Are there any general licenses for Ukraine-related sanctions?
Interviewee: Yes, there are. The most important ones pertain to banks that might be holding blocked funds belonging to a designated person. Such banks are allowed to deduct normal fees associated with maintaining the bank and they are also allowed to pay interest into the blocked accounts as if the account were still operating. The other important general license includes a provision for U.S. lawyers to provide legal services to those people who are designated. The license also allows for U.S. attorneys to be in receipt of payments for their services from non-blocked foreign sources. This means the payment has to originate from overseas and a non-blocked account.
In what instances would someone want to apply for a specific license for these sanctions?
Interviewee: Specific licenses require an application. With respect to the Ukraine sanctions, I’d imagine there are lots of people who might have had their property or funds mistakenly blocked because of wrong identification. This actually happens quite often as many people have names that are similar to those appearing on the SDN list. If your name is similar to someone on the SDN list, your transactions may have been blocked and you may have to file an application with OFAC to get those funds unblocked.
What steps should people take if they are already doing business in the region?
Interviewee: If they do not currently have a sanctions compliance program, they should implement one immediately. The policy should include instructions on what employees will need to do in the event that a business partner or transaction needs to be blocked. People doing business in their region should also conduct factual investigations to determine whether any of their business partners or customers are at least 50 percent owned by designated persons. Being proactive and, if necessary, self-disclosing a violation can go a long way to protecting your reputation and mitigating any potential enforcement response by OFAC.
If someone is doing business with a person or company that is targeted as an SDN by the Ukraine-related sanctions, do they need to cease all transactions?
Interviewee: Yes, such persons need to immediately block all of the property and interests in property belonging to the designated person. All transactions must be ceased immediately and the U.S. person involved needs to file a report to OFAC informing the agency that it has blocked a property of a designated person. That blocking report is an obligation, so failing to file the blocking report to OFAC is a separate and distinct violation on top of any underlying violation that might have occurred before. Ongoing contracts must also be blocked because contracts are considered property, and any transactions called for under the contract may no longer proceed. If a person is in that situation, it’s very likely that a violation has already occurred and self-disclosure of that violation may be the most effective way forward to try to mitigate any enforcement response from OFAC.