Kenneth Rijock

Kenneth Rijock

Friday, August 22, 2014

ALERT: OFAC REVISES ITS INTERPRETATION OF ENTITIES OWNED BY BLOCKED INDIVIDUALS



If you have any active corporate clients at your bank who have minority owners that have SDN status, you must immediately revisit those relationships, and recalculate whether OFAC's new interpretation of its regulations now bars you from doing business with them. Please consult Treasury's Revised Guidance on Entities Owned by Persons whose Property and Interests are Blocked*. What you formerly regarded as acceptable minority ownership of an entity by a blocked individual may no longer be true, due to the revised Guidance methods of calculation.

OFAC is now aggregating ownership percentages, including both direct and indirect ownership of related entities, which could include parents, subsidiaries, and related companies, and you need to be extremely careful here, including ownership interests, in  an overabundance of caution, lest you get cited later for banking an entity that you should have exited.

Since these calculations involve not only mathematics, but a careful interpretation of the language of the Guidance, it is recommended that you assemble a complete list of all entities who bank with you, with ownership details, and promptly give them to your outside bank attorneys for an opinion of counsel on all the relevant clients.

Otherwise, OFAC warns that any entity that you keep as a client, who should now be exited, could become the subject of sanctions, or even enforcement action; Watch yourself here.


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*http://www.treasury.gov/resource-center/sanctions/Documents/licensing_guidance.pdf 

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