Deadline for filing OFAC’s annual report on stranded assets is fast approaching | Davis Wright Tremaine LLP

The annual September 30 deadline for the submission of the Annual Blocked Assets Report (ARBP) to the US Department of the Treasury Office of Foreign Assets Control (OFAC) is approaching again. Under federal regulation, all “United States persons (or persons subject to the jurisdiction of the United States) who have or have had in their possession or control property blocked under this Chapter, including financial institutions”, are required to file an ARBP.1

In addition to submitting the ARBP, institutions should remember their continued obligation to report blocked assets as well as rejected transactions in accordance with OFAC regulations (“rejected transactions”) within 10 business days of the release. date the property is blocked or the transaction was rejected. Rejected transactions are not reported annually as blocked assets.2

Annual report of blocked assets

All holders of “blocked goods”3 must file with OFAC before September 30 of each year a complete report of all blocked assets held on June 30 of the reporting year.4 The 2021 version of the ARBP form, accessible through the Treasury Department website, requires information regarding, among other things, the ownership, location, value and asset classification of the blocked property.

Institutions can also view the additional guidance and instructions issued by OFAC for ARBP 2021 reporting requirements on the Treasury Department website. Note that no The ARBP must be filed:

  • 1. If an entity does not hold any blocked property;
  • 2. Concerning goods released by a general or specific license (even if the goods have not yet been returned);5 or
  • 3. Regarding assets that have been frozen under a now completed sanctions program.

For the purposes of ARBP 2021 submissions, it is essential to be aware that recent rule changes6 require entities submitting ARBPs:

  • 1. “[P]provide a disaggregated list showing each blocked asset record contained in [omnibus] accounts ”if they keep funds blocked in those accounts; and
  • 2. “[R]If the target of sanctions is not obvious, entities should “include a narrative description of the interest (s) of the target (s) in the transaction.”7

Failure by an entity to submit an ARBP on time is a violation of 31 CFR Part 501 and may subject the entity to severe criminal and civil penalties.

Reminder: Rejected transaction reports

In addition to the obligation to submit an ARBP, OFAC rules8 also require the continued submission of rejected transaction reports within 10 business days of a rejected transaction.9 These reports can be filed using the rejected transaction report template provided by OFAC, but the use of this form is not required.

Recent rule changes have changed the reporting requirements for rejected transactions.ten As DWT previously explained, the rules have broadened the scope of who must file such reports to include all U.S. persons or persons subject to U.S. jurisdiction and not just financial institutions. In addition, OFAC has developed the types of rejected transactions that must be included in such reports.

FOOTNOTES

1 31 CFR § 501.603.
2 31 CFR § 501.604.
3 Blocked assets include assets subject to sanctions programs and the OFAC-administered Specially Designated Nationals (SDN) list, found in 31 CFR Part 501. Senders and financial institutions should review the SDN list to prevent the flow. of funds or goods to or from the targeted nation or individual. When ownership is frozen, the assets are frozen and are held by the shipper or the financial institution. OFAC guidelines explain that although the blocked title deed remains with the targeted entity, the exercise of property rights over that property is prohibited without the permission of OFAC.
4 31 CFR § 501.603.
5 Note, however, that the release of assets may require the submission of additional reports outside of the ARBP context “when specifically required by OFAC, such as when [such reports] are subject to a general or specific license and must be filed within 10 working days from the date the property is released. “ Identifier.
6 To see 84 Fed. Reg. 29055 (June 21, 2019).
7 To see the OFAC guidelines mentioned above.
8 31 CFR § 501.604.
9 OFAC, in a set of FAQs, distinguishes rejected transactions from blocked transactions as follows: “In certain cases, an underlying transaction may be prohibited, but there is no blockable interest (i.e. that is, that of a National Specially Designated (SDN) or blocked person or government) in the transaction. In these cases, the transaction is simply rejected, or not processed and returned to the sender.
ten To see 84 Fed. Reg. 29055 (June 21, 2019).

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