Yesterday, DF Deutsche Forfait AG (“Deutsche Forfait”), a German trade finance firm, issued a press release regarding their recent delisting from the United States Department of the Treasury’s Office of Foreign Assets Control’s (“OFAC”) List of Specially Designated Nationals and Blocked Persons (“SDN List”). While there is nothing unusual about a company getting off of the SDN List, some of the statements made in their press release were interesting.

First, Deutsch Forfait indicated that they were removed in 249 days. This is highly unusual as most delisting cases take much longer for OFAC to process, with average wait times well exceeding two years. It should be noted, however, that Deutsche Forfait, acknowledges that they spent over 1.5 million Euro on legal and counseling fees. This allowed Deutsche Forfait to allocate an appropriate amount of resources to the SDN reconsideration process, and considering the resources they have at their disposal was an appropriate amount of money to spend as the results show. The reality, however, is that many SDNs do not have that level of resources to expend on delisting, and even when they do they are not willing to spend it on a process that is shrouded in uncertainty both as to the likelihood of success as well the time of completion. However, it should be noted that Deutsche Forfait likely expended that amount of money due to the severe impact the SDN designation had on them. Prior to the designation being made Deutsche Forfait was trading at roughly 4.00 Euro per share. After the designation those shares dipped to nearly 0.5 Euro per share, an approximately 88.5% loss in value. Even with their removal, although fairly recent, Deutsche Forfait’s stock closed at 1.23 Euro per share. These numbers show just how devastating an OFAC designation can be for a company.

In addition to allocating appropriate resources, Deutsche Forfait also acknowledged the installation of compliance programs designed to prevent running afoul of OFAC administered sanctions program in the future. The installation and administration of such programs is one of the main strategies we advise SDN clients to undertake in seeking their reconsideration, as it shows not only a change in circumstances, but a real commitment to not engage in future activities which could serve as a basis for a U.S. sanctions designation.

Second, while not explicitly stating saying so, Deutsche Forfait seemed to indicate that there was a settlement agreement in their OFAC delisting case. Specifically, Deutsche Forfait indicated that “[th]e delisting coincides with an agreement between the agency and the company under which the company gives certain undertakings. In addition, the company has agreed to comply with specified obligations as well as reporting duties towards the OFAC.” As someone who has not only represented a number of individuals and entities on the OFAC SDN list, but also removed a number of those parties, I have never heard of OFAC entering into an agreement with an SDN for removal. Typically what happens is once an SDN has demonstrated to the agency that there has been a change in circumstance, OFAC will make a public announcement that the designation has been deleted from the SDN List. Even in those cases where I have had open discussions about a particular client’s listing and delisting request with OFAC, they were not anything near what one would consider a negotiation to settle the matter. As such, I was rather surprised that an agreement was reached between the agency and the targeted party.

From what I can tell based on my knowledge of the Deutsche Forfait case, the former director of the firm–who remains designated–appears to have been removed from the company. It would not be surprising if it was that individual’s conduct and control over the entity which had caused Deutsche Forfait to be designated, and once he resigned from the firm, the basis of designation ceased to exist, thereby allowing OFAC the legal authority to remove the company based on a change in circumstances. If my guess is right, it further demonstrates that in many cases when dealing with a reconsideration of an SDN designation the main strategies to be employed are to purge troublesome relationships, and to undertake measures to ensure that conduct leading to a basis of designation won’t occur in the future. While other strategies exist, following those two primary strategies will set an SDN on a solid path towards being removed from the OFAC SDN List.