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On December 19, 2022, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) introduced the first set of regulations to be issued under the new Illicit Drug Trade Sanctions (to be codified at 31 CFR part 599). The regulations will go into effect on December 20 pursuant to Executive Order (“E.O.”) 14059 (December 15, 2021), which calls for sanctions on foreign persons “engaged in, or attempted to engage in…or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production[.]” Thus, the regulations represent an essential tool for the United States to address the “national emergency” declared in E.O. 14059 due to the global illicit drug trade (see Update of December 15, 2021).
The regulations formally set the procedures for foreign persons to be designated and placed on OFAC’s Specially Designated Nationals (SDN) List, including persons who have provided, or attempted to provide, financial, material, or technological support for, or goods or services in support of illicit drug trade. Specific definitions are set forth, as are any general and specific licensing procedures, license exceptions, and other regulatory provisions.
Recognizing that the regulations are the first to take effect under the Illicit Drug Trade Sanctions, OFAC has noted that it intends to supplement these regulations with a more comprehensive set of regulations at a later date.
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