Highlights

  • The Office of Foreign Assets Control (OFAC) has expanded Executive Order 13851, relating to the sanctions on Nicaragua that block all property and property interests of certain officials of the Nicaraguan government.
  • The expanded regulations now impose financial sanctions on a broader set of individuals, blocking both the property interests of officials in the government, as well as those who have engaged in human right abuses.

The Office of Foreign Assets Control (OFAC) on Sept. 4, 2019, promulgated regulations expanding the application of Executive Order 13851 ("Blocking Property of Certain Persons Contributing to the Situation in Nicaragua") originally issued on Nov. 27, 2018. The new regulations state that the situation in Nicaragua – including the violent response by the Government of Nicaragua to the protests that began on April 18, 2018, as well as the Ortega regime's undermining of democratic institutions and the rule of law, use of indiscriminate violence and repressive tactics against civilians, and the corruption leading to the destabilization of Nicaragua's economy – constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States.

The expanded regulations note that all transactions prohibited under the Executive Order continue to be prohibited. The Executive Order states that "all property and interests in property of blocked persons that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person ... are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in."

Targets of the Executive Order are all persons who have served as an official of the Government of Nicaragua (defined as "the Government of Nicaragua, any political subdivision, agency or instrumentality thereof, including the Central Bank of Nicaragua, and any person owned or controlled by, or acting on behalf of, the Government of Nicaragua") on or after Jan. 10, 2007, as well as those who are responsible for, or complicit in, serious human rights abuses in Nicaragua, as well as policies that undermine democratic processes or institutions in Nicaragua, policies that threaten the peace, security or stability of Nicaragua, or those engaged in any transaction involving deceptive practices of corruption by the Government of Nicaragua.

Under the new regulations, any transfer that involves any property or interest in property defined in the Executive Order after Sept. 4, 2019, that is in violation of the Executive Order is null and void, although OFAC may provide a license or other authorization to validate it. Transfers that otherwise would be unenforceable will not be deemed unenforceable in cases where the person can establish that 1) the transfer did not represent a willful violation; 2) the person did not have a reasonable cause to know or suspect that the transfer required a license or authorization; and 3) the person files with OFAC a report setting forth in full the circumstances promptly after discovery.

The expanded regulations direct any U.S. person holding funds subject to the Executive Order to place the funds in a blocked, interest-bearing account. There is no obligation to sell or liquidate the property, but the funds may not be held or invested in a way that provides benefit to any person whose property interests are blocked. Personal communication (as long as it does not transmit anything of value) is exempt, as well as information or informational materials that were fully created at the time of a transaction.

Progression of the Sanctions

In November 2018, the U.S. imposed its first round of sanctions in Executive Order 13851. The officials sanctioned for their involvement in the crackdown were Rosario Murillo, Vice President and First Lady of Nicaragua; General Francisco Díaz, the police chief; Fidel Moreno Briones, a political appointee in the Managua mayor's office; and Néstor Moncada Lau, a top presidential aide. Notably, President Daniel Ortega was not sanctioned.

On Dec. 11, 2018, the U.S. House of Representatives overwhelmingly approved the Nicaraguan Investment Conditionality Act (NICA), a bipartisan bill that allows the U.S. Department of the Treasury to sanction any non-U.S. person implicated in egregious human rights abuses and corruption in Nicaragua. The bill allowed for freezing assets held in the U.S., forbidding entry to the U.S., and revoking U.S. visas. The Senate had passed the bill on Nov. 27, 2018. President Donald Trump signed it into law on Dec. 20, 2018.

In April 2019, the Trump Administration announced sanctions against Nicaragua's Banco Corporativo (Bancorp) and Laureano Ortega, a son of President Ortega and Vice President Murillo. The move froze all U.S. assets owned by Bancorp and the younger Ortega, and barred U.S. nationals from engaging in business with them.

On June 21, 2019, OFAC imposed sanctions on four more high-ranking Nicaraguan officials for preventing Nicaraguans from exercising their fundamental freedoms. Among them are the head of Nicaragua's National Assembly, Gustavo Porras Cortes; the chief of the state-run telecommunications agency, Orlando Castillo; the minister of health, Sonia Castro Gonzalez; and the minister of transportation, Oscar Mojica Obregon. The officials are all described as members of President Ortega's "inner circle." The action blocked the officials from accessing any property they own, directly or indirectly in the U.S., or in the possession or control of any U.S. person.