Yesterday, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated four individuals it believes are materially assisting the activities of a significant foreign narcotics trafficker under the Foreign Narcotics Kingpin Designation Act (Kingpin Act). As a result of these designations the four targeted individuals will have all assets under U.S. jurisdiction frozen and U.S. persons will be prohibited from engaging in most transactions with them.

The four individuals designated by OFAC were: Ovidio Guzman Lopez, Ivan Archivaldo Guzman Salazar, Ovidio Limon Sanchez, and Noel Salgueiro Nevarez. These individuals are alleged to serve as Sinaloa Cartel operatives with ties to Joaquin Guzman Loera, a Tier I Kingpin, who was designated as a Kingpin on June 1, 2001. Two of yesterday’s designations targeted Guzman Loera’s sons, Ovidio and Ivan Archivaldo. The other two individuals designated yesterday are already in the custody of Mexican authorities.

Kingpin designations are severe and can disrupt a target’s life significantly. Not only does it block the assets of the targeted party under U.S. jurisdiction, many financial institutions in other countries follow the designations OFAC makes and block targeted parties’ accounts in the same manner required by U.S. depository institutions. This is despite the fact that they are not required to do so by their own countries’ laws. In particular, I have seen cases where Mexican banks have suspended access to or blocked accounts of Mexican nationals designated under U.S. sanctions programs. This wreaks havoc on the targeted parties ability to provide for their own well-being unless they maintain large sums of cash outside of their bank accounts.

There is a process to remove an OFAC SDN Designation, however, it is a very long process. The average OFAC reconsideration case that we have seen take about 3 to 4 years to be resolved and require the production of numerous documents to show that either the designation was made in error or circumstances have changed to such a degree that the designation is no longer applicable. In either scenario, removing an OFAC SDN designation is not easy and takes time.

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.