Understanding OFAC Commercial Litigation and Licensing
The Office of Foreign Assets Control (OFAC) is the division of the U.S. Treasury that is responsible for administering and enforcing economic sanctions against individuals and foreign governments with involvement in narcotics trafficking, terrorism, and other threats to the national security and foreign policy of the United States. In pursuing its executive mandate, one of OFAC’s primary means of enforcement is to freeze (or “block”) the assets of individuals who are alleged to present threats to the U.S. and its allies.
While OFAC’s blocking of assets belonging to these specially designated nationals (SDNs) is indeed an effective enforcement mechanism, it can also lead to substantial difficulties for SDNs who have legitimate business in the United States, individuals who are unjustly labeled as SDNs, and domestic financial institutions and businesses that have extended credit to SDNs. Each OFAC lawyer at our firm is prepared to serve as local counsel for SDNs, creditors and other interested parties facing OFAC-related issues in South Florida.
Key Statutes and Terms Involved in OFAC Licensing and Related Litigation
Due to the niche nature of OFAC practice and the complexity of the substantive and procedural issues involved, for those who have questions about OFAC’s designation of SDNs and blocking of assets, obtaining licenses to unblock assets, and pursuing transactions and foreclosures involving OFAC-blocked property, an overview of some of the key statutes and terms is a good place to start:
- Specially Designated National (SDN): As explained by OFAC, an SDN is an individual or entity that has been determined to be “owned or controlled by, or acting for or on behalf of, [a] targeted countr[y].” OFAC identifies targeted countries and SDNs by “program tags,” which are listed on the OFAC website.
- Blocked Assets: An individual’s or company’s designation as an SDN results in the automatic “blocking” of his, her or its assets. Once assets are blocked, “U.S. persons are generally prohibited from dealing with them.”
- OFAC License: In order to transfer a blocked asset, use a blocked asset to satisfy a debt or foreclose on a blocked asset, the SDN or creditor seeking payment or foreclosure must apply for a license from OFAC. Two types of OFAC licenses are potentially available: general and specific.
- Trading With the Enemy Act (TWEA): The TWEA is one of several statutes falling within OFAC’s enforcement jurisdiction. The TWEA gives the executive branch the authority to restrict trade between the U.S. and targeted countries.
- International Emergency Economic Powers Act (IEEPA): The IEEPA gives OFAC the authority to block SDNs’ assets, “during the pendency of an investigation.” Due to the breadth of the IEEPA and the substantial authority with which OFAC has been endowed, OFAC is able to block assets without judicial oversight and based on classified intelligence alone.
- Foreign Narcotics Kingpin Designation Act (Kingpin Act): Voted into law in 1999, the purpose of the Kingpin Act is “to deny significant foreign narcotics traffickers, their related businesses, and their operatives access to the U.S. financial system and to prohibit all trade and transactions between the traffickers and U.S. companies and individuals.” The Kingpin Act is modeled after the Executive Order targeting Colombian drug cartels passed in 1995 under the IEEPA.
Speak With An OFAC Lawyer At South Florida’s Saavedra-Goodwin
This brief introduction barely scratches the surface of what an OFAC law firm need to know in order to effectively represent SDNs, creditors, and other individuals and entities in OFAC-related matters. If you have questions about dealing with OFAC, or if you need local counsel for an OFAC license application or a commercial litigation matter involving a blocked asset in South Florida, please call (954) 928-9568 or contact us online to speak with an OFAC lawyer.