Yesterday, President Obama issued an executive order which imposes sanctions upon transnational criminal organizations. Among those organizations targeted for sanctions are the Brothers’ Circle, Los Zetas, Yakuza, and Camorra. This is the third time this year President Obama has imposed an entirely new category of sanctions. The first two sets of sanctions issued by President Obama in 2011 targeted Libya and Syria respectively.

The Transnational Criminal Organization sanctions is a targeted sanctions program which means that it targets specific organizations and could possibly be expanded in the future to include individuals. Moreover, this new sanctions program is a blocking program. Therefore, any transaction in which these organizations have an interest is automatically blocked. For example, if some U.S. person was to export tires to Camorra and there was a funds transfer from Camorra to that U.S. person, a U.S. bank would be obligated to blocked the transfer and place the funds into an interest bearing account until such time as the blocked party was either no longer blocked or no longer maintained an interest in the funds.

I guess the obvious question here, however, is what transnational criminal organization is actually going to use its commonly known name? How many bank accounts in the U.S. are held in the name of Los Zetas or Yakuza? Surely, OFAC will enforce the sanctions against U.S. persons who knowingly or should have known that their transactions would benefit one of these designated organizations, however, how readily available is such information going to be to U.S. persons?

Another question that came to mind when I initially looked at this executive order was what constitutes a “significant transnational criminal organization”? As I read further, I found that President Obama answered that question in Section 3(e) of the executive order. That section defines a significant transnational criminal organization as one “that includes one or more foreign persons; that engages in an ongoing pattern of serious criminal activity involving the jurisdictions of at least two foreign states; and that threatens the national security, foreign
policy, or economy of the United States.”

All I can is that I hope they are hiring over at OFAC. President Obama’s penchant for issuing sanctions has to be putting the agency under a tremendous amount of pressure in every phase. New sanctions mean new questions for the compliance division; new licensing and interpretative requests for the licensing division; more work investigating and penalizing in the enforcement division; and more investigations into the activities of blocked parties and those that support them for the designations investigations division. If you thought the current backlogs at OFAC were bad, its my guess that they are only going to get worse.

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.