USA – FLORIDA Trends and Developments Contributed by: Wifredo A. Ferrer, Barbara A. Martinez, Marcelo J. Ovejero and Oscar Alejandro Quiroz-Chávez, Holland & Knight LLP
they violate them while acting within US territory, con - spire with US persons to violate sanctions, or cause a US person to violate sanctions. The jurisdictional requirements for this second category are satisfied by minimal contact with the United States. A wire transfer passing through a US bank or an email transmitted through servers located in the United States can be sufficient to establish jurisdiction. Violations of OFAC sanctions can result in both criminal and civil penalties. Criminal liability requires proof of a wilful violation ‒ that is, the person or entity acted with knowledge that the transaction involved a designated cartel and that such transaction was prohibited by law. Criminal penalties include fines up to USD1 million per violation and, for individuals, imprisonment of up to 20 years. Civil liability under OFAC sanctions operates on a strict liability basis, requiring no proof of knowledge or intent. Civil penalties can reach USD377,700 per violation or double the transaction amount, whichever is greater. The strict liability nature of civil violations makes them particularly dangerous for companies, as even the most well-intentioned compliance efforts may not provide a complete defence. OFAC also possesses the authority to impose sec - ondary sanctions on persons and entities outside US jurisdiction. These secondary sanctions can effective - ly place the designated party that provides “material support” to cartels in the same position as a desig - nated cartel itself, prohibiting all transactions involving that party and requiring asset freezes by any US per - son in possession of their property. This mechanism significantly expands the potential reach of sanctions, as it can affect parties with no direct connection to the United States beyond their interaction with des - ignated cartels. Criminal liability under the AEDPA The AEDPA creates criminal liability for knowingly providing “material support” to designated terrorist organisations, which now includes the designated cartels. This statute represents one of the broadest and most significant legal tools available to US pros - ecutors in combating terrorism and, by extension, designated drug cartels.
The AEDPA’s definition of “material support” encom - passes virtually any form of assistance that could ben - efit a terrorist organisation. This includes any property, tangible or intangible, or service, including currency or monetary instruments, financial services, communica - tions, equipment, and transportation. The breadth of this definition means that even seemingly innocuous business transactions can potentially constitute mate - rial support if they substantially benefit a designated cartel. The statute criminalises both direct provision of mate - rial support to cartels and indirect provision through intermediaries. Liability attaches when a person pro - vides support through third parties while knowing that a cartel is the ultimate beneficiary. This aspect of the law is particularly relevant in the context of drug cartels, which often operate through complicated networks of front companies and intermediaries to obscure their involvement. The knowledge requirement under the AEDPA mer - its careful attention. While the statute requires that defendants act knowingly, prosecutors need not prove knowledge of any specific terrorist act the organisa - tion plans to commit. Instead, they must only show that the defendant knew the organisation was des - ignated or engaged in terrorist activities generally. Moreover, courts have recognised that this knowledge requirement can be satisfied through “constructive knowledge” ‒ a showing that the defendant deliber - ately ignored red flags indicating possible involvement with a terrorist organisation. This standard significantly expands potential liability, as companies cannot sim - ply turn a blind eye to suspicious circumstances and claim lack of actual knowledge as a defence. The AEDPA’s jurisdictional provisions grant US courts authority over material support provided anywhere in the world, provided the offence affects interstate or foreign commerce of the United States. Courts have interpreted this jurisdictional hook broadly, finding it satisfied by even indirect or remote effects on the US economy. Additionally, the United States can exercise jurisdiction over offences committed entirely abroad if the perpetrator is later brought into US territory.
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