Filing an Interpretive Guidance Request with OFAC - Securities Litigation & Compliance Services
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Filing an Interpretive Guidance Request with OFAC

Our Federal Lawyers Assist Banks and Other Businesses with Obtaining Interpretive Guidance from OFAC

John W. Sellers
Attorney John W. Sellers
SEC Defense Team Lead
Former DOJ Trial Attorney

Banks and other businesses that facilitate or engage in transactions with foreign entities and individuals must be careful to ensure strict compliance with Office of Foreign Assets Control (OFAC) sanctions. Sanctions violations can lead to OFAC blocking transactions and funds, and they can also trigger civil or criminal enforcement action. When a proposed transaction has potential implications under an OFAC sanction, one option is to file an interpretive guidance request with OFAC.

Interpretive guidance is a formal opinion from OFAC regarding whether a proposed transaction would violate one or more sanctions if executed. Effectively, favorable interpretive guidance acts as a safety net for banks and other entities seeking to facilitate or execute transactions that raise concerns about OFAC compliance. However, as it can take several months (if not longer) to receive interpretive guidance from OFAC, and as there are other possible approaches, deciding whether to file an interpretive guidance request with OFAC requires informed and strategic decision-making.

Interpretive Guidance Request vs. Specific License Application

While a bank’s or company’s OFAC counsel will often be able to discern whether a proposed transaction implicates OFAC sanctions, this is not always the case. In various scenarios, the nature of a transaction combined with the language of a potentially-relevant sanction will leave open questions as to whether the transaction is permissible. In this type of scenario, a request for interpretive guidance may be warranted.

Before preparing a request for interpretive guidance, however, it is worth considering whether this is the most prudent approach. If OFAC responds to the request by stating that a specific license is necessary, then the combined timelines of the interpretive guidance request and the specific license application process could easily stretch well beyond a year.

With this in mind, in some cases it will make sense to move forward with filing an application for a specific license rather than beginning with a request for interpretive guidance.

When engaged as OFAC counsel in connection with proposed transactions, we work closely with our clients to evaluate the transactions in question and determine how to proceed. Our lawyers rely on their experience as former federal prosecutors and government attorneys to help our clients make informed decisions. After carefully examining the parties to a transaction, the transaction itself, and the transaction’s potential implications under all pertinent OFAC sanctions, we provide our clients with strategic advice about how they should move forward.

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Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd
Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester
Brian J. Kuester

Former U.S. Attorney

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney

Local Counsel

John W. Sellers
John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara
Linda Julin McNamara

Federal Appeals Attorney

Aaron L. Wiley
Aaron L. Wiley

Former DOJ attorney

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (DOJ)

Chris Quick
Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow
Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Interpretive Guidance Request vs. Voluntary Self-Disclosure

Generally, a request for interpretive guidance from OFAC is a measure for avoiding, rather than remedying, sanctions violations. If a bank or other entity submits a request for interpretive guidance after committing a violation, it risks triggering enforcement action by OFAC and possible referral to the U.S. Department of Justice (DOJ) for civil or criminal prosecution.

Thus, when contemplating engagement with OFAC, timing is extremely important. Banks and other entities must have a clear understanding of their current posture with regard to OFAC compliance; and, if they are currently in compliance, they must be prepared to delay transactions as necessary to secure interpretive guidance or a specific license. Violations of OFAC sanctions cannot be undone, and the process for mitigating the consequences of a violation is very different from the process of securing authorization or approval.

In various circumstances, OFAC sanctions violations can occur before the consummation of a transaction with a blocked entity or individual. When a violation has occurred, it may be necessary to submit a voluntary self-disclosure rather than filing a request for interpretive guidance. It may also be necessary to obtain a specific license in order to consummate the transaction. At Oberheiden P.C., we advise our clients regarding what is required to effectively mitigate their risk exposure, and then we provide representation for all necessary interactions with OFAC.

Process for Filing an Interpretive Guidance Request with OFAC

When a request for interpretive guidance is warranted, the process of preparing the request should begin promptly. The first steps are to collect all pertinent records and information for submission in compliance with OFAC’s Preferred Practices for Productions. OFAC will only consider interpretive guidance requests for pending transactions, and it will reject any requests for transactions it considers to be hypothetical. To streamline the process as much as possible, a request should clearly outline the transaction and the parties involved, identify the assets involved and the specific sanctions of concern, and address any foreign policy or national security considerations that are likely to impact OFAC’s decision.

Unlike specific license applications and voluntary self-disclosures, there are no specific formal procedures for interpretive guidance requests, nor is there a specific burden of proof. Instead, a party seeking interpretive guidance should be prepared to cooperate with OFAC and communicate openly regarding the subject transaction. Transparency is key, as the point of the process is to obtain accurate guidance from OFAC, and OFAC will summarily reject requests that appear to be misleading or lacking in necessary disclosures.

With these overarching principles in mind, the process of filing an interpretive guidance request with OFAC generally involves:

  • Confirming the Need for Interpretive Guidance – As discussed above, the first step is to confirm the need for interpretive guidance. This involves evaluating all relevant OFAC sanctions, evaluating the current OFAC general licenses, assessing whether a specific license is necessary, and assessing whether any sanctions have been violated to date.
  • Gathering All Relevant Information and Documentation – The next step is to gather all of the information and documentation that OFAC will need to provide interpretive guidance. Parties seeking interpretive guidance should make the process as easy as possible for OFAC, as this will help ensure a timely response and accurate, actionable guidance.
  • Outlining the Transaction, Parties, and Assets – Beyond gathering all relevant information and documentation, parties seeking interpretive guidance from OFAC should clearly outline the subject transaction as well as the parties and assets involved. This is particularly important for complex transactions. Again, the goal is to facilitate OFAC’s issuance of interpretive guidance, so the clearer the transaction is presented, the better.
  • Submitting the Request in Compliance with OFAC’s Preferred Practices – Submitting an interpretive guidance request in compliance with OFAC’s Preferred Practices for Productions can also help facilitate the review process, and respecting OFAC’s time and internal procedures can help pave the way for constructive communications and a productive process. While not strictly required, complying with the Preferred Practices for Productions shows an understanding of the Office, and this in itself can help with moving interpretive guidance requests forward.
  • Working Cooperatively with OFAC – After submitting a request for interpretive guidance, the requesting party should be prepared to work cooperatively with OFAC as it evaluates the request. This includes being prepared to promptly provide any necessary additional documentation, answer questions, and provide further explanation of any aspects of the transaction about which OFAC raises concerns.

FAQs: Seeking OFAC Interpretive Guidance for a Proposed Transaction

How Do I File a Request for Interpretive Guidance with OFAC?

 

Technically speaking, filing a request for interpretive guidance with OFAC is a straightforward process—parties can either email the Office or file their request online. From a substantive perspective, however, there are several steps involved. This includes everything from ensuring that a request for interpretive guidance is the right approach (as opposed to a specific license application or voluntary self-disclosure) to outlining the subject transaction and anticipating questions that OFAC is likely to ask during its review.

How Long Does it Take to Get Interpretive Guidance from OFAC?

 

Similar to specific license applications and voluntary self-disclosures, the timeline for interpretive guidance requests can span from several months to a year or longer. The duration of the process is heavily dependent on the complexity of the transaction and the quality of the request for interpretive guidance.

What if OFAC Doesn’t Respond to a Request for Interpretive Guidance?

 

In our experience, a well-prepared request that pertains to a pending transaction with clear sanctions-related implications will receive a response from OFAC. The key is to prepare an effective request that complies with OFAC’s guidelines for submissions.

What if OFAC’s Interpretive Guidance is Unfavorable for a Proposed Transaction?

 

If OFAC issues interpretive guidance conveying that a proposed transaction would violate one or more sanctions, the options that are available will depend on the reason for OFAC’s guidance. In some cases, it may be possible to obtain a specific license. In others, it may be necessary to restructure the transaction, find another counterparty, or take other responsive action. If OFAC’s opinion appears to be misguided, it may also be possible to submit a request for reconsideration with additional supporting documentation.

Does My Bank or Company Need to Engage Outside Counsel to Submit an Interpretive Guidance Request?

 

Due to the complexity of the process, the timeline, and the implications involved, we strongly recommend engaging experienced outside counsel to assist with all interpretive guidance requests submitted to OFAC.


Discuss Filing a Request for Interpretive Guidance with an OFAC Lawyer at Oberheiden P.C.

If you need to know more about filing a request for interpretive guidance with OFAC, we invite you to schedule a complimentary consultation at Oberheiden P.C. Please call 866-755-0697 or contact us online to speak with an OFAC lawyer today.

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