One of the best-kept secrets in America's arsenal of financial sanctions is the U.S. Treasury Department's Terrorist Watch List. It's maintained by the Treasury's Office of Foreign Assets Control (OFAC) to enforce economic and trade sanctions against more than a dozen countries. (I wrote about this list here.)
One of those countries is Cuba. Under a series of executive orders and laws enacted by Congress, it's illegal for a U.S. citizen to travel to Cuba, without a "license" issued by OFAC. It's also illegal for a U.S. company to do business with Cuba without a license, except in narrowly defined circumstance.
However, these laws and regulations have no legal effect in other countries. If someone, say, in Spain, wants to travel to Cuba, there's no violation of U.S. law, since the United States has no jurisdiction over Spain.
Only, it does, according to OFAC. In October, OFAC shut down 80 Web sites owned by a British travel agent named Steve Marshall who sells vacations to Europeans. One of the places to which Marshall offers vacations is Cuba.
This was justified, according to OFAC, because Marshall's company "had helped Americans evade restrictions on travel to Cuba" and was "a generator of resources that the Cuban regime uses to oppress its people."
Marshall says he didn't market Cuban vacations to Americans, "because they can't travel there, anyway." But his real mistake was using a U.S.-based domain name registrar for his Web sites. This gave OFAC the ability to contact the registrar, eNom, and order the company to pull the plug on Marshall's Web sites. Given the fact that failure to comply with OFAC regulations can be punished with a 30-year prison sentence, a US$5 million criminal fine, or a civil penalty of up to US$1 million, eNom quickly complied.
Fortunately, Marshall was able to re-register his Web sites with a European registrar, although he had to rename most of them with the suffix ".net" rather than ".com."
But there's a larger issue at stake. OFAC shut down Marshall's business without warning, without a hearing, resulting in hundreds of thousands of dollars of lost revenues. Not exactly the "American way" we read about in civics textbooks.
However, it could have been worse. If Marshall had established a U.S. bank account, or maintained any other asset in the United States, the U.S. bank or custodian would have been obliged to freeze it—and turn the proceeds over to OFAC.
Are you on the OFAC terrorist watchlist? You can find out for yourself by visiting OFAC's list of "specially designated nationals" here.
If you're on the list, though, don't count on getting off anytime soon. That's because the only way to get off is to ask OFAC to remove you from the list. This is an administrative determination—you have no right to a court hearing to determine if you should have been put there in the first place.
In other words, the same bureaucrat who put you on the watch list in the first place may be the one who you ask to take you off of it. Good luck…
(For more information on emergency financial controls administered by OFAC and other government agencies, click here.)
Copyright © 2008 by Mark Nestmann
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