The United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) has been busy over the past few weeks. First, a couple of weeks ago, they issued the amended Reporting, Procedures, and Penalties Regulations, 31 C.F.R. Part 501, which expanded the level of detail required for OFAC blocking and reject reports, and extended the requirement of reject reporting to non-financial institutions.

Then on July 1, 2019, OFAC sent out a reminder that the Annual Reports of Blocked Property (ARBP) for anyone holding blocked property are due on September 30, 2019. What this means in practical terms is that anyone that is holding property blocked pursuant to OFAC-administered sanctions regulation must submit to OFAC a comprehensive list of all blocked property that they held as of June 30, 2019. If you were holding blocked property prior to that time, but no longer holding it as of June 30–perhaps it was unblocked by a license or a delisting–then there is no need to file an ARBP.

Blocked property for purposes of the ARBP is that which was blocked pursuant to an OFAC regulation. If property has been unblocked by a general or specific license, but not yet returned to its owner, its does not qualify as blocked property, and should not be reported to OFAC. OFAC offers the example of property of the Government of Sudan unblocked as a result of the January 17, 2017 issuance of the general license found at 31 C.F.R. § 538.540. Another example are those accounts which have been restricted due to the account holder ordinarily residing in Iran. Those accounts are not considered blocked and should not be reported, unless a designated party–i.e., one appearing on the OFAC SDN List or otherwise blocked by operation of the OFAC 50 Percent Rule–maintains an interest in the account.

In order to file an ARBP, use OFAC’s Form TD F 90-22.50. This form can be supplemented with a spreadsheet in the event that the filing party holds 20 or more blocked accounts, although it is not required. Completed ARBP’s can be submitted to OFACReport@treasury.gov. Given the new changes to the RPPR referenced above, OFAC has updated Form TD F 90-22.50 by creating an editable spreadsheet that contains all of the fields necessary to complete the report. You can find it here.

Here are some tips OFAC has recommended for preparing the reports as sourced from their Guidance on Filing ARBPs:

Tip #1: For submitters who maintain blocked funds in omnibus accounts, disaggregate each blocked asset in the report. At this time, this is recommended by OFAC, but will become a requirement for the 2020 ARPBs.

Tip #2: Ensure that the total number of blocked property records equals the total number of blocked assets.

Tip #3: List transactions or property blocked in foreign currencies in U.S. Dollars with the foreign currency amount and notational exchange rate included in the “Additional Description of Property” field. Also use that field to include the balance owned on property that has a negative balance while reporting the amount as zero.

Tip #4: Ensure that the appropriate regulations and program tags–e.g., SDGT, SDNTK, FTO, etc .–are reported with respect to each blocked asset and describe the blocked person. Further, include the name of the blocked person for whom the blocking occurred. If unknown, identify the circumstances that led to the blocking, including any communication from OFAC ordering the blocking. Doing this is recommended at this time, but will be required for 2020 ARBPs.

Tip #5: Identify the city and country in which the blocked property is held. Also, include a column in the spreadsheet that identifies as “Y” if the reported blocked property has been blocked since June 30, 2018 or “N” if it was previously reported.

Failure to submit a required report by September 30 constitutes a violation of 31 C.F.R. Part 501 (“Reporting, Procedures and Penalties Regulations”), so holders of blocked property should ensure that they get their reports in and they follow OFAC’s amendments to the RPPR.

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@falawpc.com