Situations in Which Dollars Get Blocked

If you or your company have assets denominated in US currency, it is essential to know what to do if your dollars suddenly become blocked. This scenario is not limited to participants in international trade, although that is more common. Other situations can arise where, without being involved in international transactions or making any international transfers, you still face the risk of having your assets blocked. For example, if you trade dollar-denominated securities through your broker and the exchange is added to the US sanctions list (OFAC SDN List), as recently happened with the SPB Exchange, your account gets frozen, and your US dollars get blocked.

What Actions Can Be Taken in This Regard

What should be done in this situation? As is often the case, there are many advisors and suggestions. Some say you should write letters to the American bank where your dollars get blocked. Others suggest writing to the Office of Foreign Assets Control of the US Department of the Treasury – OFAC. In the first case, if the bank responds, it will likely provide a brief recommendation to obtain an OFAC specific license, without which unfreezing the funds is impossible. In the second case, OFAC may not respond to such letters as it is overwhelmed with its ongoing work processing license applications.

Others think that it’s better to rely on an “institutional solution.” For example, as in the case of the SPB Exchange, one can hope that the exchange itself will resolve the issue with OFAC, resulting in all frozen accounts of brokers and their clients being unfrozen. In our opinion, this option is no better than the first two. It’s just about common sense. You can unlikely rely on someone else to be concerned about your frozen dollars. Moreover, the SPB Exchange’s strategy for getting out of the OFAC SDN List leaves much to be desired.

The Supreme Court of the Russian Federation Recommends Applying for an OFAC Specific License

Of course, if you ask us or any other American law firm specializing in US sanctions what to do in such a situation, the answer will be crystal clear. Without delay, you need to prepare and submit a request to OFAC for a specific license to unfreeze your assets. For those who question the validity of this approach, we strongly recommend reviewing the Supreme Court of the Russian Federation’s Ruling No. 305-ЭС23-11869 of November 20, 2023, which clearly states that if US dollars get blocked by a foreign bank or another credit and settlement organization, this issue must be resolved “…following the procedure provided by US law, by applying to OFAC and obtaining a specific unblocking license to lift the restrictions…”.

What is an OFAC Specific License, and How to Get It

Indeed, the only effective way to unblock your assets in such a situation is by obtaining an OFAC specific license. Anything else will just be a waste of time and money, as the longer your dollars are blocked, the greater your associated losses will be. While there are numerous recommendations and instructions on how to prepare and submit a request for an OFAC specific license on your own, caution and prudence are essential. If a very small amount is blocked and it hiring a lawyer doesn’t make sense, you can try to do it yourself, provided you have a good command of English and have dedicated enough time to studying this issue.

In all other cases, especially if a significant amount is blocked, it is best to consult an OFAC lawyer. To increase the chances of obtaining an OFAC specific license, your case must contain the correct and convincing arguments, with references to the relevant US laws and regulations. Since the grounds that OFAC considers sufficient for issuing a specific license are very limited, it is crucial to formulate your case to fit within these grounds.

Considering that OFAC takes about a year to review a request for a specific license (sometimes even longer), the stakes are high. It is important to make the right choice from the outset to avoid the consequences of a hasty, ill-considered decision later.