Late last week, the Office of Foreign Assets Control (“OFAC”) designated the Soho Mall in Panama City, Panama, as a Specially Designated Narcotics Trafficker under the Foreign Narcotics Kingpin Sanctions Regulations. The action was taken based on OFAC allegations that the Mall was engaged in money laundering on behalf of Waked Hatum whom OFAC also designated based on its belief that he and his organization were engaged in drug trafficking and money laundering.
The effect of that designation is set forth in section 598.202 of the Foreign Narcotics Kingpin Sanctions Regulations, which we cite in full because of its curiously fractured English (apparently translated from Middle English into Sanskrit before being rendered into a Modern English of sorts):
Except to the extent provided in regulations, orders, instructions, licenses, or directives issued pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to the effective date, there are blocked as of the effective date, and any date thereafter, all such property and interests in property within the United States, or within the possession or control of any United States person, which are owned or controlled by a specially designated narcotics trafficker.
“There are blocked”? Seriously?? Section 598.203 contains the normal provision prohibiting “any transaction or dealing” by a U.S. party in any “property or interest in property” of any specially designated narcotics trafficker.
With that background, General License No. 4, which permits certain transactions pertaining to the Soho Mall, comes as something of a surprise. The General License permits shipments of goods by U.S. persons to “non-designated” stores and other tenants in the mall provided the goods were ordered before May 5 and the delivery is completed prior to July 6. Yes, you read that right. The general license does relate to “non-designated” stores in the mall.
While it’s easy to understand the need for some license to wind-down operations by U.S. persons with the designated mall (a license, by the way, that was not issued), it is hard to understand the need for such a license for the non-designated stores in the mall itself. This license would only be necessary if OFAC thinks that somehow the designated mall has an “interest in” the inventory of the non-designated stores in the mall, a rather surprising idea at best. I can’t imagine what kind of interest this is other than perhaps the mall’s interest that the stores will sell their inventory so that they can pay their rent. By that logic, the mall also has an interest in all the inventory that the stores may have at other locations. So, if there is a MacDonald’s in the food court, no U.S. person can make any deliveries to any other MacDonald’s owned by the same franchisee anywhere else in the world.
It is difficult at this point to see what meaning, if any, is left for the phrase “interest in property.” Of course, OFAC, like Humpty-Dumpty in Alice in Wonderland, has little concerns for the niceties of logic and meaning
When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.” “The question is,” said Alice, “whether you can make words mean so many different things.”
Apparently OFAC thinks that it can.