Yesterday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced designations against the Panama-based Waked Money Laundering Organization, including its leaders, network of supporters and associates, and companies. According to press reports, Colombian law enforcement arrested the organization’s leader, Nidal Ahmed Waked Hatum, at a Bogota airport the day prior to the designations.
In total, OFAC added 8 individuals and 68 business entities to the List of Specially Designated Nationals (SDN List) pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). Narcotics traffickers have used these businesses to obscure the source of drug money through a variety of means, including trade-based money laundering, bulk cash smuggling, real estate development, and illicit financial services. The designation of Balboa Bank & Trust is particularly noteworthy, as it reflects Treasury’s continued willingness to use the Kingpin Act against financial institutions. As noted in a previous entry, OFAC had not designated a bank pursuant to the Kingpin Act prior to November 2015.
OFAC clearly anticipates that these designations will cause significant disruptions, as it concurrently issued three General Licenses authorizing certain wind down transactions involving a hotel, newspapers, and a shopping mall. U.S. persons should carefully consider the scope and expiration dates of these licenses prior to engaging in any dealings with these designated companies.
The designations do not signal the beginning of United States government actions in response to the Panama Papers leak. Any potential use of those documents will be limited by the legal ethical issues surrounding the use of intentionally disclosed materials likely protected by the attorney-client privilege. In addition to the legal ethical limitations, the evidentiary which serves as the administrative record for the designations would have required several months for investigation, drafting and interagency approval. OFAC could not have finalized such an extensive package of designations within one month of the leak.