Key Takeaways:
- OFAC issued an interim final rule extending OFAC's recordkeeping requirements from 5 years to 10 years, to comport with the corresponding statute of limitations extension.
- OFAC also published a request for public comment with respect to its approach to information collection.
- Public comments in connection with the interim final rule are due October 15, 2024, while public comments regarding OFAC's information collection are due November 12, 2024.
On September 11, 2024, the U.S. Department of the Treasury's
Office of Foreign Assets Control ("OFAC") issued an
interim final rule ("Rule") that extends OFAC's
recordkeeping requirements from 5 to 10 years. The Rule was published in the Federal Register on
September 13, 2024, and public comments are due by October 15,
2024. The Rule will be effective on March 12, 2025. Also on
September 11, 2024, OFAC issued a request for public comments ("RPC"),
giving participants 60 days to comment on OFAC's information
collection practices, including the recordkeeping requirement
imposed by the Rule. Comments are due by November 12, 2024.
OFAC's Recordkeeping Rule
The Rule follows April 24, 2024 amendments to the International
Emergency Economic Powers Act ("IEEPA") and the Trading
with the Enemy Act ("TWEA") that extended the statute of
limitations for violations of OFAC sanctions administered under
IEEPA or TWEA, from 5 to 10 years. As covered in a prior client alert, in July 2024, OFAC issued
guidance related to this statute of limitations extension that made
clear it expected to implement matching recordkeeping requirements.
The Rule modifies OFAC's Reporting, Procedures, and Penalties
Regulations, which require that those involved in transactions that
are regulated by OFAC's sanctions programs keep complete and
accurate records of each of these transactions. The Rule amends 31
CFR § 501.601, mandating that such records be maintained for
10 years (up from 5 years), which now matches the statute of
limitations period.
Notably, while the possible penalty amounts have not been altered,
the Rule extends the time during which civil monetary penalties
could accrue for mandatory reports (e.g., reporting required under
specific OFAC licenses) that are filed with OFAC after the
applicable deadlines, to 10 years. The Rule is likely to cause
companies to confront administrative challenges as well as
additional expenses as they modify their compliance and
recordkeeping policies and systems to align with the Rule's
requirements.
OFAC is soliciting public comments with respect to the following
topics:
- Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information has practical utility.
- The accuracy of the agency's estimate of the burden of the collection of information.
- Ways to enhance the quality, utility, and clarity of the information to be collected.
- Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
- Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services required to provide information.
OFAC's Information Collection
Practices
OFAC's RPC is connected to the Paperwork Reduction Act of 1995
("Act"), which was promulgated to limit the public's
documentary and regulatory reporting burdens. The Act requires
agencies collecting information from the public, like OFAC, to seek
approval from the Office of Management and Budget ("OMB")
prior to engaging in such information collection. An OMB control
number is assigned to the requesting agency's information
collection request ("Request") once OMB approves that
request. OFAC has many different approved Requests corresponding to
the multiple information collection mandates in its regulations
(e.g., submission of blocked property reports). Requests are only
approved by OMB for a limited period, so OFAC (and other agencies)
must periodically seek extensions of their approved Requests.
In the RPC, OFAC seeks public comments regarding its (1)
consolidation of the majority of its existing OMB-approved Requests
under OFAC's primary OMB control number (the one linked to the
OMB Request approvals for most of OFAC's information
collections); and (2) revision of its burden estimates based on
this consolidation and recent significant changes to the sanctions
landscape (including Russia-related sanctions).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
