Sanctions against President Gustavo Petro: Compliance implications for organizations

Diaz Reus - On October 24, 2025, the Office of Foreign Assets Control of the U.S. Department of the Treasury ("OFAC") announced an unprecedented measure: the designation of Colombian President Gustavo Francisco Petro Urrego, along with several members of his inner circle, under Executive Order 14059, which authorizes economic sanctions against foreign persons involved in the global illicit drug trade.

Beyond the geopolitical impact of these sanctions, financial institutions and other organizations must consider the extraterritorial reach of the U.S. sanctions regime and the compliance risks they now face in their transactions involving Colombia.

This article describes the legal basis for the designation, its practical effects, and the compliance implications that both Colombian institutions and foreign institutions operating in Colombia should consider.

Legal basis for the designation

Executive Order 14059, issued in December 2021, authorizes the Department of the Treasury, under the authority of the International Emergency Economic Powers Act (IEEPA), the National Emergencies Act (NEA), and the Fentanyl Sanctions Act (FSA), to block the property and interests of any foreign person who has materially contributed—or poses a significant risk of contributing—to the international proliferation of illicit drugs or the means for their production. The order also allows for the sanctioning of those who provide financial, material, or technological support to previously designated individuals or entities.

According to the OFAC statement, President Petro was designated for his alleged responsibility for the expansion of cocaine production in Colombia and for implementing policies that benefited narco-terrorist organizations.

Compliance implications for financial institutions and other organizations

As a result of the designations, all property and interests in property of the designated or blocked person that are in the United States, or in the possession or control of U.S. persons, are blocked and must be reported to OFAC. In addition, any entity that is owned, directly or indirectly, individually or collectively, 50 percent or more by one or more blocked persons is also considered blocked. Unless expressly authorized by a general or specific license issued by OFAC, or in cases where an exemption applies, OFAC regulations generally prohibit any transaction involving property or interests in property of blocked persons.

Companies and financial institutions should bear in mind that the scope of OFAC sanctions extends far beyond the borders of the United States. U.S. persons are prohibited from engaging in transactions with designated entities, unless expressly authorized. Similarly, non-US persons are also prohibited from engaging in conduct that circumvents or evades US sanctions, as well as inducing or conspiring with US persons, knowingly or unknowingly, to violate such sanctions. Violations of the U.S. sanctions regime can result in civil or criminal penalties for both U.S. and foreign persons. In addition, foreigners risk being subject to OFAC sanctions if they engage in certain transactions or activities involving designated or blocked persons.

To prevent sanctions-related violations, it is advisable to conduct an OFAC review of any transaction involving designated persons to confirm whether authorization is required to proceed. If necessary, a specific license or formal interpretation should be requested from OFAC. Organizations can also prevent, detect, and respond appropriately to potential violations of OFAC sanctions by designing and implementing Sanctions Compliance Programs (SCPs). Having an effective SCP is also an important mitigating factor that OFAC considers when deciding whether to impose sanctions for an apparent violation of its regulations or when determining the severity of the corresponding fine.

Possibility of appeal or exclusion from the list

Designated individuals may request their exclusion from the Specially Designated Nationals List through an administrative process before OFAC. The request for exclusion must demonstrate that the grounds for the designation were erroneous or that the circumstances that led to it no longer exist. If OFAC denies the request, the affected party may file a judicial appeal with a U.S. federal court under the Administrative Procedure Act, alleging that the decision was arbitrary, capricious, or contrary to law.

Conclusion

The sanctions imposed on President Petro and his inner circle reflect the growing use of economic sanctions as a foreign policy and national security tool. Both financial institutions and multinational companies will need to closely monitor the regulatory implications of this measure and strengthen their internal controls to avoid violations, even unintentional ones, of the sanctions regime.