The United States Department of the Treasury Office of Foreign Assets Control (OFAC) has designated a number of individuals and entities as Specially Designated Nationals (SDNs) and placed them on a blacklist which freezes their assets and prohibits U.S. persons from engaging in transactions with them.

Of the parties designated, one was Jorge Luis Llanos Gazia. His designation resulted due to his alleged support for and actions on behalf of the Sinaloa Cartel and previously-designated SDNT Agustin Reyes Garza (a.k.a. “Don Pilo”). OFAC previously designated Mexican national Agustin Reyes Garza as an SDNT on December 15, 2009 due to his alleged support of the narcotics trafficking activities of Sinaloa Cartel.

According to OFAC, Llanos Gazia has provided services in support of the narcotics trafficking activities of the Sinaloa Cartel and Reyes Garza. Llanos Gazia, born in Cali, Colombia has obtained Mexican citizenship and is also recognized as a national of Italy. Llanos Gazia was previously imprisoned in the United States for a conviction on federal cocaine trafficking charges. It is believed that after completing his sentence in 1995, Llanos Gazia moved to Mexico and eventually resumed his involvement in narcotics trafficking activities.

Also designated today are two Mexican companies owned and/or controlled by Llanos Gazia. Audio Alarmas, S.A. de C.V., an alarm system company, and Basaltos Tonala, S.A. de C.V., a construction materials company, were both designated by OFAC. Both companies are located near Guadalajara, Mexico.

In addition to the aforementioned parties, two Iranians living in Germany, and an entity they are associated with, were also designated due to their alleged connection to the Afghan drug trade. Alleged Iranian narcotics trafficker Bahram Ali Shayesteh is accused of being involved in millions of dollars of transactions with Afghan narcotics traffickers. According to OFAC, Shayesteh has facilitated the exportation of thousands of kilograms of crystal grade heroin out of Afghanistan and has been responsible for providing hundreds of liters of heroine precursors to Afghan narcotics traffickers.

Shayesteh serves as the managing director and 70 percent owner of Intercontinental Baumaschinen und Nutzfahrzeuge Handels GmbH, a Germany-based industrial transportation company which was also designated. OFAC went a step further and designated Shayesteh’s wife, the Chief Executive Officer and 30 percent owner of Intercontinental Baumaschinen und Nutzfahrzeuge Handels GmbH, for acting for or on behalf of her husband and Intercontinental Baumaschinen und Nutzfahrzeuge Handels GmbH.

The bad news for these parties is that their designation is going to serve as a type of economic death penalty. It will be very difficult for these designated parties to engage in transactions through legitimate and traditional financial channels as a result of the SDN designation. The good news is that there is an administrative process through which to challenge this designation. Although it does take time and the proceedings can be complex, OFAC SDNs are removed from time to time. Indeed, today OFAC removed a number of SDNs from the OFAC SDN List. Most notable of these was the Bank of Khartoum, which was previously designated under the Sudan sanctions program.

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.

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