On July 11, 2023, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) issued Hostages and Wrongful Detention Sanctions Regulations (Regulations). The Regulations were issued pursuant to Executive Order 14078 (E.O. 14078), signed by President Biden July 19, 2022 – a full year earlier – which had determined that terrorist organizations, criminal groups, and other malicious actors who take hostages for financial, political, or other gain, and foreign states that engage in the practice of wrongful detention, including for political leverage or to obtain concessions from the United States, constitute a threat to the national security, foreign policy, and economy of the United States.
E.O. 14078 empowers the Secretary of State, in consultation with the Secretary of the Treasury and the Attorney General, to place on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List), any foreign person determined to be responsible for or complicit in, to have directly or indirectly engaged in, or to be responsible for ordering, controlling, or otherwise directing, the hostage-taking of a United States national or the wrongful detention of a United States national abroad; to have attempted to engage in such activity; or to be or have been a leader or official of an entity that has engaged in, or whose members have engaged in, such activity if it relates to the leader’s or official’s tenure. E.O. 14078 also authorizes the Secretary of State, in consultation with the Secretary of the Treasury and the Attorney General, to place on the SDN List any foreign person determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of such activity or any person or entity on the SDN List as a result of such activity.
The effect of being placed on the SDN List is to exclude the listed party from participating in the U.S. economic system and to block (i.e., freeze) any property or interest in property of the party in the United States or in the possession or control of a U.S. person.
The term “hostage-taking” is defined as “the unlawful abduction or holding of a person or persons against their will in order to compel a third person or governmental organization to do or to abstain from doing any act as a condition for the release of the person detained.” The term “wrongful detention” is defined as a detention that the Secretary of State has determined to be wrongful consistent with section 302(a) of the Robert Levinson Hostage Recovery and Hostage-taking Accountability Act of 2020, which provides a list of eleven criteria for the Secretary of State to consider in making the determination. The criteria include credible information that the detained individual is innocent; that the individual is being detained to influence U.S. government policy or to secure economic or political concessions from the U.S. government; or that the detained individual was involved in exercising or promoting freedom of the press, religion, or the right to peaceful assembly.
These sanctions are not limited to nationals of any specific country or geographic region. While OFAC is widely known for enforcing economic embargoes imposed on certain countries (e.g., Iran, Cuba, North Korea), and while OFAC sanctions, including SDN List designations, are often directed against specific persons and entities in particular countries not subject to full embargo (e.g., China, Belarus, Sudan), OFAC also imposes SDN List and other types of sanctions on various categories of malefactors, regardless of their nationality or geographic location. Such categories include narcotics traffickers, terrorists, cyber-criminals, persons who interfere with U.S. elections, proliferators of weapons of mass destruction, and transnational criminal organizations. A U.S. statute (the Global Magnitsky Act) allows SDN List designation of non-U.S. human rights abusers anywhere in the world. Similarly, under E.O. 14078 and the Regulations, any non-U.S. person or entity anywhere can be designated for participating in hostage-taking or wrongful detention (as defined).
OFAC sanctions are complex and multi-faceted. Compliance requires consultation with experienced sanctions counsel.
