On September 3, 2019, the Department of the Treasury's Office of Foreign Assets Control (OFAC) issued the Nicaragua Sanctions Regulations as 31 CFR Part 582. These new regulations codify Executive Order (EO) 13851, which President Trump issued on November 27, 2018. The new regulations do not appear to make any substantive changes to the list-based sanctions authorities in the EO, which, among other things, authorized sanctions against human rights violators, those engaged in corrupt practices and those undermining democracy in Nicaragua.
Accordingly, the new regulations block (freeze) the property within US jurisdiction of any person the Secretary of the Treasury, in consultation with the Secretary of State, finds to be:
- Responsible for or engaged in:
- Serious human rights abuses in Nicaragua
- Actions or policies that undermine democratic processes or institutions in Nicaragua
- Actions or policies that threaten the peace, security or stability of Nicaragua
- Any transaction involving deceptive practices or corruption on behalf of or related to the government of Nicaragua
- A leader or official of an entity whose members have engaged in any activity described above or of any sanctioned person
- An official of the government of Nicaragua any time on or after January 10, 2007
Furthermore, the new regulations authorize the Secretary of the Treasury, in consultation with the Secretary of State, to impose sanctions on any person he deems to have materially assisted, sponsored or supported the above conduct, any already-sanctioned person, any person owned or controlled by a sanctioned person or any person who has acted or purported to act on behalf of a sanctioned person. This authority, which is common in US sanctions programs, can significantly expand the scope of sanctionable conduct—and thus makes compliance that much more of a challenge.
These blocking sanctions add the person to OFAC's Specially Designated Nationals (SDN) List and freeze all of the sanctioned person's property and interest in property within US jurisdiction. US persons1 are prohibited from engaging in or facilitating any transactions with persons on the SDN List without first receiving authorization from OFAC. Furthermore, under OFAC's "50% Rule," entities that are directly or indirectly owned 50 percent or greater in the aggregate by SDNs are also considered blocked.
The codification of the Nicaragua list-based sanctions first created by the EO in late 2018 does not, in itself, signal a substantive expansion or other modification of the sanctions. It does, however, come amid a series of sanctions policy actions related to Cuba and Venezuela—the other two members of what Assistant to the President for National Security John Bolton described as the "troika of tyranny."2
Accordingly, it remains to be seen whether and, if so how, the US might expand its use of the Nicaragua list-based sanctions going forward. To date, the US has imposed three rounds of sanctions, against a total of seven individuals and one entity, under the sanctions discussed above and the Nicaragua Human Rights and Anticorruption Act of 2018. Accordingly, businesses and individuals with dealings in Nicaragua should remain on the lookout for potential new sanctions and/or designations in the future.
1 US person means any US citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States. Exec. Order 13851 (Nov. 27, 2018).↩
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