OFAC Lifts Remaining Sanctions on the Cali Cartel

308 Cali Cartel Names Lifted from SDN List by OFAC

308 NAMES REMOVED FROM THE SDN LIST IN SINGLE LARGEST ACT OF DELISTING

OFAC announced today that it has removed the names of over 300 individuals and entities from the Specially Designated Nationals and Blocked Persons List (SDN List).  This action is the largest single delisting in the history of Treasury’s sanctions programs.  The removals follow the financial collapse of Colombia’s Cali Cartel, who were previously designated pursuant to Executive Order 12978 (1995).  Leaders Miguel and Gilberto Rodriguez Orejuela, however, remain on the SDN List and are currently serving 30-year prison sentences in the United States.

In its announcement OFAC reveals that the “primary goal for sanctions is behavioral change.”   The crippling economic impact of sanctions is believed to spur this change. This belief is consistent with the primary regulation governing delistings, 31 C.F.R. 501.807.  That regulation states that “[a] person may seek administrative reconsideration of his, her, or its designation . . . or assert that the circumstances resulting in the designation no longer apply.”  According to the Treasury, the persons delisted today “credibly showed that they have stopped engaging in sanctionable activities.”

How does one credibly show that they have stopped engaging in sanctionable activities?  The regulation sheds some light on the issue, but not much.  A person “may submit arguments or evidence that the person believes establishes that insufficient basis exists for the designation.  The blocked person may also propose remedial steps on the person’s part . . . which the person believes would negate the basis for designation.”  But the regulations don’t reveal the substance of what moves or compels the agency to delist a person.

Looking at today’s delisting, it appears that the passage of time helps.  The longer a person can demonstrate that they have reformed their conduct the better off they will be when challenging their designations.  The Cali Cartel was first designated in 1995, nearly 20 years before today’s mass-delisting.  Also, the terms of removal in this case were first agreed to in 2006.  Presumably the people removed today have spent the past 10 years demonstrating they were worthy of removal.

Credibility also matters.  It’s one thing for an SDN to say that they have changed.  It’s another thing altogether to reasonably believe that an SDN has changed.  Credibility in this case appears to have been bolstered by the extensive plea agreement reached between the U.S. Government, the Rodriguez Orejuela brothers, and the Colombian Government.  As part of the brothers’ guilty pleas, “28 of their family members who were previously designated . . . entered into an agreement with the U.S. Department of Justice and the U.S. Department of the Treasury in September 2006.”

For nearly 10 years, pursuant to this agreement, “the family members were obligated to sever all ties with narcotics trafficking, to identify all property financed in whole or in part with narcotics proceeds, and to relinquish these assets to the Colombian government.”  Most of the family members complied with the terms of the agreement, and those that didn’t were prosecuted by Colombian officials.

Having non-compliance met with local prosecution likely enhanced the veracity of the information these family members provided to the U.S. Government.  This additional layer of verification through threat of prosecution probably helped the U.S. Government determine that the information was indeed credible.  However, it still took nearly 10 years for the delisting to occur.

Anyone seeking to remove their name from the SDN List should anticipate that their request will be met with skepticism from OFAC.  Plan for this skepticism and make sure your arguments and evidence can be independently verified and presumed true.  Coordination with your local government, as was done here, may be one way to approach SDN List Removal.

Disclaimer: Blog posts should not be relied upon as legal advice and are only provided for informational purposes.  Information contained in blog posts may also become outdated with the passage of time as laws change and U.S. foreign policy and national security objectives evolve.