What Is an OFAC License?

Restrictions associated with international sanctions often become an obstacle to doing business or personal financial transactions. The US Office of Foreign Assets Control (OFAC) administers sanctions. In some cases, it may provide a license that allows you to perform transactions that would normally be prohibited. This document is known as an OFAC license. For those facing or subject to sanctions, understanding the role of a license and the process for obtaining one is critical.

Overview of OFAC and Its Purpose

OFAC is a division of the U.S. Treasury Department responsible for administering and enforcing economic and trade sanctions against countries, entities, and individuals. These sanctions are applied in the interests of national security, foreign policy and the fight against international threats. For example, terrorism, weapons proliferation or human rights violations. OFAC's primary purpose is to prevent the illicit flow of funds and ensure that U.S. foreign relations are maintained lawfully.

OFAC carefully enforces its requirements and blocks any assets that may belong to sanctioned individuals or entities. However, for certain lawful purposes, exceptions are possible, which are implemented through the issuance of licenses by OFAC.

What Is an OFAC License?

An OFAC license is a formal authorization to conduct a specific transaction that would normally be prohibited under sanctions rules. This is a kind of exception that allows financial or trading transactions to be carried out despite existing restrictions. A license is issued in strict accordance with the law and only if there are compelling reasons.

A license may be necessary if, for example, a company wants to carry out a transaction with an entity in a sanctioned country. Also, if it is necessary to transfer funds to a relative living in the sanctions area. Obtaining an OFAC license does not automatically remove all restrictions, but provides an opportunity to legally perform specific actions within the framework of the sanctions regime.

Types of OFAC Licenses

There are two main types of OFAC licenses, general and individual. General licenses allow certain types of transactions to be carried out without the need to submit a separate request. For example, this may concern humanitarian aid supplies or transactions related to educational programs. These licenses are predefined by OFAC and apply to a wide range of individuals or entities.

Individual licenses, on the other hand, are issued for specific cases and require a detailed application. Each such application is considered on an individual basis, and the applicant must demonstrate that the requested operation meets the established criteria. Individual licenses may be required to conduct unique transactions that are not covered by general permits.

How to Apply for an OFAC License

The OFAC license application process contains several steps. First of all, it is necessary to prepare a complete and reliable statement, which indicates all the details of the proposed operation, its purpose and participants. The application must contain arguments confirming that the transaction does not violate US national security interests and complies with the law.

Once an application is submitted, it undergoes review and analysis by OFAC. Depending on the complexity of the case and the amount of information provided, the review may take considerable time. The applicant should be prepared that OFAC may request additional documents or clarification.

It should be remembered that an incorrectly completed application or provision of incomplete information may lead to refusal to obtain a license. Therefore, you should carefully approach the preparation of all necessary documents and information.

How Lawyers Can Help You With OFAC Licenses?

Legal team has a high level of knowledge and experience in the field of sanctions regulation and OFAC licenses. They can offer support at all stages of filing an application, from analyzing your situation to representing your interests before OFAC.

The difficulty of obtaining an OFAC license should not interfere with your legitimate interests. Contact our lawyers to receive qualified support and confidence that your actions will comply with international requirements.