Treasury’s Office of Foreign Assets Control (OFAC) recently held an all-day international trade symposium where it provided guidance on many of its programs, and discussed program requirements and licensing procedures. For those of you who were not lucky enough to attend, here are ten OFAC tips:
- As part of the Export Control Reform Initiative (ECRI), OFAC worked with Commerce’s Bureau of Industry and Security (BIS) and Department of State’s Directorate of Defense Trade Controls (DDTC) to create a consolidated screening list. You can find it here. Note that it does not include all government lists. It only combines lists from the big three. Other lists such as law enforcement wanted persons lists, U.S. General Services Administration excluded party lists, and international blocked persons, wanted, and entity lists are not included in this database. If you find it necessary for your business, there are software programs available that provide a fully consolidated search of both domestic and international restricted parties.
- Despite all the new sanctions laws and recent blogger comments that TSRA can’t survive, Treasury will continue to issue Trade Sanctions Reform and Export Enhancement Act (TSRA) licenses, “but it will be a different environment in which you’ll operate.” This means you can still get a license to export medicine, medical devices and food stuffs from OFAC. The new Central Bank sanctions do not shut down the program.
- Although the U.S. seems to be restoring its diplomatic relationship with Burma due to Burma’s changing political atmosphere, there are presently no changes to OFAC’s Burma sanctions. OFAC has not begun licensing beyond the scope of the current Burma program.
- BIS will provide an illustrative list of TSRA eligible medical device replacement parts. Keep a look out. OFAC and BIS recognize that replacement parts need to be exported.
- There is no formal process for expedited OFAC license processing. This needs to be repeated because no one wants to believe this statement. There really is no formal process for expedited processing. However, you can tell OFAC if there is an urgent situation. You can request expedited processing on the top of your license application and OFAC will consider the circumstances. OFAC has complete discretion and will decide if you really do need to jump the processing line. In certain rare cases that OFAC considers true emergencies, OFAC will grant your request, but again there is no formal process for expedited processing. So if some lawyer tells you he can get you a license through expedited processing–call another lawyer. A business issue is generally not considered an urgent need.
- The new SDN Search tool performs a simple search so always try searching in a variety of ways such as last name first, first name first, and using key words. The new OFAC search tool can be accessed at SDN Search.
- Screen parties multiple times throughout a transaction. The SDN list can change daily. Reliance on an outdated SDN list is a frequent cause of OFAC violations. It is best to run the names at the beginning of your transaction and as a last step before exporting.
- “Legal services” exemptions or general licenses generally cover activities distinct from the registration and protection of intellectual property. However, depending on the sanctions program, there may be a separate authorization for these activities. For example, the Iranian Transactions Regulations (ITR) contain a specific authorization for certain patent, trademark and copyright transactions. In other words protecting IP rights is not always authorized under a legal services exemption. Read general licenses and exemptions carefully.
- OFAC violations frequently result from the following actions: misunderstanding the regulations, miscommunication with institutions, failure to escalate SDN matches, failure to comply with the terms and conditions of a license, use of an expired license, and reliance on the due diligence of a freight forwarder. Make sure your compliance program is thorough and includes checks to avoid these common mistakes!
- Read your OFAC license! It does not necessarily include everything you requested and in some cases it contains reporting requirements.
Also note that as the symposium was taking place, OFAC issued guidance concerning the implementation of section 1245 of the National Defense Authorization Act (NDAA) into the Iran sanctions program. The new guidance can be found on OFAC’s website.