So the rumor, which has recently been substantiated, is that the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) will be releasing a new online application process for all license applications to be processed through. The new online application process will be similar to the one used to apply for licenses to export agricultural commodities, medicine, and medical devices to Iran and Sudan. The new license application process is currently being tested and should be available in the next few weeks–which in OFAC terms means that it could be a few more months. While a new online license application sounds like it could be a wonderful thing that will streamline the licensing process and lead to quicker response times, it’s my personal belief that it could present some issues.

First, by automating and streamlining the process, there is a certain amount of advocacy that is taken out of the process. Why would that matter? Well everything with OFAC is based on the facts and circumstances of the case, as well as contemporary foreign policy considerations. I’m not sure that the ability to effectively communicate such considerations or provide detailed explanation into the facts will be available in the same manner on an online application form as it would in a free form license application. It seems that the new online application process may appear like the OFAC unblocking application forms which provide very little space or opportunity to advocate for the release of blocked funds. Indeed, many times when we have been hired to handle unblocking matters, it is typically when an unblocking license has been denied due to lack of any legal or policy reasons why the funds should be unblocked. The new application process may present similar problems. Which brings me to my second point.

More people may seek to use the OFAC license application on their own, seeing it as an easy, automated process, as opposed to having counsel or at least someone with OFAC experience prepare the application. This is problematic for a few reasons. One, it could lead to a number of frivolous licenses being filed by parties who are unaware of OFAC regulations or licensing policies. For example, I frequently get calls from individuals who say the need an OFAC license “to transfer funds from Iran”. These funds transfers are generally authorized as personal remittances for things such as inheritance. By bypassing counsel in the application process due to their being emboldened by an easy, automated process, individuals could end up filing frivolous licenses for things that are already licensed or exempted, or for which authorization is absolutely out of the question. Second, even when the applications are valid, properly vetting the transactions to make sure Specially Designated Nationals are not involved, and that the authorization is properly advocated for, by individuals unfamiliar with OFAC, could lead to a number of denials which may require one or more re-filings before they can authorized.

I hate to disparage an online application process which is so clearly needed, but there are some legitimate concerns that I have and I’m sure other OFAC practitioners will have as well. If done correctly, OFAC’s new licensing application platform could be a blessing. If not, it could end up limiting the ability of practitioners to properly advocate on behalf of a license application and/or lead to more frivolous applications being filed. I guess we’ll see what happens when the new online application process is unveiled to the public. Until then we’ll keep our fingers crossed that the online application process serves as a benefit and not a detriment.

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