Sanctions by the Numbers: Transnational Crime and Drug Trafficking

Transnational Crime: Designations and Delistings, 2009–2021*

Transnational crime­–related sanctions have been successful in pressuring sanctioned persons to cease engaging in targeted behavior, leading to a significant number of delistings. There are many potential reasons for an increase in delistings, such as when the sanctioned target has a “verified change in status,” like retirement from a position within a sanctioned government. It can also indicate a significant change in behavior, which can be used as a tool to measure the success of a sanctions program. The most prominent example is the 2006 plea agreement by Cali Cartel kingpins Miguel and Gilberto Rodriguez Orejuela who faced drug trafficking and money laundering charges in U.S. courts and forfeited $2.1 billion in narcotics-related assets worldwide. As part of an accompanying legal agreement with the U.S. government, 28 members of their families agreed to identify their narcotics-related assets and relinquish them to the Colombian government. At the conclusion of this process in 2014, the Treasury delisted 308 individuals and entities in what was, at the time, the single largest delisting action in U.S. sanctions history. Delistings under transnational crime–related sanctions authorities accounted for almost half of total U.S. sanctions delistings from 2009–2021, demonstrating the success of these programs in influencing behavioral change among sanctioned targets.

Transnational Crime–related Designations during the Obama and Trump Administrations

President Barack Obama’s administration actively incorporated transnational crime­–related sanctions within its broader counter-drug-trafficking strategy, issuing far more designations than President Donald Trump’s administration. Under Obama, the National Security Council listed sanctions as a key pillar of its 2011 Strategy to Combat Transnational Organized Crime, which called for protecting the integrity of the global financial system through the use of financial tools and sanctions. Obama later signed Executive Order 13581, which created the Transnational Criminal Organizations (TCO) sanctions program to designate members of, and those who offer material support to, transnational criminal organizations. As a result, the Treasury gained additional sanctioning authority beyond targeting drug traffickers to those involved in any criminal activity. While the first term of the Obama administration saw more than 1,500 transnational crime–related sanctions—averaging 234 sanctions per year—the Trump administration averaged 81 sanctions per year and reached a total of just 323 new designations by the end of 2020. Although Trump later amended language within this program to broaden designation criteria and explicitly target facilitators of transnational organized crime, this did not lead to a steady increase in transnational crime–related sanctions as he used other tools, such as law enforcement and border patrol, to address drug trafficking issues.

Transnational Crime Designations during the Obama and Trump Administrations

In place of increasing designations on transnational crime, the Trump administration adopted a hardline policy on drug trafficking through focusing heavily on law enforcement and interdiction at the border. In March 2017, Trump supported the efforts of the Office of National Drug Control Policy through signing Executive Order 13784, which established the President’s Commission on Combating Drug Addiction and the Opioid Crisis to review the parts of the federal budget that address the opioid epidemic. Under the Trump administration, it is possible that Washington’s intensive use of sanctions for other purposes, such as the “maximum pressure” campaigns on Iran, Venezuela, and North Korea, consumed much of the Office of Foreign Asset Control’s (OFAC) limited resources, leaving less bandwidth for transnational crime–related designations. While the Trump administration did not clearly articulate a position regarding the utility of sanctions for countering illicit activity, the relative decline in the utilization of these measures suggests that the Treasury under Trump preferred non-sanctions tools to achieve goals related to drug trafficking.

Global Distribution of Transnational Crime–related Sanctions

Treasury has imposed transnational crime–related sanctions on individuals and entities spanning 68 countries, but has focused efforts in Colombia (670), Mexico (666), Panama (155), Guatemala (60), Peru (40), and Venezuela (39) due to high levels of drug dealing by transnational crime groups in these countries.

Transnational Crime Designations by Country 2009–2021*

Colombia and Mexico

Colombia (670) and Mexico (666) continue to serve as epicenters for drug trafficking into the United States and account for roughly 60 percent of total transnational crime–related designations (2,155). In both countries, Washington has implemented counternarcotics sanctions in close coordination with local governments—the U.S. embassies in Bogotá and Mexico City host the only permanent OFAC attachés.

Panama

Panama serves as a major international tax haven and an important jurisdiction for designations since Latin American traffickers and other criminals operate shell companies within its borders to launder or obfuscate funds. The Panama Papers leak in 2016 revealed a massive money laundering scheme facilitated by a Panama-based law firm called Mossack Fonseca, which hid billions of dollars belonging to foreign national leaders, politicians, and even Russian President Vladimir Putin.

Others

Outside of the Western hemisphere, additional jurisdictions of concern include Afghanistan, where opium trafficking linked to the Taliban is a major concern, and Lebanon, which continues to function as a major financial center and link between the Middle East and Latin America. Analyzing the global distribution of transnational crime–related sanctions also provides insight on the financial connections between drug trafficking groups and terrorist organizations, as seen in Lebanon with the terrorist group Hezbollah and Afghanistan where roughly 70 percent and 27 percent of all Afghanistan-related sanctions are pursuant to counterterrorism and counternarcotics authorities, respectively. Italy and Japan, respectively home to the Camorra and Yakuza criminal groups originally designated by the TCO program, have also been targeted as key contributors to transnational criminal activity involving the trafficking of drugs, arms, and persons.

Ranking Countries by Total Designations per Administration

During the Trump administration, transnational crime–related sanctions strategy became entangled with broad foreign policy issues, primarily with Mexico, Venezuela, and China. Mexico overtook Colombia as the leading target of U.S. designations and China quickly became the fourth most frequent target. Despite tensions in the overall U.S.-Mexico relationship, close coordination between the Treasury and the Mexican government on sanctions continued, but the November 2019 murder of nine U.S. nationals in northern Mexico tested the resolve of these collaborative efforts. Trump declared his intention to designate Mexican cartels as Foreign Terrorist Organizations (FTOs), reigniting a debate from the Obama administration on whether Mexican cartels qualified as terrorist groups. After strong opposition to the use of FTO designations by both the Mexican government and his own administration, Trump refrained from pursuing this designation, but the idea continues to garner support among some Republican lawmakers. The sudden increase in transnational crime–related designations on Venezuela and China during the Trump administration demonstrated a significant shift in Washington’s foreign policy concerns.

Countries by Total Transnational Crime Designations, 2009–2021*

Venezuela

The Obama and Trump administrations took strikingly different approaches to dealing with Caracas. While the Obama administration largely adopted a “behind-the-scenes” diplomatic approach to mitigate rising political tension with Caracas amid counternarcotics-related sanctions, the Trump administration publicly exposed links between Venezuelan government officials and drug traffickers while issuing sanctions to further highlight the illicit activities of Venezuelan President Nicolás Maduro’s regime. Most notably, OFAC designated Venezuelan Vice President Tareck El Aissami in 2017 and the Department of Justice later indicted Maduro himself, along with 14 other prominent government officials, on charges of “narco-terrorism” for conspiring with a Colombian armed guerilla group called the Fuerzas Armadas Revolucionarias de Colombia (FARC), which aimed to “flood” the United States with cocaine in 2020. The sanctioning of top government officials was likely a part of the Trump administration’s overall “maximum pressure” sanctions campaign targeting Caracas.

China

Under the Trump administration, designations on Chinese nationals distributing Chinese-manufactured fentanyl became a major focus of drug-related sanctions programs. Noting that since 2013 China has been the primary source of fentanyl in the United States, the Trump administration expanded existing Obama-era sanctions on Chinese nationals with the goal of pressuring Beijing to deal more seriously with the growing drug problem. Amid the deterioration of diplomatic relations during the U.S.-China trade war, Chinese officials accused the Trump administration of using the fentanyl issue as a “political weapon” to advance its own agenda. However, the Trump administration achieved a major breakthrough in 2019 when Beijing agreed to designate all fentanyl-like drugs as controlled substances, banning their manufacture and sale. Questions remain on whether China will be able and willing to enforce these restrictions as Beijing has not cooperated with Washington in extraditing indicted Chinese nationals to American law enforcement.

Connections to Terrorist Financing

Drug trafficking provides a reliable financial network for violent insurgent groups, such as terrorist organizations, as both seek to exploit existing structural and social vulnerabilities for financial gain. In January 2011, the Treasury designated Lebanese national Ayman Joumaa, along with 28 individuals and entities associated with him. Joumaa masterminded a complex international criminal network that laundered over $200 million per month from the shipment of South American cocaine to the United States, Europe, and the Middle East on behalf of the Lebanon-based terrorist organization Hezbollah.

The Ayman Joumaa Drug Trafficking and Money Laundering Organization

As with most transnational crime, the successful facilitation and transfer of financial payments across country borders is crucial to global terrorism financing schemes. A month following the designation of Joumaa and his associates, the Treasury Department claimed that Hezbollah “derived financial support from the criminal activities of Joumaa’s network” and identified the Lebanese Canadian Bank (LCB)—the eighth largest in Lebanon with more than $5 billion in assets—as the center of this activity. Under Section 311 of the USA Patriot Act, the Treasury named the LCB a “financial institution of primary money laundering concern,” prohibiting U.S. financial institutions from opening or maintaining correspondent banking accounts for the LCB. This effectively severed the bank’s access to the U.S. dollar–denominated financial system centered in New York City. Within a month, the bank had collapsed and its remaining assets were sold to another Lebanese bank. Over the next two years, the U.S. government seized hundreds of millions in assets from the defunct bank that were traced to its activities on behalf of Hezbollah.

Future Outlook

The Biden administration has currently issued 40 transnational crime–related sanctions within its first year, signaling an intent to incorporate sanctions within its global counternarcotics strategy as the designations target persons in Mexico (21), Pakistan (6), Colombia (5), Qatar (5), Bahrain (1), Palestine (1), and Saudi Arabia (1). Biden outlined his political intentions to combat transnational crime in a letter to the Speaker of the House of Representatives in July, stating that transnational criminal organizations continue to pose an “extraordinary threat to the national security, foreign policy, and economy of the United States.” The U.S. government will likely continue to leverage the Kingpin Act and relevant counter-narcotic-trafficking authorities within its overall counternarcotics strategy to synergize cooperation between U.S. agencies and global law enforcement agencies, as seen in the global distribution of transnational crime–related designations.

Conclusion

The use of sanctions to counter drug trafficking presents multiple logistic and enforcement challenges. The influence of organized crime groups on forcing mass migration from Central America to the United States, the ongoing domestic opioid crisis, and the potential implications on the opium trade following the Taliban takeover of Afghanistan are likely major concerns for the Biden administration’s counter-narcotics-trafficking strategy. While in recent years the use of transnational crime–related sanctions has declined, perhaps due to greater use of Treasury’s limited resources for other policy purposes, the Biden administration will likely continue to incorporate transnational crime–related sanctions within its broader national strategy with the goal of disrupting illicit financial networks and drug cartels.

Methodology

All designations and delistings were drawn from the following OFAC sanctions programs and updated until November 2021: SDNT, SDGT, SDNTK, BPI-SDNT, BPI-SDNTK, TCO, IFSR, and NPWMD.

Acknowledgments

The author would like to acknowledge the CNAS Communications and Publications Teams for their support, as well as EES Program Director Emily Kilcrease for her review of this report.

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The CNAS Sanctions by the Numbers series offers comprehensive analysis and graphical visualization of major patterns, changes, and developments in U.S. sanctions policy and economic statecraft. Members of the CNAS Energy, Economics, and Security Program collect and analyze data from publicly available government sources, such as the Treasury Department’s Office of Foreign Assets Control.