The United States District Court for the Southern District of New York ruled that the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) was required to turnover the names of parties granted specific licenses to engage in transactions otherwise prohibited by OFAC administered sanctions programs. This disclosures are to be made pursuant to a Freedom of Information Act (“FOIA”) request.

Although earlier this year corporate license holders were advised that their identities could be disclosed pursuant to a FOIA request, this was not the case with individual license holders. Due to a certain exemption in FOIA, OFAC sought to prevent disclosure of such names as “personnel and medical files and similar files.” However, the U.S. District Court in the Southern District of New York has now ruled that the privacy interests at stake here are outweighed by the public’s interest in disclosure.

Upon OFAC’s request, the District Court granted a 45-day stay of the decision. OFAC will almost certainly appeal the district court’s decision.

While a number of attorneys are upset about this development, as it will not protect their client’s identities and business dealings, others are pleased with the District Court’s decision. The argument on both sides deals with the effect such disclosures will have on the licensing program and clients’ willingness to file for licenses now that their identities can be revealed to the public.

One one hand those in favor of the District Court’s decision believe that this will actually open it up for more people to apply for licenses and to comply with OFAC regulations, because they will have more insight into which transactions are licensable and how to go about carrying out a transaction otherwise prohibited by an OFAC administered sanctions program.

On the other side of the debate are those that feel disclosure will scare potential license applicants from seeking licenses as their identity and activities will be available to the public. This could limit their ability to engage in certain types of activities and open up avenues for competitors to gain insight into their activities.

My opinion is that this development will have an adverse impact on corporate license holders and future applicants, but is very beneficial for private individuals and small business owners. Whether this ruling stands will remain to be seen, as will the effect this ruling has.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 at 202-351-6161 or ferrari@ferrari-legal.com.