OFAC Blocked Assets
The Office of Foreign Assets Control (OFAC) has a variety of enforcement tools at its disposal. One such tool is the authority to block funds and other assets in accordance with economic sanctions programs, making them inaccessible to their owners. These assets are isolated and removed from the global financial system, significantly impacting the ability of targeted parties to conduct operations or finance activities. This measure not only restricts the financial resources of sanctioned parties but also serves as a signal to other organizations to avoid cooperating with them.
Faced with OFAC asset blocking? Our law firm is ready to provide comprehensive protection of your interests. We analyze the legality of the blocking, interact with financial and government authorities, and develop effective strategies for expedited sanction removal.
What are OFAC Blocked Assets?
Blocked assets are funds, securities, property, or any other form of assets that are subject to restrictions imposed by the Office of Foreign Assets Control.
Such measures are taken within the framework of U.S. sanctions policy and mean that the asset owner temporarily or permanently loses the ability to manage them – sell, transfer, receive income, or use them in any other way. Such measures are taken within the framework of U.S. sanctions policy and mean that the asset owner temporarily or permanently loses the ability to manage them.
Let us consider the most common reasons for blocking:
- Participation in transactions with individuals or companies under sanctions (for example, included in SDN List );
- Violation of sectoral sanctions (in energy, defense, financial, and other industries);
- Ownership of assets by a person or structure subject to sanctions for financing terrorism, money laundering, corruption, etc.
Failure to comply with sanctions may result in significant fines, criminal liability for management, loss of business reputation, and trust from partners and clients.
Banks, brokerage companies, payment systems, and other financial organizations are required to immediately report to OFAC upon discovering the involvement of assets with sanctioned persons or transactions. The notification describes the details of the transaction, the owner of the assets, and the amount under suspicion.
Financial institutions block access to assets related to entities on the SDN list or subject to sanctions. Until further decisions by OFAC, the assets remain frozen, and any transactions with them are prohibited.
Companies are required to implement compliance programs that allow them to identify suspicious transactions and participants under OFAC sanctions.
What does it mean to be blocked by OFAC?
If your account or property falls under OFAC restrictions, you will not be able to manage them: withdraw funds, sell, exchange, or use them in other transactions.
OFAC can block the following categories of assets:
- Bank accounts or funds associated with organizations or individuals listed on the SDN List, or belonging to a sanctioned government;
- Items, goods, and supplies, directly or indirectly exported from the United States to a prohibited foreign country or its citizens;
- Imported goods into the USA, if they originate from a sanctioned foreign country or are supplied by a person under OFAC restrictions;
- Any assets located in the United States or under U.S. control, if they belong (in whole or in part) to an SDN or a foreign government listed on the sanctions list.
Thus, practically everything that has economic value is subject to blocking: money, accounts, tangible and intangible assets, as well as documents confirming ownership or disposal rights.
Any transactions with blocked assets, including attempts to transfer money to another country or to a different account, are blocked by financial institutions under the threat of fines and sanctions from American regulators. All those required to block property must keep records of such assets and report their presence and status to OFAC in a timely manner.
Our law firm offers comprehensive legal support on issues of sanctions compliance and asset unblocking. If you are concerned that your assets may be blocked or want to avoid risks in international transactions, we will help analyze the situation, ensure effective compliance, and, if necessary, represent your interests in interactions with OFAC.
Licensing and Compliance with OFAC
To conduct transactions or business operations with sanctioned participants, you need OFAC license. It provides official permission to act within the framework of sanction legislation and avoid possible fines or criminal liability.
Any company or individual from the USA (or operating in US dollars and through the American financial system) involved in transactions with potentially sanctioned counterparties is required to obtain an OFAC license. There are 2 types of licenses: general and specific.
General License applies immediately to a wide range of individuals or types of transactions, providing general permission without the need to obtain individual approval in each specific case.
Companies and individuals using general licenses are required to strictly follow the prescribed conditions, regularly monitor counterparties, and maintain compliance documentation confirming adherence to the sanctions regime.
Specific License is required in cases where the transaction goes beyond the scope of already existing general licenses. It is considered on an individual basis, taking into account the details of the transaction, participants, amount, and region. Violation of at least one condition of the specific license may result in the transaction being deemed illegal.
Our company has many years of experience assisting clients with obtaining OFAC licenses and complying with sanctions legislation. We offer a full range of services: from auditing compliance programs to preparing and supporting applications for a specific license.
Current Prohibitions OFAC
OFAC sanctions cover a wide range of countries, organizations, and individuals influencing global security and stability. The Office of Foreign Assets Control imposes restrictive measures on the following countries, each of which is included in sanctions programs due to various political, economic, or humanitarian factors:
- Russia: sanctions are related to the violation of Ukraine’s territorial integrity, election interference, and cyberattacks;
- Iran: sanctions imposed in response to support for terrorism, human rights violations, and the nuclear program;
- North Korea: restrictions are related to nuclear and missile programs, as well as human rights violations;
- Syria: sanctions imposed for supporting terrorism and violating human rights;
- Cuba: measures aimed at limiting the political regime, supporting democracy and human rights;
- Venezuela: sanctions are applied due to corruption, human rights violations, and the political crisis;
- Belarus: restrictions are related to repression against citizens and the undermining of democracy.
OFAC uses sanctions not only against countries but also against individuals, organizations, and legal entities. Main categories:
- Individuals: leaders and high-ranking officials under government sanctions. Persons involved in financing terrorism, corruption, and human rights violations;
- Legal entities: corporations, banks, and organizations that support prohibited regimes or conduct operations with sanctioned assets. Companies involved in money laundering or financing illegal activities;
- Criminal groups: organizations associated with terrorism, such as “Al-Qaeda,” ISIS, or HAMAS. Cartels and criminal syndicates involved in the illegal trafficking of drugs or weapons.
Non-compliance with OFAC prohibitions can lead to severe fines, asset blocking, and even criminal penalties. The sanctions apply to all U.S. citizens and companies, as well as international entities that use dollar transactions or interact with American financial institutions.
Steps to Take When You Discover Frozen Assets
The discovery of frozen assets can become an unpleasant surprise for companies and individuals, as the freeze extends to bank accounts, securities, property, and other assets. Correct actions in such a situation will help minimize the consequences and protect your rights.
In the event of a blockage, the financial institution (bank or broker) is obligated to notify the owner about it, specifying the reason. Check whether you, your counterparties, or participating companies are included in sanction lists. Clarify which assets are frozen and in which jurisdiction the blockage occurred.
Make sure you have copies of notifications, bank letters, and any other documents related to the freeze. Gather data about the transaction or operations that might have caused the freeze: contracts, invoices, payment orders, and other supporting documents. Determine what actions could have led to the asset freeze to understand how to proceed further.
We recommend seeking help from a qualified attorney as soon as possible. An expert on OFAC issues will help analyze the situation, determine whether the blocking was lawful, and develop a strategy for further actions. Attorneys will assist in properly drafting requests, preparing documents, and reducing the likelihood of errors that could worsen the situation.
Send an Administrative Request to OFAC asking for details on the reasons for the asset freeze. If the transaction falls under sanctions but you have grounds for its execution (e.g., humanitarian reasons or exceptions to sanction programs), submit an application for a specific OFAC license. Attach copies of contracts, invoices, letters, and other documents confirming the legality of your actions to the request.
If you believe the blocking is unlawful, a lawyer can file an appeal with OFAC requesting the unblocking of assets. In the case of an unjustified freeze, it is possible to challenge it in court if administrative methods have not yielded results.
The Role of Credit Bureaus and Financial Institutions
Bureaus and banks are required to verify their clients, counterparties, and transactions for matches with individuals and organizations included in the SDN list. The verification is carried out using automated monitoring systems that compare client data (name, date of birth, place of residence) with sanction lists.
If during the verification process a connection between the client or transaction and individuals from the SDN list is identified, the financial institution is obligated to immediately freeze assets, cease any operations, and notify OFAC.
Financial institutions are required not only to block assets but also to provide detailed reports on the freeze and related actions to OFAC.
Credit bureaus working with banks and financial organizations analyze client data to identify potential risks associated with their involvement in prohibited transactions.
Credit bureaus, working with banks and financial organizations, analyze client data to identify potential risks associated with their involvement in prohibited transactions. Screening against OFAC lists is conducted at the stage of account opening, loan issuance, or large transactions.
Clients whose assets are frozen lose the ability to manage their funds until obtaining permission from OFAC. In cases where a client is mistakenly sanctioned, the financial institution may assist in submitting a request for clarification.
OFAC Lawyers for Blocked Assets
Blocked accounts, funds, or property can cause serious harm to business, financial stability, and reputation. In such situations, working with experienced OFAC attorneys becomes a key factor in resolving the issue.
The process of unblocking assets requires a clear understanding of OFAC regulatory requirements. The slightest errors in document submission or argumentation can lead to denial or delays in the case.
Improper handling of blocked assets can lead to additional sanctions, fines, or even criminal charges. Lawyers will help avoid these risks.
Lawyers act as intermediaries between the client and the regulator, preparing detailed requests, explaining the reasons for the freeze, and providing justifications for unblocking assets.
The process of interacting with OFAC can be long and labor-intensive. Lawyers specializing in sanctions law know how to expedite the process and achieve a positive outcome.
We develop effective strategies considering the unique circumstances of each case and offer solutions tailored to specific needs. Our goal is to achieve the fastest and most favorable outcome for the client, regardless of the complexity of the situation.
If your assets have been blocked by OFAC, don’t waste time. Contact our professional attorneys for consultation and legal assistance. We will analyze your situation, prepare all necessary documents, and achieve the unblocking of your assets. Contact us right now to protect your interests and regain control over your funds.
