Applying for an OFAC Specific License

Applying for an OFAC Specific License

So you need to apply for a license from the Office of Foreign Assets Control (OFAC) to engage in a transaction that would otherwise be prohibited? Don’t worry, you’re not alone. Lots of businesses and individuals have to navigate this process. While it can seem daunting, it doesn’t have to be with the right information.

This article will walk you through everything you need to know about OFAC licenses, the application process, and tips for getting approved. We’ll cover:

• What is an OFAC specific license?
• When do you need a specific license?
• How to apply for an OFAC specific license
• Tips for getting your OFAC application approved
• Waiting for a decision from OFAC
• If your application is denied

Let’s get started!

What is an OFAC Specific License?

OFAC is a department of the U.S. Treasury that administers and enforces economic and trade sanctions against targeted foreign countries, regimes, terrorists, international narcotics traffickers, and more. They do this by blocking assets and trade transactions with sanctioned entities.

Sometimes, there may be legitimate reasons you need to engage with a sanctioned entity. This is where OFAC licenses come in. A license is basically OFAC’s permission to do business that would otherwise be prohibited under sanctions regulations.

There are two types of OFAC licenses:

• General licenses – These authorize a particular type of transaction for an entire class of people without having to apply. For example, there may be a general license permitting certain humanitarian aid to a sanctioned country.
• Specific licenses – These are issued to a particular person or entity to authorize a specific transaction. You have to apply for these.

So in summary, an OFAC specific license is written permission from OFAC authorizing you or your company to engage in a transaction that would normally violate sanctions.

When Do You Need a Specific License?

If the transaction you want to engage in is not authorized under a general license, you’ll need to apply for a specific one. Here are some examples of when you might need a specific OFAC license:

• Exporting certain goods or services to a sanctioned country
• Importing goods like agricultural commodities from a sanctioned country
• Providing financial services or extending credit to a sanctioned entity
• Engaging in a transaction with a sanctioned individual or company
• Unblocking funds of a sanctioned entity under certain conditions

It’s important to note that OFAC doesn’t issue specific licenses for just any transaction. They evaluate applications on a case-by-case basis against the national security and foreign policy interests of the United States. Just because you apply doesn’t guarantee approval.

How to Apply for an OFAC Specific License

If you’ve determined a specific license is needed, here are the steps to apply:

1. Review the sanctions programs and restrictions that apply to your situation on OFAC’s website.
2. Gather all information and documents needed to support your application.
3. Apply online through OFAC’s website or mail a paper application.
4. Pay the application fee of $5,655.
5. Respond promptly to any requests from OFAC for additional information.
6. Wait for a licensing decision from OFAC.

OFAC’s online application system will guide you through the information required, including:

• Applicant information like name, address, tax ID
• Details about the proposed transaction
• Information on the sanctioned region, country, entity or individual involved
• Reasons why the license is required

It’s important to be as thorough as possible and clearly demonstrate why the license is needed. Having an OFAC compliance lawyer assist can be extremely helpful, given the complex regulations.

Tips for Getting Your OFAC Application Approved

Unfortunately, OFAC rejects more license applications than it approves. In 2020, it approved just 606 specific licenses while denying over 3,000. So what can you do to get approval?

• Work with an experienced OFAC attorney – Having expert guidance increases your chances.
• Make a compelling case – Clearly demonstrate how the transaction aligns with U.S. policy goals and benefits national security.
• Highlight any humanitarian considerations – Helping people in need can make a difference.
• Follow up on requests quickly – Fully comply with any additional information OFAC asks for.
• Be transparent in disclosures – Trying to hide anything will hurt, not help.
• Propose mitigation measures – Offer steps you can take to reduce risks identified by OFAC.
• Get help from your Congressional representative – They can advocate to OFAC on your behalf.

While not guaranteed, following these tips will give your application the best possible chance of approval.

Waiting for a Decision from OFAC

Once you submit your license application, the waiting begins. OFAC does not have any firm timelines or deadlines for reviewing applications and making decisions. It may take weeks, months, or in some cases even years.

You can check the status of your pending application through OFAC’s automated license application hotline or online status check system. But otherwise, you’ll need to be patient.

If it’s been more than 2 weeks, you can call OFAC’s Licensing Division at (202) 622-2480 to politely inquire about the status. But avoid pestering them, as that won’t speed things up.

While waiting, make sure to notify OFAC of any material changes that may impact their decision. Don’t proceed with the transaction until the license is granted.

If Your Application is Denied

If OFAC denies your license application, don’t lose hope. You have options, including:

• Request reconsideration – Additional info may change their mind.
• Modify the transaction – Tweak details to address OFAC’s concerns.
• Appeal the decision – File a formal appeal asking OFAC to reverse the denial.

Before pursuing these options, thoroughly review OFAC’s denial letter and understand their reasoning. Also assess if you have a reasonable chance of getting a reversal. If not, it may be best to move on.

Conclusion

Obtaining an OFAC specific license requires time, effort and patience. But it opens doors to engage in transactions that would otherwise be prohibited under sanctions. Follow the guidance in this article to successfully navigate the application process and maximize your chances of approval.

And remember, you don’t have to go it alone. Consulting an OFAC compliance expert or attorney can make a big difference. They will help craft the strongest case possible to OFAC on your behalf.

Wishing you the best of luck with your OFAC license application!