Banking and Finance Law Daily OFAC modifies regulations governing reporting, procedures, and penalties
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Thursday, June 20, 2019

OFAC modifies regulations governing reporting, procedures, and penalties

By Thomas G. Wolfe, J.D.

While revising its regulations covering "Reporting, Procedures and Penalties," OFAC is requesting public comments on the amendments.

The Treasury Department’s Office of Foreign Assets Control (OFAC) has promulgated an interim final rule amending its "Reporting, Procedures and Penalties Regulations (the Regulations)" to provide updated instructions and incorporate new requirements for parties filing reports on blocked property, unblocked property, or rejected transactions. In addition, OFAC’s interim final rule: (1) revises the section of the Regulations governing licensing procedures to include information regarding OFAC’s electronic license application procedures and to provide additional instructions regarding applications for the release of blocked funds; (2) clarifies rules governing the availability of information under the Freedom of Information Act for "information that is submitted to OFAC pursuant to the Regulations’; and (3) makes many other "technical and conforming edits" throughout the Regulations. While the interim final rule takes effect June 21, 2019, OFAC is requesting written comments about the changes, and those comments must be submitted by July 22, 2019.

The Regulations (31 CFR Part 501) set forth standard reporting and recordkeeping requirements as well as license application and other procedures pertinent to the various economic sanctions programs administered by OFAC. In particular, OFAC’s interim final rule updates six sections of the Regulations.

Reports. Under the "Reports" subpart, the amendments include: "§501.602—Reports to be furnished on demand"; "§501.603—Reports on blocked and unblocked property"; and "§501.604—Reports on rejected transactions." Generally, for these reporting sections, the agency is: seeking "greater detail" regarding the information required to be provided to OFAC in connection with blocking reports; expanding coverage of reports concerning the "release of property from blocked status"; and clarifying the broad application of "all rejected transactions," not just "rejected funds transfers."

Penalties. Similarly, under the "Trading With the Enemy Act (TWEA) Penalties" subpart, the interim rule amends "§501.701—Penalties" by now stating that persons who willfully violate any provision of TWEA (including its applicable licensing, rules, or regulations) and any persons who willfully violate, neglect, or refuse to comply with any order by the President issued in compliance with TWEA, "shall, upon conviction, be fined not more than $1,000,000 or, if an individual, be imprisoned for not more than 20 years, or both."

Procedures. Under the "Procedures" subpart, the amendments affect "§501.801—Licensing" and "§501.806—Procedures for unblocking funds believed to have been blocked due to mistaken identity." Accordingly, section 501.806 now requires a party who believes that funds have been blocked due to mistaken identity to "send requests to release funds to OFAC in writing either by U.S. mail or electronically to OFAC’s reports e-mail address."

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