OFAC Updates Regulations on Reporting, Procedures, Penalties
The Treasury’s Office of Foreign Assets Control is updating its Reporting, Procedures and Penalties Regulations to change how parties file reports on blocked property, unblocked property and rejected transactions related to economic sanctions, OFAC said in a June 20 notice. The amended regulations, to be published in the June 21 Federal Register, also detail revisions to OFAC’s electronic license application procedures, the availability of its records under the Freedom of Information Act and other “certain technical and conforming changes,” OFAC said.
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The regulations detail updated methods for submitting and filling out blocking reports, which covers initial blocking reports, annual reports of blocked property, annual report formats, reports on unblocked property and electronic submission of reports. The goal of the changes, OFAC said, is to better inform submitters of information they need to include in their blocked property reports in an effort “to reduce the need for follow up requests from OFAC” and to “lessen the overall reporting burden.”
Under the updates, OFAC is requiring submissions of initial blocking reports to include a list of new details: the name and address of the person holding the blocked property, a description of the transaction related to the blocking, the “associated sanctions target” that is blocked, a description of the blocked property and the transaction, the date the property was blocked, the estimated value of the property, the legal authority under which the property is blocked and a copy of any “payment or transfer instructions.” Submissions of annual reports of blocked property must follow similar requirements, OFAC said, but must also include “the number of accounts or items reported.”
OFAC is requiring similar information for submissions of reports on property that is unblocked, but also requires those submitters to include a list of identifying information, including a description of the property and its location “immediately prior to its release from blocked status,” the date the property was unblocked and a copy of the original blocking report filed with OFAC.
OFAC is also revising procedures related to unblocking of funds believed to have been blocked because of a “mistaken identity.” The party who believes the funds were blocked by mistake must “send requests to release funds to OFAC in writing either by U.S. mail or electronically,” OFAC said.
Annual reports must be submitted “using the most recent version of Form TDF 90-22.50, Annual Report of Blocked Property, or by another official reporting option, including electronic,” OFAC said. The agency is updating Form TDF to “reduce the need for follow up requests from OFAC.” It is also requiring certain submitters to include in their annual reports “a disaggregated list showing each blocked asset contained within the omnibus account.” This new requirement begins with the 2020 annual reports, OFAC said.
Other updated regulations detail electronic submissions of reports, wherein OFAC is now accepting electronic reports on blocked or unblocked property. The agency said it “strongly prefers to receive reports made pursuant to this section by email or any other official electronic reporting option.”
OFAC also amended regulations on reports for rejected transactions. The agency said it wishes to clarify that "rejected transactions" applies “broadly to all rejected transactions (and not only to rejected funds transfers).” OFAC is also replacing the phrase “rejected funds transfers” with “rejected transactions” and is adding a definition for “transactions.” Rejected transactions cover those related to “wire transfers, trade finance, securities, checks, foreign exchange, and goods or services,” the agency said.
OFAC is also updating its regulations on records requests and said information provided to OFAC will “generally” be released “upon the receipt of a valid [Freedom of Information Act] request.”
The agency is revising licensing procedures to provide more instructions regarding applications for the release of blocked funds, OFAC said. Applications for specific licenses that ask permission to “engage in any transactions otherwise prohibited pursuant to 31 CFR chapter V or sanctions programs” under OFAC must be filed through “OFAC’s Reporting and License Application Forms page” or by mail, the agency said. Reports must be provided to OFAC “in a usable format agreed upon by OFAC.” OFAC also said it added a “reference in the regulations to newly updated guidance regarding data delivery standards and the submission of documents.”
OFAC is also revising “penalties for willful violations of the Trading with the Enemy Act” as required by the “Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010” to read that violators of the act can face a maximum fine of $1 million or maximum prison sentence of 20 years.