OFAC Reporting Requirements for Blocked Property and Rejected Transactions

Every U.S. person that blocks property or rejects a transaction under U.S. sanctions has a reporting duty to the Office of Foreign Assets Control (OFAC). The core rules are in the Reporting, Procedures and Penalties Regulations, 31 C.F.R. Part 501, and the deadlines are short: a blocking report or a reject report must be filed within 10 business days, and everyone holding blocked property on June 30 must file an annual report by September 30. Since August 8, 2024, initial blocking reports, annual reports and reject reports must be filed through the OFAC Reporting System (ORS).

This guide explains which reports are required, what each must contain, how to file them, how long records must be kept and what happens when a report is late or missing. It is written for banks, money services businesses, fintechs, insurers, brokers and any company that may end up holding or rejecting sanctioned property.

The duty to report blocked property falls on any U.S. person, including a financial institution, that holds, unblocks or transfers property blocked under OFAC’s regulations. Primary responsibility rests with the actual holder, transferrer or releaser of the property. For property held in trust, the trustee is responsible; for real property, the duty falls on a U.S. co-owner, legal representative, agent or property manager in the United States.

The duty to report rejected transactions applies to any U.S. person that rejects a transaction which is not blocked but would violate OFAC’s regulations if processed. Under the Cuban Assets Control Regulations (31 C.F.R. Part 515), the duty extends to all persons subject to U.S. jurisdiction, which includes foreign entities owned or controlled by U.S. persons.

U.S. persons generally include U.S. citizens and permanent residents wherever located, entities organized under U.S. law and their foreign branches, and anyone in the United States. If you are unsure whether your business is covered, start with who counts as a U.S. person under OFAC.

The initial report must include:

Every person holding blocked property as of June 30 must file a report on all of it by September 30 of the same year — not only property blocked during the past 12 months. The annual report lists, among other things, the number of accounts or items and their value in U.S. dollars as of June 30.

OFAC requires the TD F 90-22.50 spreadsheet, submitted through the OFAC Reporting System (OFAC FAQ 50). For omnibus accounts, the annual report must include a disaggregated list of each blocked asset.

A rejected transaction report follows the same deadline and is filed through ORS. It must contain the information required by § 501.604(b) to the extent the filer has it when the transaction is rejected; OFAC generally does not expect the filer to go back to the counterparty to complete the report (OFAC FAQ 820).

At a minimum, OFAC expects the submitter’s details, the date of the rejection, the legal authority for it and any relevant documentation received, including a copy of the payment or transfer instructions, check or letter of credit. Rejected trade documents are reported with a value of $0.00, with the value of the shipment described in a narrative.

Failing to file a required report, filing it late or keeping incomplete records is a violation of OFAC’s regulations in its own right, even where the underlying transaction was handled correctly. OFAC’s Enforcement Guidelines set specific caps for these failures: a late report may draw a penalty of up to $3,550 if filed within 30 days of the due date and up to $7,104 if filed later, plus up to $1,422 for every 30 days a blocked-property report is overdue, for up to 10 years; failing to furnish information under § 501.602 may cost up to $29,150, or $72,876 where the underlying transactions exceed $500,000 (31 C.F.R. Part 501, App. A, § IV).

Where reporting failures accompany a substantive violation, the program statute applies: for programs under the International Emergency Economic Powers Act, civil penalties can reach $377,700 per violation or twice the value of the transaction, whichever is greater, and willful violations carry criminal fines of up to $1 million and up to 20 years’ imprisonment. For the Cuba program, which rests on the Trading with the Enemy Act, the civil maximum is $111,308 per violation (31 C.F.R. § 501.701).

OFAC weighs reporting failures under its Economic Sanctions Enforcement Guidelines (31 C.F.R. Part 501, Appendix A). Prompt correction, cooperation and a voluntary self-disclosure to OFAC are mitigating factors, while repeated or long-running failures weigh against the filer under the General Factors of the Guidelines.