Episode #376: The Adjustment Bureau
“I think it’s a big win. And also people may not like to hear this, it’s actually a win for sanctions,” says Erich Ferrari, founder of Ferrari & Associates and a leading U.S. sanctions attorney. In this wide-ranging interview, Ferrari explains the intricacies of the U.S. sanctions regime, the legal basis and bureaucratic processes behind delisting individuals and entities from the Specially Designated Nationals (SDN) list, and responds to public criticism following the recent removal of several Myanmar-linked clients from U.S. sanctions.
Ferrari begins by reflecting on how he first entered the field. He was a law student in the aftermath of 9/11, when the legal profession increasingly focused on national security and financial enforcement. At the time, several Islamic charities in the U.S. were sanctioned without much due process. Ferrari found this troubling, especially as there were limited ways to appeal these rulings, and this led him to study the field of sanctions more closely, eventually creating a firm dedicated exclusively to this niche.
While his firm’s best-known work involves representing clients seeking to be delisted from U.S. sanctions, Ferrari clarifies that they also handle a wide range of sanctions-related matters, such as compliance for financial institutions and licensing for humanitarian organizations. Yet the heart of their practice remains guiding clients through the complex delisting process—a task that can take years and demands intricate legal strategy, deep familiarity with the workings of the Office of Foreign Assets Control (OFAC), and a broad understanding of U.S. national security priorities.
Ferrari explains that the Specially Designated Nationals and Blocked Persons List is a register of individuals, entities, and even properties—like aircraft or vessels—that are sanctioned under various U.S. statutes or executive orders. A person or company may be added for engaging in conduct or holding a status deemed harmful to U.S. national security, foreign policy, or economic interests. Importantly, the designation is not necessarily based on criminal activity in the legal sense. “It’s not that the conduct is prohibited by law of the United States,” Ferrari says. “But rather that these activities harm U.S. interests.”
While OFAC, which manages the SDN list, is housed within the U.S. Treasury Department, decisions as to who gets put on it are most often made through information and direction from a variety of other agencies: the National Security Council, State Department, Department of Justice, CIA, Department of Defense, and other intelligence bodies. OFAC compiles the designation memoranda, but its action is informed by policy direction and intelligence from across the U.S. government. Once designated, individuals often find out from the news or social media rather than an official communication. “People go to sleep at night, and then they wake up in the morning and find out the U.S. government has sanctioned them!” Ferrari says. The consequences are immediate and severe. At that point, all U.S. persons and companies are legally prohibited from dealing with them; foreign banks and institutions often cut off ties as well to avoid running afoul of U.S. secondary sanctions. “It really has the impact of completely shutting them out of the global financial system,” Ferrari explains.
Getting off the list is a long and arduous process, often taking more than two years. Under Treasury regulations, there are three possibilities for removal: demonstrating that the original designation was based on error; showing that the underlying circumstances have changed; or proposing remedial steps that would eliminate the basis for designation. Ferrari notes that the first approach—arguing an insufficient basis—is rarely successful. OFAC is granted “extreme deference” by U.S. courts, meaning it does not have to prove anything beyond a reasonable belief based on available information. “They are reviewing petitions to determine whether the party should stay on the list,” Ferrari emphasizes, “not whether they should be removed.”
Thus, the most effective strategy is to treat the process as one of compliance and remediation. For this, petitioners must engage with the same agency that placed them on the list in the first place, and persuade OFAC (and the broader U.S. government) that they no longer pose a threat. Ferrari advises clients not to argue that OFAC is wrong, but rather to focus on addressing the agency’s concerns.
Once a petition is submitted, OFAC shares the material with law enforcement and intelligence agencies, who verify the claims and look for any additional inculpatory information. He stresses that the burden of proof falls squarely on the petitioner. Even after removal, however, the social and economic consequences of the original designation continue indefinitely; in particular, that can be years of restricted access to financial services. “It’s not as if a light gets turned on when someone is removed.”
This brings the interview around to the news that has brought the issue of Myanmar sanctions to the fore: OFAC’s recent removal of four Myanmar-linked parties from the SDN list, which includes two individuals and one company represented by Ferrari’s firm. The move sparked anger among Burmese communities and human rights advocates, especially given accusations that some of the delisted individuals had ties to Myanmar’s military and were allegedly involved in weapons procurement. UN Special Rapporteur Tom Andrews voiced concerns, and some Burmese activists accused Ferrari of enabling impunity. In response, Ferrari offers a firm yet measured defense.
“I’m in no way saying they can’t be angry [about this] or they shouldn’t have an opinion,” he says. But he emphasizes that delistings are not based on whether a lawyer is persuasive, but on a determination by the U.S. government that the legal criteria for designation are no longer met. He then flips the argument and stresses that delisting is actually a crucial component of successful sanctions, saying, “If parties are not being removed from the sanctions list, that means there have been no changes in behavior, which means the sanctions have been ineffective!” So Ferrari urges critics to understand that delisting is part of making sanctions work, not undermining them. He notes that if sanctioned persons believe they will never be removed, they have no incentive to modify their conduct or sever ties with problematic actors. “It’s going to create an environment where no one can get off the list,” he warns, “and if no one can get off the list, then no one is going to address the U.S. government’s concerns.”
He also distinguishes his legal work from lobbying. “Lobbying is not permitted for sanctioned persons,” he says, noting that OFAC has prosecuted individuals for attempting to do so. Instead, he represents clients in a legal administrative process, conducted entirely in writing. “There’s no going into the White House and having a conversation. There’s no going to Congress and trying to drum up political support.” (note that recent podcast guest Lorcan Lovett recently posted an article on his Substack page expressing a different argument after speaking with Ferarri)
Moreover, Ferrari makes it clear that he does not take all cases. “If a client came to me and said, I did all of this stuff, and I don’t want to change any of it, I want to continue to do it—I wouldn’t take that case.” He says that his firm only represents clients willing to engage in good faith, and who are prepared to tell the truth to the U.S. government. The risk of lying is significant: criminal prosecution for misrepresentation is a very real possibility. Ferrari emphasizes the importance of understanding that the role of a sanctions lawyer is not to defend a client’s innocence, as in criminal law, but to bring their behavior into compliance with U.S. legal expectations.
When asked whether the recent delistings represent a shift in policy, Ferrari says no, noting that the cases had been pending since the early Biden administration, in fact, and reviewed by two successive administrations. He adds that there is no evidence of any rollback in enforcement or changes to the executive order that governs the Burma sanctions program. These were “technical” cases, he emphasizes, not political signals.
He further explains that U.S. sanctions are authorized under a statute that allows the President to declare a national emergency. That declaration must be renewed annually to maintain the sanctions program. In the case of Burma, there has been no indication that the U.S. plans to roll back its Burma-focused sanctions or reduce enforcement.
Ferrari concludes the interview by encouraging individuals who may be at risk of designation to take media and NGO reports seriously. “You need to view it as a compliance exercise,” he advises, urging those under scrutiny to either disprove the allegations or take steps to distance themselves from problematic relationships or activities.
For Ferrari, he emphasizes that sanctions law is not about defending reputations but navigating a high-stakes regulatory process with profound geopolitical implications. “My goal here is to make sure that parties understand what the requirements are for removal, to give them the opportunity to present their side to the U.S. government, and then from there, the U.S. government makes a determination.”