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A blocked account is a segregated interest-bearing account (at a commercially reasonable rate), which holds the customer's property until the target is delisted, the sanctions program is rescinded, or the customer obtains an OFAC license authorizing the release of the property. In some cases, an underlying transaction may be prohibited, but there is no blockable interest in the transaction (i.e., the transaction should not be accepted, but there is no OFAC requirement to block the assets). The Guidelines outline the various factors that OFAC takes into account when making enforcement determinations, including the adequacy of a compliance program in place within an institution to ensure compliance with OFAC regulations. Banks must block transactions that: For example, if a U. bank receives instructions to make a funds transfer payment that falls into one of these categories, it must execute the payment order and place the funds into a blocked account.
Treasury that administers and enforces economic and trade sanctions based on U. foreign policy and national security goals against targeted individuals and entities such as foreign countries, regimes, terrorists, international narcotics traffickers, and those engaged in certain activities such as the proliferation of weapons of mass destruction or transnational organized crime. OFAC has been delegated responsibility by the Secretary of the Treasury for developing, promulgating, and administering U. sanctions programs.; Antiterrorism and Effective Death Penalty Act (AEDPA), , B; United Nations Participation Act (UNPA), 22 USC 287c; Cuban Democracy Act (CDA), –10; The Cuban Liberty and Democratic Solidarity Act (Libertad Act), –91; The Clean Diamonds Trade Act, Pub. OFAC lists have not been designated government lists for purposes of the CIP rule.Banks must report all blockings to OFAC within 10 business days of the occurrence and annually by September 30 concerning those assets blocked (as of June 30).Once assets or funds are blocked, they should be placed in a separate blocked account. Many of these sanctions are based on United Nations and other international mandates; therefore, they are multilateral in scope, and involve close cooperation with allied governments.However, OFAC's requirements stem from other statutes not limited to terrorism, and OFAC sanctions apply to transactions, in addition to account relationships.OFAC has the authority, through a licensing process, to permit certain transactions that would otherwise be prohibited under its regulations. OFAC can also promulgate general licenses, which authorize categories of transactions, such as allowing reasonable service charges on blocked accounts, without the need for case-by-case authorization from OFAC.
OFAC can issue a license to engage in an otherwise prohibited transaction when it determines that the transaction does not undermine the U. policy objectives of the particular sanctions program, or is otherwise justified by U. These licenses can be found in the regulations for each sanctions program (31 CFR, Chapter V (Regulations)) and may be accessed from OFAC’s Web site.
Prohibited transactions that are rejected must also be reported to OFAC within 10 business days of the occurrence.
Banks must keep a full and accurate record of each rejected transaction for at least five years after the date of the transaction.
If the transaction conforms to OFAC's internal licensing policies and U. foreign policy objectives, the license generally is issued.
If a bank's customer claims to have a specific license, the bank should verify that the transaction conforms to the terms and conditions of the license (including the effective dates of the license), and may wish to obtain and retain a copy of the authorizing license for recordkeeping purposes.
108-19; Foreign Narcotics Kingpin Designation Act (Kingpin Act), –1908, ; Burmese Freedom and Democracy Act of 2003, Pub. It is important to note that the OFAC regime specifying prohibitions against certain countries, entities, and individuals is separate and distinct from the provision within the BSA's CIP regulation (.220(a)(4)) that requires banks to compare new accounts against government lists of known or suspected terrorists or terrorist organizations within a reasonable period of time after the account is opened.