On March 5, 2020, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) sanctioned the Nicaraguan National Police (NNP) and three senior officials of the Government of Nicaragua for their alleged involvement in human rights abuses in that country. OFAC imposed these sanctions pursuant to Executive Order (E.O.) 13851 “Blocking Property of Certain Persons Contributing to the Situation in Nicaragua,” and the Nicaragua Human Rights and Anticorruption Act of 2018 (NHRAA).
Additionally, OFAC issued General License No. 1 authorizing all transactions that are necessary to conduct official business of the U.S. Government in Nicaragua; and General License No. 2 authorizing all transactions and activities that are ordinarily incident and necessary to the wind down of transactions involving the NNP, through 12:01 a.m. eastern daylight time, May 6, 2020.
Consequences of These Additional Sanctions
Individuals and companies sanctioned by OFAC are added to the List of Specially Designated Nationals and Blocked Persons (“SDN List”). Accordingly, all of their property within or transiting U.S. jurisdiction is blocked. In addition, if they are not authorized by a general or specific license issued by OFAC, U.S. persons or foreigners that conduct business in or with the U.S., U.S. persons, or using U.S.-origin goods or services are prohibited from engaging in transactions with individuals and companies sanctioned under E.O. 13851 and the NHRAA, or with entities in which they have, directly or indirectly, 50% or greater ownership interest.
U.S. and foreign persons violating the additional OFAC Sanctions on Nicaragua may face significant civil and criminal penalties. OFAC may also add them to its SDN List (secondary sanctions).
Preventing Violations of OFAC Sanctions on Nicaragua
Conduct an OFAC review of any transaction involving Nicaragua to confirm whether you need OFAC’s authorization to proceed. If necessary, request OFAC’s specific license or interpretative guidance. In addition, organizations can prevent, detect, and react appropriately to violations of OFAC Sanctions by designing and implementing Sanctions Compliance Programs (“SCP”). Having an effective SCP in place is also a significant mitigating factor that OFAC will consider when deciding whether to impose sanctions based on an apparent violation of its regulations, or for calculating the appropriate penalty.
Legal Options for Sanctioned Individuals and Entities
Anyone placed on the SDN List by OFAC has the right to seek removal under an administrative process known as “De-Listing.” To be removed, listed individuals and entities can file a written request for reconsideration with OFAC. If OFAC denies this request for De-Listing, administrative remedies are deemed exhausted and listed individuals and entities can subsequently file a civil action with a U.S. District Court seeking judicial review of OFAC’s actions under the Administrative Procedure Act.
Individuals and entities penalized by OFAC for engaging in apparent violations of its sanctions, after exhausting administrative remedies, may also request a U.S. District Court to set these civil penalties aside as arbitrary or capricious.
Info: Michael Diaz, Jr., Javier Coronado
Tel: +1 (305) 375-9220