OFAC General License No. 76A Expired

The main SPB Exchange news now is that OFAC General License No. 76A expired on January 31, 2024. From the date the SPB Exchange was added to the US sanctions list—OFAC SDN List —on November 2, 2023, until January 31, 2024, this license allowed anyone conducting transactions with the SPB Exchange to perform operations necessary to complete deals related to the SPB Exchange, including terminating relationships with the exchange and withdrawing assets obtained from such transactions. Although taking advantage of this opportunity was challenging in practice, now, after the expiration of this license, the situation has worsened for those with frozen funds due to the US sanctions against the SPB Exchange.

Why OFAC General Licenses Often Don’t Work

To be fair, it should be noted that similar problems have arisen for other individuals and entities long before the SPB Exchange was placed on the US sanctions list. Similar issues often occurred in connection with other narrow-targeted general licenses related to specific sanctioned organizations or individuals, as well as with the broader-scope OFAC General License No. 50.

Let’s illustrate this with an example. Suppose you, as an individual, discover that some of your funds are frozen, for instance, in the Bank of New York Mellon or JPMorgan Chase. You approach the bank to unfreeze your assets based on OFAC General License No. 50, only to receive a response stating that you need to obtain an OFAC specific license for this. The same situation awaits you with any other US bank and European banks like Euroclear Bank.

This is not about their biased attitude towards you. They simply fear becoming subject to secondary sanctions and/or fines if they do not rigorously adhere to US sanctions regulations. Penalties for violating US sanctions can be very substantial. For example, when the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury accused the French banking group BNP Paribas of violating US sanctions, BNP Paribas had to agree to pay a fine of $8.8 billion to settle the conflict in 2014 (Hausler v. BNP Paribas S.A., 169 F. Supp. 3d 531, 534 (S.D.N.Y. 2016).

OFAC Specific License

The US legislation on economic sanctions is complicated enough. This is why it’s crucial to seek assistance from a qualified specialist to draft your petition for an OFAC specific license. Of course, if you’re dealing with a very small frozen amount and can’t afford a qualified lawyer, you’ll have to prepare the application yourself and hope that OFAC won’t object to licensing such a small amount.

However, if substantial funds are frozen, the need for assistance from a qualified attorney is evident. In this case, there are two options: (1) seek assistance from a local lawyer/firm or (2) an American attorney. Although many local lawyers offer services for obtaining OFAC licenses, not all of them have a thorough understanding of American law, and very few have a clear understanding of how the OFAC petition process works in practice. If you need to address a local legal issue, you turn to local lawyers. Similarly, it’s better to consult an American OFAC lawyer when faced with issues related to US economic sanctions.

While the management of the SPB Exchange assures its clients that they will try to resolve these issues, our analysis of the SPB Exchange’s recently adopted strategy for dealing with OFAC does not leave room for optimism. It’s unlikely that there will be any encouraging SPB Exchange news soon. Each investor will have to solve asset unfreezing problems independently. But that doesn’t mean you necessarily have to deal with OFAC alone. Contact us, and we’ll tell you what we can do for you.