When a person wishes to deal with an entity on the Specially Designated Nationals (SDN) list, it is generally prohibited from doing so unless a general or special license is granted by the Office of Foreign Assets Control (OFAC). These licenses are granted when OFAC determines that the granting of a license would not undermine American national security or foreign policy goals. General licenses may apply to certain transactions with one SDN or certain types of transactions with all SDN’s. Special licenses are granted to companies or individuals to allow a certain transaction or transactions with a SDN.
We represent companies in the application for special licenses with OFAC. In order to obtain a special license, it is necessary to understand the transaction, the parties to a transaction and American foreign policy goals. With this understanding, we can draft an application for OFAC. OFAC’s process for reviewing applications for special licenses is opaque, and it is difficult to know what OFAC is considering or where the application is in the process; nevertheless, a carefully prepared application can result in the granting of a special license.
Closely related to the application for a special license is a request to “unblock” funds. Whenever OFAC learns of a transaction with a SDN that results in payment to or from a U.S. person, it will “block” or freeze the transaction, meaning that the payment will not be processed. In these circumstances, it is necessary to apply to OFAC to have the blocked funds released. If the blocked funds are not claimed, they will ultimately be forfeited to the U.S. Treasury. We assist clients in both the obtaining of special licenses and the unblocking of funds.