The United States Department of the Treasury Office of Foreign Assets Control (OFAC) has designated an incredible fifty four (54) individuals under the Foreign Narcotics Designation Act (“Kingpin Act”). This action was taken following  last Tuesday’s U.S.-Mexico Merida High Level Consultative Group meeting in Mexico City.

According to OFAC, these individuals represent principal lieutenants and enforcers for Mexico’s Gulf Cartel and Los Zetas –groups that are accused of being responsible for much of the current violence in Mexico. These designations represent an increasingly utilized U.S. strategy to fight Mexican drug trafficking organizations using economic sanctions. Any U.S. person or company, no matter where they are located, are prohibited from conducting financial or commercial transactions with any of these recently designated individuals.

OFAC alleges that many of the newly designated individuals maintain control over drug trafficking activities in cities and towns throughout Mexico, but particularly in the Mexican states of Tamaulipas and Nuevo Leon. A number of these individuals have also been indicted in the U.S., including Jaime Gonzalez Duran, Samuel Flores Borrego, Mario Ramirez Trevino, Alfredo Rangel Buendia, Gilberto Barragan Balderas, Juan Reyes Mejia Gonzalez, Omar Trevino Morales, Jesus Enrique Rejon Aguilar, Eleazar Medina Rojas, Aurelio Cano Flores, Sigifredo Najera Talamantes, Dimas Gonzalez Rodriguez, Victor Manuel Vasquez Mireles, and Rogelio Gonzalez Pizana.

The Gulf Cartel is said to be responsible for smuggling and distributing significant amounts of drugs, such as cocaine and marijuana, into the U.S. Traditionally, Los Zetas had served as the enforcement arm of the Gulf Cartel, however, they are now believed to operate independently and are seeking control over certain drug routes.

U.S. persons engaged in transactions with individuals designated pursuant to the Kingpin Act can be penalized under U.S. federal law. Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals face up to 10 years in prison for criminal violation of the Kingpin Act and fines pursuant to Title 18 of the United States Code.

The penalties associated for dealing with those designated under the Kingpin Act are severe. If you have engaged in such transactions you need to retain counsel familar with OFAC and the Kingpin Act to learn how to mitigate any proposed penalties. Furthermore, if you are an individual effected by these designations, you have rights to contest the designation. Contact a lawyer who is familiar with OFAC SDN removal procedures and start the process of freeing yourself from the SDN list.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 at 202-351-6161 or ferrari@ferrari-legal.com.