OFAC publishes RPPR obligations FAQs

The US Treasury’s Office of Foreign Assets Control (‘OFAC’) has published an FAQ which emphasises its expectation that all US persons and those subject to US jurisdiction, regardless of whether they’re financial institutions or not, should understand and adhere to Reporting, Procedures and Penalties Regulations (‘RPPR’) in effect from last June.

The June changes, it points out, introduced ‘new requirements for parties filing reports on blocked property, unblocked property, or rejected transactions’ – as well as ‘information regarding OFAC’s electronic license application procedures and provides additional instructions regarding applications for the release of blocked funds.’

It says: ‘OFAC expects all U.S. persons and persons otherwise subject to U.S. jurisdiction, including parties that are not U.S. financial institutions, to comply fully with all requirements of this rule, including the expanded requirement in Section 501.604 of the RPPR to provide reports to OFAC regarding rejected transactions within 10 business days of the rejected transaction. (Previously, only U.S. financial institutions were required to submit reports to OFAC for rejected funds transfers.) Reports on rejected transactions are to be submitted to OFAC, preferably electronically…

‘OFAC accepted comments from the public on this rule, which it continues to review. In addition, OFAC welcomes further feedback as we assess whether any clarification or modification to the rule is appropriate, including: additional information regarding the business impact of this rule; examples of rejected transactions that are proving challenging to report; the quantity of rejected transactions; and the types of information in the filer’s possession for a rejected transaction report.’

Findings of violation of the rule are, say lawyers, infrequent but not unknown. In August 2013, WorldECR reported that OFAC had issued ‘a Finding of Violation to VISA International Service Association (‘VISA’) for violations of the Reporting, Procedures and Penalties Regulations (the ‘RPPR’), 31 C.F.R. part 501– and that OFAC had said that on 9 November 2007, VISA violated § 501.603(b)(1) of the RPPR when it failed to file two initial reports of blocked property with OFAC within ten business days of blocking two accounts in which Bank Melli (the assets of which are blocked) had an interest.’

See: https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_compliance.aspx#819