Drug trafficking is a worldwide problem. The narcotics business is intimately connected to money laundering, because of the need to hide illicit profits. The proceeds are often used for other crimes. Therefore, one of the OFAC lists consists of the names of individuals and entities known to have participated in the trafficking of narcotics.
In 1999, the President of the United States signed the Foreign Narcotics Kingpin Designation Act (also known as the Kingpin Act), which created a series of related sanctions known as the “Foreign Narcotics Kingpin Sanctions Regulations”. According to the OFAC office, the act “blocks all property and interests in property, subject to U.S. jurisdiction, owned or controlled by significant foreign narcotics traffickers as identified by the President.
’In addition, the Kingpin Act blocks the property and interests in property, subject to U.S. jurisdiction, of foreign persons designated by the Secretary of Treasury, in consultation with the Attorney General, the Director of Central Intelligence, the Director of the Federal Bureau of Investigation, the Administrator of the Drug Enforcement Administration, the Secretary of Defense, and the Secretary of State, who are found to be:
- Materially assisting in, or providing financial or technological support for or to, or providing goods or services in support of, the international narcotics trafficking activities of a person designated pursuant to the Kingpin Act;
- Owned, controlled, or directed by, or acting for or on behalf of, a person designated pursuant to the Kingpin Act; or
- Playing a significant role in international narcotics trafficking.”
In summary, U.S. organizations and corporations are prohibited by OFAC from engaging in any property or property interest transactions involving designated entities (including trade transactions, accounts, securities, and other assets). They are also banned from participating in any transaction that avoids or evades the Kingpin Act’s sanctions against drug traffickers.