[author: Sam Finkelstein]

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has released updated guidance concerning recent legislation that doubled the statute of limitations for violations of certain sanctions and export control provisions. This updated guidance provides clarity regarding time-bars for enforcement and includes additional information about OFAC’s planned extension of record-keeping requirements.

On April 24, 2024, President Biden signed into law the 21st Century Peace Through Strength Act, Pub.L. No. 118-50, div. D (the “Act”). Section 3111 of the Act extended from five years to ten the statute of limitations for civil and criminal violations of the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA). IEEPA and TWEA form the statutory bases for nearly all of the economic and trade sanctions programs administered by OFAC.

In the wake of this legislative change, legal practitioners in the sanctions space and their clients were left to speculate as to whether OFAC would seek to retroactively apply the new statute of limitations to sanctions violations that had previously been time-barred. Through its latest guidance, OFAC has clarified how the extended statute of limitations will impact its enforcement of U.S. sanctions moving forward.

OFAC’s guidance explains that the new, ten-year statute of limitations applies to any violation that was not already time barred at the time of the Act’s enactment. Practically speaking, this means that OFAC may now commence an enforcement action for violations of IEEPA or TWEA-based sanctions within 10 years of the latest date of the violation, if such date was after April 24, 2019. Sanctions violations which occurred prior to that date were already time-barred at the time of the Act’s passage, and thus are not subject to the extended statute of limitations. However, all other violations are fair game.

Also noteworthy within the updated guidance is a paragraph informing readers that OFAC anticipates publishing an interim final rule extending from five years to ten the record-keeping requirements codified at 31 C.F.R. § 501.601. This widely anticipated change would align existing record-keeping requirements with the extended statute of limitations.

The extended statute of limitations and forthcoming extension of related record-keeping requirements have significant implications for sanctions compliance programs. Companies should consider proactively shoring up their record-keeping provisions before the final rule is made effective. Additional changes to how companies approach due diligence, internal investigations, and mergers and acquisitions due diligence may be necessary as well, to account for risks presented by possible sanctions violations resurrected under the extended statute of limitations.