Who Needs Representation Before OFAC?

Suppose you or your company is under US sanctions. In that case, all your accounts and transactions are automatically blocked, and you cannot continue business activities. This situation looks like a complete deadlock. However, even in this case, you probably can find a way out if you are ready to make certain concessions and compromises. We can help you here. It’s always better to ensure a legal representation of the client before the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury to fully understand reasons for this situation and conduct negotiations with this department on possible ways to lift sanctions.

Assets Unfreezing

In particular, representing a client before OFAC can significantly help if your goal is to unfreeze assets. In this case, at least two scenarios are possible. The first is when you need to unfreeze part of your assets to complete a particular transaction. First, you must obtain an OFAC license. Essentially, a license is OFAC’s authorization to carry out a specific transaction that, if not authorized, would be prohibited. When you apply to OFAC to allow a particular transaction, you must justify why certain assets should be released.

The second scenario is about unfreezing all assets. In this case, most likely, the solution to this problem should be a delisting from the OFAC SDN list , since the blocking of all assets most often occurs as a result of the inclusion of a particular individual or company in OFAC SDN list. As in the first case, we are ready to help.

Consequences of Company Restructuring in which a Sanctioned Person Owned 50 % or More

One may need a representation before OFAC when dealing with the negative consequences of restructuring a company in which a person under US sanctions owned 50% or more. According to the 50 percent Rule , such a company is automatically considered under sanctions, and all its assets in the United States are blocked. In this situation, the company’s major shareholder may want to reduce his stake below 50 percent to get it out of the sanctions. Note that this can only be done outside the USA since any transactions with the company are prohibited in the United States. In addition, US citizens or US companies must not be involved in such a transaction.

Let’s suppose this is done outside of America and without the involvement of American individuals or companies. Thus, the company is no longer considered under US sanctions automatically because the sanctioned person’s share has fallen below 50 percent. However, if the company property comes within the US or within the possession or control of a US citizen or US entity, it will be blocked. You can unfreeze it in one of two ways only: (1) get an OFAC license to unblock particular property of the company or to do a transaction with this property; (2) remove the former majority shareholder of the company from the OFAC SDN List . The situation turns out this way because, firstly, the sanctioned person retains some of his interest in the company. Secondly, and most importantly, OFAC does not recognize the unauthorized transfer of ownership in the company by a person under US sanctions .

Representing Clients before OFAC on Different Issues

Representation of clients before OFAC may be necessary for a variety of reasons. Whether it’s delisting from OFAC SDN List , getting an OFAC license or making a request to OFAC, you’d be much better off with a US lawyer. Contact us to find out how we can help.