Authors: Jeremy Clifton CRCM, CAMS & Nick Milcarek, CAMS
On July 22, 2024, the Office of Foreign Assets Control released guidance on the extension of the statute of limitations specifically involving OFAC record keeping requirements. Beginning March 12, 2025, the interim final rule will extend recordkeeping requirements from 5 to 10 years. This comes after the prior administration signed into law the 21st Century Peace Through Strength Act. Section 3111 of the law specifically states that the statute of limitations on sanctions violations be extended to 10 years under the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TEA).
Section 501.601 of the Department of Treasury’s rules now reads:
“Records and recordkeeping requirements.
Except as otherwise provided, every person engaging in any transaction subject to the provisions of this chapter shall keep a full and accurate record of each such transaction engaged in, regardless of whether such transaction is effected pursuant to license or otherwise, and such record shall be available for examination for at least 10 years after the date of such transaction. Except as otherwise provided, every person holding property blocked pursuant to the provisions of this chapter or funds transfers retained pursuant to § 596.504(b) of this chapter shall keep a full and accurate record of such property, and such record shall be available for examination for the period of time that such property is blocked and for at least 10 years after the date such property is unblocked.”
What does this mean for financial institutions? It clearly indicates that any transaction subject to sanctions blocking or rejecting will now need to be retained for a minimum of 10 years. Most community financial institutions have historically had little if any experience or need to block or reject transactions as true sanctions matches are very rare.
What does this mean for non-match OFAC or sanctions documentation? This is not as clear as we would have hoped at this time; keep in mind this is an interim final rule with comments and a final rule to come. With the statute of limitations being 10 years and with the ambiguity of the section “every person engaging in any transaction subject to the provisions of this chapter shall keep a full and accurate record of each such transaction engaged in, regardless of whether such transaction is effected pursuant to license or otherwise, and such record shall be available for examination for at least 10 years”, we are recommending a wait and see approach at this time. If your institution has non-match OFAC records after April 24, 2019, we recommend that they continue to be maintained for the interim. We will keep you updated on any changes.
For more information and guidance on the new OFAC requirements, please see the below links.
Guidance from OFAC: extension_statute_of_limitations_guidance_20240722.pdf
Federal Register Mentioning OFAC Changes:
ttps://www.federalregister.gov/documents/2024/09/13/2024-20674/reporting-procedures-and-penalties
On July 22, 2024, the Office of Foreign Assets Control released guidance on the extension of the statute of limitations specifically involving OFAC record keeping requirements. Beginning March 12, 2025, the interim final rule will extend recordkeeping requirements from 5 to 10 years. This comes after the prior administration signed into law the 21st Century Peace Through Strength Act. Section 3111 of the law specifically states that the statute of limitations on sanctions violations be extended to 10 years under the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TEA).
Section 501.601 of the Department of Treasury’s rules now reads:
“Records and recordkeeping requirements.
Except as otherwise provided, every person engaging in any transaction subject to the provisions of this chapter shall keep a full and accurate record of each such transaction engaged in, regardless of whether such transaction is effected pursuant to license or otherwise, and such record shall be available for examination for at least 10 years after the date of such transaction. Except as otherwise provided, every person holding property blocked pursuant to the provisions of this chapter or funds transfers retained pursuant to § 596.504(b) of this chapter shall keep a full and accurate record of such property, and such record shall be available for examination for the period of time that such property is blocked and for at least 10 years after the date such property is unblocked.”
What does this mean for financial institutions? It clearly indicates that any transaction subject to sanctions blocking or rejecting will now need to be retained for a minimum of 10 years. Most community financial institutions have historically had little if any experience or need to block or reject transactions as true sanctions matches are very rare.
What does this mean for non-match OFAC or sanctions documentation? This is not as clear as we would have hoped at this time; keep in mind this is an interim final rule with comments and a final rule to come. With the statute of limitations being 10 years and with the ambiguity of the section “every person engaging in any transaction subject to the provisions of this chapter shall keep a full and accurate record of each such transaction engaged in, regardless of whether such transaction is effected pursuant to license or otherwise, and such record shall be available for examination for at least 10 years”, we are recommending a wait and see approach at this time. If your institution has non-match OFAC records after April 24, 2019, we recommend that they continue to be maintained for the interim. We will keep you updated on any changes.
For more information and guidance on the new OFAC requirements, please see the below links.
Guidance from OFAC: extension_statute_of_limitations_guidance_20240722.pdf
Federal Register Mentioning OFAC Changes:
ttps://www.federalregister.gov/documents/2024/09/13/2024-20674/reporting-procedures-and-penalties
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