On December 15, 2021, the White House issued Executive Order (EO) 14059, “
Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade.” The new EO, which implements aspects of the Fentanyl Sanctions Act of 2019 (21 U.S.C. § 2301
et seq.), could bring a significant expansion in the US government’s use of sanctions to combat narcotics trafficking. It also builds on more than 25 years of efforts including Clinton-era sanctions against Colombian drug trafficking networks and the identification of drug trafficking organizations under the Foreign Narcotics Kingpin Designation Act. The new EO includes innovative designation criteria geared toward the Biden administration’s goal “to modernize and update our response to drug trafficking,” as stated in the EO’s preamble.
Broad Authority for Sanctions Designations
EO 14059 authorizes the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, and the Secretary of Homeland Security, to impose sanctions on any foreign person they determine:
- To have engaged in, or attempted to engage in, activities or transactions that have materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production (hereafter “international illicit drug proliferation activity”); or
- To have knowingly received any property that the foreign person knows either (a) constitutes, or is derived from, proceeds of international illicit drug proliferation activity; or (b) was used or intended to be used to commit or to facilitate international illicit drug proliferation activity.
The EO also authorizes the imposition of sanctions on any foreign person who provides–or attempts to provide–financial support, other support, or goods or services in support of international illicit drug proliferation activity, or to any person sanctioned under the EO. Leaders and officials of any foreign entity sanctioned under the EO, or of any foreign entity that has engaged in international illicit drug proliferation activity, can also be targeted for sanctions. Finally, the EO authorizes the imposition of sanctions on any foreign person who is owned, controlled, or directed by, or acting for or on behalf of, a person sanctioned under the EO.
The EO defines “proliferation of illicit drugs” to mean any illicit activity to produce, manufacture, distribute, sell, or knowingly finance or transport, any narcotic drugs or other controlled substances.
The authority to impose sanctions on persons who knowingly receive proceeds of illicit conduct resembles the US criminal money laundering statute that prohibits transactions in the proceeds of specified unlawful activity (18 U.S.C. § 1957), and is a new authority in the sanctions context. The ability to pursue a sanctions designation–rather than a criminal prosecution–against a foreign person who receives proceeds of illicit international drug trafficking is a notable development, since the evidentiary standards, procedural mechanisms, and jurisdictional constraints in the sanctions context differ from those that apply in criminal cases. (In this respect, the EO is similar to the Global Magnitsky sanctions under EO 13818, which provide the US government with an alternative to criminal prosecutions to target perpetrators of corruption outside the United States, who may be beyond the reach of the US criminal justice system.) This broad designation authority also empowers the Treasury Department to impose sanctions on the financial facilitators of illicit drug trafficking based solely on the nature of the proceeds they handle, where prior sanctions programs have generally required evidence of a specific relationship (such as control or agency) between the facilitator and another sanctioned person.
Familiar Menu of Sanctions
EO 14059 contemplates a range of potential sanctions that can be imposed on the foreign persons who meet the designation criteria described above. The sanctions “menu” in the EO aligns with the sanctions outlined in the Fentanyl Sanctions Act (21 U.S.C. § 2313) and other prior sanctions-related statutes. In addition to blocking a target’s property and interests in property within US jurisdiction by adding the foreign person to the Office of Foreign Assets Control List of Specially Designated Nationals, the range of potential sanctions under EO 14059 also includes prohibiting US financial institutions from making loans to designated persons; prohibiting transfers of credit or payments or foreign exchange transactions within US jurisdiction involving designated persons; prohibiting US persons from investing in or purchasing significant amounts of equity or debt instruments of a designated entity; and sanctions on executives and officers of a designated entity. Section 2 of the EO authorizes the Treasury Secretary to impose one or more of the sanctions from the menu on each designated person.
Potential Future Developments
The Fentanyl Sanctions Act requires the President to submit periodic reports to Congress identifying foreign opioid traffickers and calls for the imposition of sanctions on each such trafficker, as well as foreign persons who are owned or controlled by or acting on behalf of or at the direction of such traffickers, or supplying them with precursors (21 U.S.C. § 2311 and § 2312). The first such report was due in mid-2020, but it appears that no reports have been produced to date. As and when the US government produces these Fentanyl Sanctions Act reports, it is likely that they will lead to additional designations of foreign opioid traffickers under EO 14059.
By its terms, EO 14059 takes aim not only at opioid and fentanyl trafficking but also at the international proliferation of other narcotic drugs and controlled substances. It is likely to be a powerful new tool in the US government’s arsenal of legal authorities to combat the illicit global drug trade.
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