OFAC Updates Rules Related to Blocked Property

OFAC has issued a Final Rule that clarifies its process for blocked property and related actions. Financial institutions are probably most familiar with OFAC’s ability to block property for those designated on the OFAC List. That is, once someone is designated on the OFAC List, their property is to be blocked, and institutions are prohibited from engaging in any transactions involving the blocked person. In some cases, however, OFAC may issue other orders, including:

• identifying property or interests in property as blocked pursuant to OFAC's authority due to an interest of an already blocked person, including where such interest may not be apparent to the public;
• blocking specific property or interests in property of a person who is not already blocked but whom OFAC is investigating for potential designation; and,
• blocking or imposing other prohibitions with respect to a person's specific property or interests in property less than full blocking sanctions.

Notice of such action may be provided in the Federal Register (unless the investigation is pending) or by separate notices to those impacted. OFAC may provide written notice to those directly impacted or it may notify an impacted financial institution that would, in turn, need to notify impacted customers.

The Final Rule clarifies the actions OFAC may take; the different forms of notification and how impacted parties can contact OFAC with questions. It also provides guidance as to how blocked property may be released and how the status of someone subject to blocked property could be reconsidered.