Lost in all the hype surrounding the passive ING Bank settlement yesterday, was that the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued one new designation under the Foreign Narcotics Kingpin Designation Act (Kingpin Act) and released nearly two dozen SDNs from the Specially Designated Nationals List (SDN List) pursuant to anti-narcotics trafficking sanctions. The individual who was designated, Francisco Antonio Colorado Cessa, was also indicted by a federal grand jury in the Western District of Texas for involvement in a money laundering scheme on behalf of Las Zetas that involved purchasing, breeding, training, and racing American quarter horses in the United States. The indictment was returned on May 30, 2012; however, it was not unsealed until yesterday. The indictment also charges 14 other individuals for involvement in the conspiracy.

OFAC does not always rely on the returning of an indictment to designate a party under one of the sanctions programs they administer. Moreover, there are different burdens of proof for indictments, criminal convictions and OFAC designations. For an indictment to be returned the grand jury only must find that there is probable cause to charge the party or parties being investigated by the grand jury. As most people know, for a criminal conviction the charges have to be proven by the government beyond a reasonable doubt. However, for an OFAC designation, OFAC only needs a reasonable cause to believe that the party they seek to designate is involved in some activity for which one of their sanctions programs permits designation.

There have been a large number of removals from the OFAC SDN List this year. However, the overwhelming majority of those removals have been related to counter narcotics trafficking. This may be because the majority of designations are made pursuant to OFAC’s counter narcotics trafficking sanctions, or because the Office of Global Targeting’s focus is placed more firmly upon those types of designations. An additional consideration, however, could be the fact that many of those designated find themselves also charged with narcotics and money laundering criminal violations in the U.S. and may cooperate with the government in exchange not only to reduce their potential sentence but also to have their names removed from the OFAC SDN List. This is a tactic that has previously been utilized by a few criminal defense attorneys with some modicum of success.

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.