What is an OFAC license?
The significance of obtaining OFAC clearance, better known as being removed from U.S. economic sanctions programs, is crucial for individuals and organizations that fall under the restrictions imposed by the Office of Foreign Assets Control. OFAC is a part of the U.S. Department of the Treasury responsible for implementing and enforcing financial sanctions against countries that violate certain norms. Obtaining OFAC clearance is essential for those wishing to restore economic relations after being placed on the SDN (Specially Designated Nationals) list.
What are the criteria for obtaining an OFAC license?
To obtain an OFAC license, you must meet the procedures set depending on the specific case. There are two types of licenses: general licenses and specific licenses.
- A general license authorizes a particular type of transaction for a class of persons without the need to apply for a license.
- OFAC specific license is the same across sanctions programs
Lack of sufficient grounds for placement on the SDN list
The Specially Designated Nationals and Blocked Persons (SDN) list includes individuals and organizations that, according to the Office of Foreign Assets Control (OFAC), are involved in activities contrary to the interests of the United States.
If you can prove that the initial reasons for being placed on the SDN list were insufficient or mistaken, this could serve as grounds for lifting the sanctions. For example, this might be possible if the actions that led to your inclusion on the list are no longer relevant or were misinterpreted according to OFAC’s regulations.
The original reason for inclusion is no longer valid
In some cases, the original reason for being placed on the SDN list may no longer be valid. This can happen if the issue that led to your inclusion on the list has been changed or resolved. For example, if the policies or actions that resulted in sanctions have changed, or if you have met the conditions set for lifting the sanctions, this could serve as a basis for requesting removal from the list. It’s necessary to provide OFAC with sufficient evidence proving that the original reason for the sanctions is no longer relevant.
Incorrect identification
Mistaken identity is another reason to request an OFAC license. This happens when an organization or individual is wrongly added to the SDN list due to name similarities, incorrect information, or other errors. In such cases, you need to provide evidence proving that a mistake was made and that the sanctions should be lifted. For example, if your name matches that of someone actually involved in illegal activities, and you can prove it’s a mix-up, OFAC might consider your request for clearance.
A deceased person who is subject to sanctions
A person might be removed from a sanctions list if they die. After someone’s death, OFAC sanctions usually become pointless. In such cases, it’s necessary to provide OFAC with proof of the person’s death and request their removal from the list.
What You Need to Know About the OFAC Licensing Process
The process of obtaining an OFAC license requires careful consideration and preparation. Here are a few key points to keep in mind during the OFAC license application process:
- Documents and Preparation
To apply for an OFAC license, you need to prepare and submit a range of supporting documentation: court decision and documents proving the completion of certain actions. The applicant must demonstrate that their situation meets the criteria for obtaining an OFAC license. - Processing times
The process of obtaining an OFAC license can vary in duration depending on the complexity of the case and the completeness of the information provided. Typically, the process takes several months but every application is considered on a case-by-case basis. Applicants should be prepared for the review time to vary based on the specifics of their case and the level of detail in the information submitted. - The Role of Experienced Lawyers
To successfully obtain OFAC authorization, it’s recommended to consult with qualified sanctions attorneys. A professional OFAC license attorney will provide you with legal protection and assist in preparing the necessary documents, offering consultations, and interacting with OFAC. Choosing the right lawyer can significantly increase your chances of achieving a positive outcome.
FAQ
How long does it take to get an OFAC license?
There is no fixed timeline for obtaining a license from OFAC, and the processing time can vary dramatically. A straightforward request might be resolved in a few months, whereas a highly complex or sensitive application could take more than a year to be adjudicated. The duration depends on factors like the specific sanctions program, the completeness of the application, national security implications, and OFAC’s overall workload.
What is an OFAC certification?
An “OFAC certification” is not an official certificate issued by the government. It is a contractual term referring to a written representation or warranty made by one party to another. In this clause, a company attests that it is in compliance with OFAC’s regulations and is not engaged in any sanctioned business. These certifications are commonly used in loans, supply agreements, and other contracts to manage sanctions risk between commercial parties.
Why do you need an OFAC license?
An OFAC license is required to carry out a transaction that would otherwise be illegal under U.S. sanctions laws. It provides the legal authority to proceed with a specific action, such as releasing blocked funds, providing certain services to a sanctioned country for humanitarian reasons, or engaging in a pre-approved commercial activity. Essentially, a license functions as a formal waiver from OFAC for a particular prohibited activity.
What are OFAC requirements?
The fundamental OFAC requirement is that U.S. persons must refrain from engaging in any transactions or dealings, directly or indirectly, with individuals, entities, or countries targeted by U.S. sanctions, unless authorized by OFAC. To meet this requirement, businesses and financial institutions are expected to implement a risk-based sanctions compliance program to identify, prevent, and report any such prohibited activities.
