On May 10, 2024, the Office of Foreign Assets Control (OFAC) published an interim final rule (IFR) to amend its “Reporting Procedures and Penalties Regulations.” The IFR would generally require filers to use the electronic OFAC Reporting System (ORS) for submission of initial reports of blocked property, Annual Reports of Blocked Property, and reports of rejected transactions beginning on August 8, 2024. OFAC is soliciting public comments on this IFR until June 10, 2024.
According to OFAC, “the electronic submission of reports improves efficiencies in reporting and reviewing data,” and “many filers currently use ORS, on a voluntary basis.” In any event, OFAC is encouraging filers to become familiar with ORS and to submit reports using that system in advance of the compliance date.
Note that, if a submitter can provide evidence of “unique and extraordinary circumstances” that would prevent the electronic filing of reports (e.g., lack of Internet access), the submitter may call OFAC (202-622-2490) to request an alternative way to submit reports. Such requests will be subject to “a presumption of denial” and granted only in writing.
Email Submission of Other OFAC Reports
The interim final rule will also require electronic submissions only, either via e-mail (OFACReport@treasury.gov) or the ORS for: reports on unblocked or transferred property, reports on litigation, arbitration, and dispute resolution proceedings (when blocked property is involved), rulemaking, rules governing availability of information, procedures for unblocking property believed to have been blocked and reported in error, and procedures governing delisting from the Specially Designated Nationals and Blocked Persons List or any other OFAC list.
Reports of Unblocked or Transferred Blocked Property
As mentioned above, the IFR will require electronic submissions of reports of unblocked or transferred blocked property, either via e-mail or the ORS. Reports must be submitted within 10 business days of the unblocking or transfer of blocked property, including pursuant to a valid order issued by a U.S. government agency or U.S. court. No filing is required:
- If a report has already been submitted in connection with a general or specific license.
- For credits of interest payments that are not transfers of blocked property; or
- For debits from blocked accounts for normal service charges, when permitted by OFAC sanctions.
Reports of Rejected Transactions
OFAC also issued the following clarifications regarding reports of rejected transactions:
- Securities, checks, foreign exchange, and goods and services are not considered “transactions” subject to OFAC reporting unless provided as part of a transaction.
- The term “U.S. person” applies to all U.S. persons (or persons subject to U.S. jurisdiction), not just U.S. financial institutions.
- Filers are only required to report the information that is available to them at the time a transaction is rejected.
Reports to be Furnished on Demand
The IFR added a note to its requirements for “reports to be furnished on demand,” stating that: if OFAC has reason to believe an account or transaction may involve the property or interests in property of a blocked person, OFAC may instruct a financial institution to provide certain information to aid the identification of blocked property, to report transactions that meet specified criteria, and notify OFAC prior to processing such transactions.
Other Amendments
Lastly, OFAC modified its “compliance release” procedures for requests relating to property that is blocked in error; updated the regulations with respect to the availability of information under the Freedom of Information Act (FOIA); and clarified delisting procedures for persons seeking removal from any list maintained by OFAC.
Please send an email to compliance@americascreditunions.org if you have any questions or feedback regarding this IFR. Again, OFAC will accept public comments until June 10, 2024.
Resources Links:
Federal Register: OFAC Reporting, Procedures and Penalties Regulations