OFAC Delists Former Paraguayan President Horacio Cartes
Implications & Reflections on U.S. Sanctions Policy
On October 6, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) removed former Paraguayan President Horacio Manuel Cartes Jara and several affiliated companies from its Specially Designated Nationals (SDN) list, reversing measures that had been in place for nearly three years under the Global Magnitsky Human Rights Accountability Act.
Cartes was originally designated in January 2023 for alleged large-scale corruption and obstruction of a transnational criminal investigation. His designation, and that of four affiliated companies — Tabacos USA Inc., Bebidas USA Inc., Dominicana Acquisition S.A., and Frigorifico Chajha S.A.E. — effectively froze their assets in U.S. jurisdictions and prohibited U.S. persons from engaging in transactions with them. In August 2024, OFAC expanded sanctions to include Tabacalera del Este S.A. (Tabesa), Paraguay’s largest tobacco producer, citing material support to Cartes and his network.
OFAC’s October 2025 action formally delisted Cartes and his affiliated entities, restoring their ability to engage in U.S.-linked financial and commercial activities. Current Paraguayan President Santiago Peña welcomed the decision as a positive development in bilateral relations and an opportunity to restore investor confidence.
Background and Context
The sanctions imposed on Cartes were part of a broader U.S. policy effort to promote accountability and integrity in Latin America. The U.S. Department of State had already sanctioned Cartes in July 2022 under a recurring provision in annual U.S. appropriations laws — often referred to as Section 7031(c) — for “significant corruption,” rendering him and his immediate family ineligible for entry into the United States. Section 7031(c) allows the Secretary of State to revoke and refuse to issue U.S. visas to foreign officials and their immediate families involved in corruption or gross human rights violations.
The subsequent Global Magnitsky designations in 2023 and 2024 extended these restrictions to his business empire, freezing assets and disrupting operations. These actions severely limited Cartes’s access to global financial systems and affected the reputation of Paraguay’s private sector.
The delisting reflects either changed circumstances or an administrative determination that the original grounds for designation are no longer applicable — a result usually achievable only through persistent legal, compliance, and diplomatic engagement.
The Delisting Process
Under OFAC practice, delisting petitions must demonstrate that the basis for designation no longer applies. This can include evidence of corporate governance reforms, compliance improvements, divestment, or other remedial actions. Successful cases often involve coordinated legal, lobbying, and diplomatic efforts — including dialogue with OFAC, structured remediation plans, and documentation of changed circumstances.
In Cartes’s case, U.S. officials have not disclosed the precise reasoning, but the removal appears to follow an extensive petition process supported by counsel and engagement through diplomatic channels. It may also reflect a change in policy toward Paraguay.
Understanding U.S. Sanctions Policy
U.S. economic sanctions serve as a strategic instrument of foreign policy and national security, enabling the U.S. government to influence international conduct without military force. Programs such as the Global Magnitsky Act allow the U.S. to target foreign individuals and entities worldwide for corruption, human rights abuses, or undermining democratic processes.
Sanctions can be selective or comprehensive — the Cartes designations being a clear example of a targeted approach. Conversely, delistings often serve a dual purpose: they reward remedial conduct and signal diplomatic recalibration.
Implications for Clients and Counterparties
- Reactivation of Business Activity: The removal from the SDN list allows Cartes and his companies to resume transactions with U.S. and international counterparties, subject to standard compliance procedures.
- Residual Risk: Financial institutions and multinational partners should still exercise enhanced due diligence until all compliance databases are updated.
- Policy and Diplomatic Signals: The delisting may reflect U.S. recognition of progress in Paraguay’s governance or shifting geopolitical priorities in Latin America.
- Lessons for Sanctioned Entities: The case underscores that delisting is achievable through coordinated legal, compliance, and diplomatic strategies, rather than political rhetoric alone.
Conclusion
The delisting of Horacio Cartes and his companies marks a notable shift in U.S. engagement with Paraguay and highlights the flexible, discretionary nature of OFAC’s sanctions regime. For businesses and financial institutions, it serves as a reminder that sanctions risk is dynamic — requiring constant monitoring, prompt system updates, and a nuanced understanding of the policy motivations behind these measures.
The foregoing is for informational purposes only. It is not intended as legal advice and no attorney-client relationship is formed by the provision of this information.