The Office of Foreign Assets Control (OFAC) is the federal agency tasked with the regulation and enforcement of trade and economic sanctions. These sanctions serve to protect the U.S. financial system and achieve U.S. national security and foreign policy objectives. Sanctions are primarily implemented as regulations, rules, and executive orders. Most such sanctions regulations exempt from regulation certain activities related to information and informational materials, personal communications, and travel.
OFAC also administers exceptions to the regulations, primarily through the use of general and specific licenses. If you have any concerns on OFAC compliance, an OFAC sanctions attorney is available who can answer any questions you might have and advise you as to proper procedure in applying for licenses.
OFAC has industry-specific guidelines for compliance, including for:
Many individuals and entities involved in international business affairs are unaware of the specific regulations applicable to their situation. Moreover, many people also fail to appreciate how quickly and how often sanctions regulations are updated (see OFAC’s latest actions here). Such persons are therefore at risk of unknowingly violating OFAC sanctions. An experienced OFAC compliance and licensing lawyer who has worked on cases involving economic sanctions and is familiar with business matters is capable of providing legal counsel to assist people and businesses comply with the law.
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OFAC License Application
OFAC authorizes some otherwise prohibited business transactions to take place with proper pre-approval and licensure. Some licenses are written directly into the regulations, requiring a person to comply with the requirements of that license if they choose to undertake the proscribed transaction. These are called general licenses.
Other licenses are issued in a more traditional manner, by application, either written or via the internet, to OFAC. These are called specific licenses. Both types of licenses are written authorizations by the Office of Foreign Assets Control to permit certain transactions with strict adherence to specific conditions put in place by OFAC.
To apply for a specific license, it is not required that a particular form be utilized. However, specific information regarding the transaction is required in the form of a written request. The request must contain a detailed description of the transaction to take place and must provide the names and addresses of all individuals, companies, and entities involved. Application guidelines and embargo program regulations specify any additional information that is required in the application process.
The application or written request for a license should be mailed to the following address:
Office of Foreign Assets Control
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Attn: Licensing Division
OFAC recently rolled out its online application process. The online application page can be navigated from here. Although the process has been moved online, there still is not a standard application form. The request to OFAC should still contain all of the relevant information and include compelling legal and/or policy arguments supporting why a transaction should be authorized.
OFAC will provide applicants with a written notice of approval or denial once a decision has been made. A denial is considered a final action by the agency, and there is no process for agency appeal. In the case that new information can be provided showing good cause or a change of circumstances arises, it may be requested that OFAC reconsider a particular request.
Applying for a license can be confusing and daunting for individuals who are new to the process. A well-qualified OFAC attorney can help alleviate any confusion and ensure that all the necessary and compelling information is included in the application. For information about requests for interpretive guidance, click here. Or, click here to interpretive guidance FAQs.
Specific and General Licenses
There are two types of licenses for which one may apply: a general license or a specific license. A general license permits a certain type of transaction for a class of individuals without having to file a particular application with OFAC. A specific license, on the other hand, is a written authorization provided by OFAC that approves a particular transaction for a certain individual or entity. To obtain a specific license, OFAC must receive and approve a written request, or application, for the license. Any OFAC-approved transaction is subject to certain conditions. A violation of any of the given conditions results in a violation of OFAC sanctions.
While OFAC’s website addresses frequently asked questions regarding licensing, consulting with personal counsel may be more beneficial. Obtaining the proper licensing is pertinent to conducting business with foreign countries, regimes, and individuals to whom these U.S. economic sanctions apply. Full and complete compliance with U.S. economic sanctions is the legal obligation of every U.S. person, U.S. business, and person subject to the jurisdiction of the United States.
Due Diligence and Reporting
Ignorance is not a valid defense to violations of OFAC-administered economic sanctions. All companies, entities, and individuals involved in international business or other affairs are required to perform their due diligence in maintaining compliance with all U.S. sanctions. OFAC provides a wealth of information online, but the answers pertaining to a specific scenario or transaction may not always seem clear. When compliance with federal regulations is questionable, it is wise to consult with an attorney who is knowledgeable in matters related to international trade, finance, national security, and sanctions. It is ultimately the individual’s or company’s responsibility to seek out the necessary information to ensure compliance.
In cases of international business transactions, it is important to maintain a record of all transaction details, including financial exchanges of any kind, all goods given or received, and all parties involved. For up to five years from the date of a foreign transaction, an OFAC investigation may demand a thoroughly-maintained report. Failure to maintain such records can form the basis of a separate and distinct violation of law, in addition to any substantive violations of the sanctions. In addition, reporting certain transactions to OFAC may be required in certain instances.
OFAC Compliance Counsel
The details of OFAC and U.S. economic sanctions can be complex. It may be hard to determine what is required for certain transactions or if an international business matter falls under economic or trade sanctions at all. For professional and personalized assistance with transactional matters, including OFAC licensing, an OFAC compliance attorney can assist with questions and provide crucial counseling to help avoid costly violations of OFAC sanctions. An OFAC sanctions attorney can answer any questions you might have and advise you as to proper procedure in applying for licenses.