Unblocking Frozen Funds or Assets

When funds or assets are frozen by the Office of Foreign Assets Control (OFAC), it is typically in response to U.S. sanctions imposed on designated individuals, entities, or countries engaged in activities that threaten U.S. national security or foreign policy interests. The process to unblock frozen assets can be complex and requires adherence to strict procedural and legal standards set by OFAC. This article provides a comprehensive overview of the unblocking process, detailing the application requirements, timing considerations, and potential complications that may arise.

How OFAC Blocked Funds and Other Assets?

OFAC enforces economic sanctions programs by blocking or “freezing” the assets of designated persons or entities, effectively restricting their access to these resources. Under U.S. law, including the International Emergency Economic Powers Act (IEEPA), OFAC can require U.S. financial institutions and entities within U.S. jurisdiction to freeze any funds, property, or economic interests held by sanctioned individuals or entities.

OFAC’s asset-freezing measures serve as a powerful deterrent, isolating sanctioned parties from the global financial system. These sanctions can apply to various types of assets, including bank accounts, shares, real estate, and intellectual property. To lift the freeze, individuals or entities may petition OFAC for the release of blocked funds, provided they meet the regulatory conditions for unblocking or have grounds to challenge the designation.

Who Can Make the OFAC Unblocking Application?

An application to unblock funds or assets frozen by OFAC can be submitted by the designated individual or entity, their legal representative, or any other party with a legitimate interest in the blocked assets. Given the complex nature of OFAC sanctions, it is often advisable to engage an experienced sanctions attorney to manage the application process, ensuring that all procedural requirements are met.

A sanctions attorney can help applicants navigate OFAC’s stringent regulatory standards and interpret the legal criteria necessary for an unblocking determination. Additionally, legal counsel may be instrumental in presenting an effective argument for unblocking, particularly when challenging a designation or proving that the asset holder no longer meets the criteria for sanctions.

How Long Does it Take OFAC to Release Funds?

The timeline for unblocking frozen assets can vary significantly depending on the complexity of the case and the specific grounds for unblocking. OFAC generally assesses applications on a case-by-case basis, and processing times can range from several weeks to multiple months. High volumes of applications and the necessity of thorough background checks often contribute to these extended timelines.

In some instances, OFAC may request additional documentation or clarification, which can prolong the process further. Applicants should be prepared for the possibility of delays and ensure they submit a comprehensive application to avoid common processing issues. Legal representation can be beneficial in managing these procedural steps and expediting the unblocking process where possible by ensuring all documentation meets OFAC’s stringent requirements.

What to Include in Unblocking Application to OFAC?

1. The applicant must provide a full account of the blocked assets, including their value, location, and any pertinent financial or property documents;
2. The applicant must clearly articulate the reasons why the assets should be unblocked, such as demonstrating that the designation was incorrect, that the applicant no longer qualifies as a sanctioned entity, or that there are humanitarian or other permitted grounds for unblocking under OFAC’s licensing framework;
3. Applications must include any evidence relevant to the unblocking request, such as legal opinions, identification documents, financial records, or third-party attestations. For example, if a company seeks to unblock funds frozen in connection with past activities, evidence of a change in ownership or business operations can support the case for unblocking;
4. Applications must also include detailed contact information for the applicant or their representative, along with a formal statement authorizing OFAC to review and process the unblocking request.

A well-prepared application that addresses OFAC’s key concerns and provides substantial evidence to support the unblocking claim is more likely to result in a favorable outcome. Given the stakes involved, applicants often benefit from working with legal professionals who understand the technical and procedural requirements of OFAC’s review process.

Challenges and Complications

The process of unblocking frozen assets is often fraught with challenges, especially when dealing with complex sanctions designations or ambiguous regulatory interpretations. Some common issues include:

• Failure to provide adequate proof to justify the unblocking can result in application denials or prolonged review periods;
• As OFAC frequently updates its sanctions programs, changes in the regulatory environment may affect the eligibility of applicants to unblock assets, making it essential to stay informed of current sanctions policies;
• In some cases, non-U.S. entities or individuals seeking to unblock assets may inadvertently face secondary sanctions if they engage with other sanctioned entities, creating additional complications for those managing multinational assets or investments.

Given these challenges, applicants are encouraged to consult with OFAC compliance attorneys, who can assess the specific circumstances of the case, prepare robust documentation, and advise on any potential obstacles to unblocking. Effective legal representation can ensure that applicants address OFAC’s requirements accurately and have the strongest possible case for asset release.

For individuals or entities seeking assistance with unblocking frozen funds or assets, our experienced team of OFAC sanctions attorneys offers expert guidance on all aspects of the unblocking process. Contact us to discuss your case and explore the legal options available to facilitate the unblocking of your assets within the framework of U.S. sanctions laws.