| US Treasury Department (2023)

Once funds have been determined to require freezing, they must be deposited into an interest-bearing account on your books from which only OFAC-authorized withdrawals can be made. The ban must also be reported to OFAC Compliance within 10 business days. Some banks have chosen to open separate accounts for each blocked transaction, while others have opted for omnibus accounts titled "Blocked Libyan Funds", for example. Either method is satisfactory as long as there is an audit trail that allows certain funds to be released with interest at any point in the future.

OFAC regulations require funds to receive interest at a commercially reasonable rate, i.e. H. at a rate currently offered to other depositors for deposits or instruments of comparable size and maturity.

Generally yes. In most cases (e.g. with the exception of Iraq), OFAC regulations contain provisions that allow a bank to charge blocked accounts with normal service fees described in the individual regulations. Fees must conform to a published fee schedule for the type of account in which funds are held.

no OFAC regulations are tailored to further the needs and purposes of specific executive orders or by-laws that provide the broad outline of each program. In some cases the President has determined that a comprehensive asset freeze is appropriate and in others the President has determined that more limited restrictions (e.g. import bans) are appropriate. The only oneProgramming websitesoutline the limitations for each program. Particular attention should be paid to checking targets on sanctions lists that are included in any ofOFAC Non-Specially Designated Nationals Sanctions Lists.

A U.S. financial institution, its foreign branches and, in some cases, its wholly-owned or controlled foreign subsidiaries cannot open an account for a person on OFAC's Specially Designated Nationals and Restricted Persons (SDN) list, or for a person who is otherwise blocked (e.g. a blocked government or a body subject to the 50 percent rule). This is a prohibited service. However, the institution or its affiliates should exercise due care to ensure that the person attempting to open the account is the same person as appears on OFAC's SDN list or is otherwise subject to suspension. In many cases, an institution can identify a "false positive" when the name resembles the name of a sanctioned person, but the rest of the information provided by the applicant does not match the descriptor information on OFAC's SDN list. If a U.S. financial institution obtains possession or control of property involving a Blocked Person, the U.S. financial institution is obligated to block that property. In other words, if you receive an application to open an account from a person matching the information on the SDN list, along with an opening deposit, you are obligated to block the funds. The same applies to other banking transactions. For example, if a customer asks if he or she can send money to a relative's account at Bank of XYZ that is on the SDN list, the bank may say, "No, that's illegal." If, on the other hand, a bank receives instructions from their client to debit their account and transfer the funds to XYZ's bank, the bank must comply with the instructions by freezing the funds containing future interest of SDN Bank. You may be thinking of the analogy of a bouncing ball. Once the ball starts moving, you must stop it as it gains your possession.

If your blocking software or account holder verification service indicates a potential match, OFAC recommends that you conduct an initial analysis before contacting OFAC. If you have a fairly exact match with a name on theListe der Specially Designated Nationals (SDN).(or one of OFAC'sother sanctions lists) and your customer is in the same environment as the SDN, feel free to contact OFAC. Computer software may flag some transactions that are not actually linked to OFAC goals. This is where human intervention becomes crucial and some hands-on research may be necessary. Please look at the followingDue Diligence Stepsbefore calling OFAC. Unless you have an exact match or are otherwise privy to information that indicates the hit is a sanction target, it is recommended that you do not actually block a transaction without raising the matter with OFAC.

In these programs with blocking provisions, OFAC's rules block any "property" in which a target has an interest. The term "property" is very broad and includes present, future or contingent interests. In the case of a wire transfer, the bank holds blocked property after receiving specific instructions from their client to send the funds. In this case, funds must be blocked and reported to OFAC within ten days. On the other hand, if a customer simply asks "Can I send money to Cuba?" There is no blockable interest in the request and the bank can answer the question or forward the customer to OFAC. The same logic applies to cases where the transaction would have to be rejected under OFAC regulations. Technically, there is no "rejection item" until the bank receives instructions from their customer to debit their account and wire the funds.