When the United States Department of the Treasury Office of Foreign Assets Control (OFAC) denies your license request it can be a very deflating and frustrating event. A great deal of time and effort goes into properly drafting an OFAC license and then waiting on word of OFAC’s decision in regards to such license application can also take months. Not to mention, all the while you are anxious to engage in the transaction for which you sought a license.

When a license is denied there is a process to request a reconsideration of OFAC’s determination. A denial by OFAC of a license application constitutes final agency action. There is no formal process of appeal contained in the regulations, however, OFAC will reconsider its determinations for good cause. Good cause could be where the circumstances initially disclosed in the license application have changed or where additional relevant information was not previously made available to OFAC. However, the question is should you engage in this reconsideration process?

As anyone who has dealt with OFAC can tell you, they have a huge backlog and limited staff and budget. As such, it often takes them quite sometime to process a request. Therefore, requesting a reconsideration of their initial denial will just lead to further delays in processing on their end. In this scenario, it may be advisable to file suit under the Administrative Procedure Act. Since, OFAC’s denial of a license application constitutes a final agency decision, then the matter will be ripe for judicial review under the APA.

However, before filing suit, the matter needs to be carefully considered. Here are some considerations you should keep in mind:

1. Were the transactions you proposed eligible for licensure?
2. Did you supply all information needed by OFAC to properly render a decision on the license application?
3. Did OFAC act in an arbitrary and capricious manner?
4. Are you prepared to engage in costly litigation over the right to engage in the proposed transactions?

Although, filing suit under the APA for judicial review of an OFAC license application denial may be a quicker route than asking OFAC for a reconsideration, it is certainly an uphill battle. Understand that the burden of proof in an APA action is “arbitrary and capricious” and that OFAC is given great deference in their decision making. Although, OFAC’s reconsideration process moves at a very slow pace, filing suit may also be a waste of time. As such, weigh the above considerations very carefully before making your decision on how to proceed.

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@ferrari-legal.com.

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