 U.S.C. § 1189(a)(2)), State notifies Congress 7 days before a formal designation.
• Last, an official designation notice is published in the Federal Register.

It’s a bit disappointing that GAO’s report focuses exclusively on the FTO process, given that FTO designations are relatively rare when compared to SDN listings. As noted, in footnote 8 of the report hints that while the process for terrorism designations under Executive Order 13324 is “somewhat similar” to an FTO designation, they are not the same. More importantly, the vast majority of SDN listings as a whole run through Treasury rather than State.

Furthermore, given the nature of the FTO target set, there are far fewer due process concerns involved in these designations when compared to other programs. For the past three fiscal years, Treasury’s Office of the Inspector General has claimed that assessing OFAC’s management of the SDN List and reviewing listing/delisting procedures is on its to-do list. As we’ve yet to see any result of these efforts, it would have been nice of Congress to instruct GAO to take a broader look at designations across the U.S. government.