Yesterday, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) made its first mass designations under the Transnational Criminal Organizations (“TCO”) Sanctions. This is inline with statements made by a senior OFAC official last week at the OFAC International Trade Symposium who said that we would soon be seeing OFAC becoming increasingly active in their administration of these sanctions.

These designations pertained to alleged members of both Yakuza and Brother’s Circle, two organizations that were previously designated under the TCO Sanctions. Both organizations have been alleged of engaging in a variety of criminal activities ranging from narcotics trafficking to complex fraud schemes. The designations of alleged specific members of these organizations will likely carry much of an impact that then the designation of the organization’s themselves for two reasons. First, it is unlikely that a criminal organization is going to use the name they are commonly referred to by law enforcement and the public at large. Second, in my experience it seems that the designation of individuals can be significantly more detrimental to the targeted parties, particularly in nations where the majority of financial institutions are owned by U.S. parent banks or even Western banks.

Designations of individuals and entities under the TCO Sanctions are made pursuant to Executive Order 13,581. This executive order is made pursuant to the President’s authority in the International Emergency Economic Powers Act (“IEEPA”). As such, the standard methods, outlined at 31 CFR 501.807, for requesting a reconsideration of such a designation apply. Unlike Kingpin designations, however, IEEPA does not prohibit disclosure of records under the Freedom of Information Act (“FOIA”). As such, those designated under IEEPA are in a better position to obtain information related to the designation than would be the case under other types of designations.

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.