On December 15, 2021, President Biden issued Executive Order 14059, “Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade” (“EO 14059”) aimed at addressing the trafficking of illicit drugs, including the illicit production, global sale and widespread distribution of drugs, in the United States. A press release issued by the Treasury Department explained that the additional authority under EO 14059 builds on the Treasury’s previous sanctions authorities, i.e., in Executive Order 12978 (which also targets narcotics traffickers) and the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”). The Kingpin Act has acted as the primary authority for counter narcotics sanctions since it was enacted over 20 years ago, but in a White House press release, a senior official of the Biden Administration stated that the “new EO will give Treasury greater flexibility, speed and power to sanction those within the global drug trade,” as the nature of drug trafficking has changed and requires modern tools to combat transnational criminal groups and international drug traffickers. The State Department also issued a press release regarding these developments, available here.
EO 14059 authorizes the US Treasury Department, in consultation with the US Department of State, to sanction foreign persons found to fall within the following:
- Parties which have engaged in, or attempted to engage in, activities or transactions that materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs, including the facilitation of their production;
- Parties who knowingly received any property or interest in property known to constitute or derive from illicit activities or transactions, or parties who were used or intended to be used to commit or facilitate activities or transactions, that have materially contributed, or posed a significant risk of materially contributing to, the international proliferation of illicit drugs, including the facilitation of their production;
- Parties who provided, or attempted to provide, financial, material or technological support for, or goods or services in support of, any person described in 1 and 2 above or any sanctioned person;
- Parties determined to be or to have been a leader or official of any sanctioned person or any foreign person in any activity described in 1 and 2 above; and
- Parties owned, controlled, or directed by, or to have acted or purported to act for or on behalf of, directly or indirectly, any sanctioned person.
As a result of designations under EO 14059, “US Persons” (i.e., (i) US citizens and permanent residents, wherever located or employed; (ii) entities organized under the laws of the United States and their non-US branches, including through acts of their employees; and (iii) any individual or entity acting through an employee physically located in the United States, even temporarily) are prohibited from directly or indirectly dealing with or facilitating virtually any transactions with such designated parties as well as any entities 50% or more owned by one or more SDNs. Any property and interests in property of such parties must also be blocked (or “frozen”) if they come within the United States or the possession or control of a US Person, including but not limited to a US financial institution clearing or otherwise handling US dollar transactions that involve these SDNs.
In addition to the issuance of EO 14059, one individual and seven entities were added the Specially Designated Nationals and Blocked Persons List (“SDN List”) maintained by the Office of Foreign Assets Control (“OFAC”), appearing under the [ILLICIT-DRUGS-EO] tag created by EO 14059. Seventeen individuals and entities previously designated under the Kingpin Act and Executive Order 13581 (targeting Transnational Criminal Organizations) were also designated under the [ILLICIT-DRUGS-EO] tag. A full list of these parties is available on OFAC’s recent action page here.