The Office of Foreign Assets Control (OFAC) and the Department of Treasury recently designated seven US companies owned or controlled by an international drug trafficking network known as Goldpharma. This organization, based in Buenos Aires, Argentina, utilized websites to distribute illicit opioids to buyers in the US and other countries. The companies were designated as significant narcotics traffickers under the Foreign Narcotics Kingpin Designation Act, also known as the Kingpin Act.
In recent years, OFAC has stepped up regulation of foreign narcotics traffickers, and the agency now typically designates entities under the Kingpin Act several times per year. To date, over 2,000 entities have been designated under the Kingpin Act. These designations are common because narcotic traffickers often seek to utilize the US financial system and economy, and the United States seeks to regulate their activities and prohibit the transfer of funds to further drug trafficking.
What is the Purpose of the Kingpin Act?
The Foreign Narcotics Kingpin Designation Act was passed in the Congress and signed into law in December of 1999. It allowed the Treasury Department to freeze the assets of various cartels and to prosecute Americans who would hold onto and transfer cartel money. The Kingpin Act also authorizes the government to designate and regulate persons and entities it believes are engaging in the distribution of narcotics and other drugs.
OFAC Designations and Sanctions
These sanctions are typically issued on individuals and entities engaging in drug trafficking, not on entire countries as a whole. The penalties of violations of the Kingpin Act include roughly $1.5 million of civil penalties per violation, and in certain severe cases, criminal penalties which include 30 years in prison and fines up to $5 million. Corporate fines can reach up to $10 million.
Let an Experienced OFAC Attorney Help with Compliance
Individuals and companies that do business internationally should take steps to be aware of updated designations. Because the penalties for sanctions violations can be severe, it is critical to ensure compliance programs and protocols are adequate. Failure to do so could result in blocked assets and fines.
A knowledgeable OFAC attorney could review or help draft an effective sanctions compliance program to avoid potential violations. An attorney could also help individuals and businesses seek and obtain any special licenses or permissions needed to conduct their transactions.