The Department of the Treasury’s Office of Foreign Assets control (OFAC) issued a final rule amending specific reporting and procedural regulations effective November 7, 2024. OFAC published the interim final rule on May 10, 2024, seeking comments by June 10, 2024. The final rule’s enactment is noteworthy because OFAC seriously considered public comments concerning reporting requirements for unblocked or transferred property. The final rule adds three exceptions to the reporting of unblocked or transferred property based on the public comments received after publication of the interim final rule.
31 C.F.R. § 501.603(b)(3)(i) requires reports within 10 business days of when blocked property is unblocked or transferred, including when this action occurs pursuant to a valid order issued by a U.S. Government agency or U.S. Court. OFAC’s stated purpose for this reporting requirement is to enhance their ability to determine the status of blocked and unblocked property on a continuing basis. Another key provision is that filers must submit these reports electronically. Recognizing the increased burden on the public given this broad reporting requirement, as reflected by the public comments to the interim rule, OFAC created three exceptions effective with the final rule’s implementation on November 7, 2024:
- Reports need not be submitted for authorized transfers of funds or credit by a financial institution between blocked accounts in its branches, or authorized debits for normal service charges;
- Reports need not be submitted for blocked property that is unblocked or transferred pursuant to a general or specific license, unless the license itself requires the submission of an unblocking report; and,
- Reports need not be submitted for property that is unblocked pursuant to OFAC’s removal of a person from the SDN list.
In addition to this reporting procedure update, the November 7, 2024, final rule also makes the following changes or additions to OFAC’s regulatory scheme:
- Clarifies the scope of the term “transaction” in 31 C.F.R. § 501.604(a).
- Revises the procedures at 31 C.F.R. § 501.806 requesting release of funds blocked due to “mistaken identity” to include “typographical or similar errors leading to blocking.”
- Requires filers to use the OFAC Reporting System (ORS) for submission of initial reports of blocked property and annual reports of blocked property pursuant to 31 C.F.R. § 501.603(b)(1) and reports of rejected transactions pursuant to 31 C.F.R. § 501.604(d).
The pace of OFAC’s oversight of international transactions shows no sign of slowing down.
