Challenging an OFAC Sanctions Designation

Challenging an OFAC Sanctions Designation

Being designated by the Office of Foreign Assets Control (OFAC) can have serious consequences for both individuals and companies. If you find yourself in this situation, you may be wondering – how do I challenge an OFAC designation? The process can seem daunting, but with the right strategy and legal support, it is possible to get removed from an OFAC list.

In this article, we’ll walk through everything you need to know about disputing an OFAC designation, including:

• What is OFAC and what do sanctions designations mean?
• Reasons you might be designated
• The process for challenging a designation
• Building an effective case for removal
• Working with an experienced sanctions lawyer
• What to expect during the review process
• Steps after removal from the SDN list

What is OFAC?

OFAC is a financial intelligence and enforcement agency within the U.S. Department of Treasury. Their main role is to administer and enforce economic and trade sanctions programs against foreign countries, entities, and individuals. Some of the sanctions programs OFAC oversees include:

• Counter-terrorism sanctions
• Counter-narcotics trafficking sanctions
• Country-specific sanctions against Iran, North Korea, Syria, Cuba, etc.
• Sanctions against targeted individuals and organizations

When OFAC designates a company or person under one of these programs, they are placed on the Specially Designated Nationals (SDN) list or one of the other sanctions lists. This immediately triggers asset freezes and trade blocks against the target per OFAC regulations.

Reasons for Designation

There are many reasons OFAC may decide to designate an individual or entity. Some of the most common include:

• Ties to terrorism or terrorist financing
• Involvement with drug trafficking or transnational organized crime
• Supporting hostile regimes like North Korea, Syria, or Iran
• Engaging in cyber-attacks, human rights abuses, or corruption
• Violating U.S. export controls or sanctions laws

OFAC does not need to prove guilt “beyond reasonable doubt,” only have a reasonable basis to believe a person is engaged in sanctionable conduct. This relatively low evidentiary standard means that OFAC designations can at times ensnare unintended targets.

The Process for Challenging a Designation

If you or your company has been designated by OFAC, you have the right to request reconsideration and submit a petition to be removed from the SDN list. Here are the steps involved:

1. Request an administrative record from OFAC

This will include the reasons and evidence for your designation. OFAC must provide the record within 30 days of receiving your written request.

2. Review the administrative record and assess the basis for designation

Carefully go through the allegations and supporting documents to understand OFAC’s rationale for the designation. This will help you formulate your rebuttal arguments.

3. Draft and submit a delisting petition to OFAC

The petition should clearly lay out why you believe the designation was unwarranted and should be rescinded. We’ll go over building a strong petition later on.

4. OFAC reviews the petition and renders a decision

OFAC aims to review petitions within 90 days. However, it may take up to a year or more in some cases.

5. If denied, request reconsideration or file an appeal

You can request an additional review if your petition is initially rejected. As a last resort, you can appeal to a federal district court.

This basic process applies whether you are petitioning as an individual or company. Always consult qualified legal counsel when navigating OFAC delisting procedures.

Building an Effective Delisting Case

The key to successfully challenging an OFAC designation lies in constructing a compelling rebuttal case. Here are some strategies for putting together a persuasive petition:

• Dispute the reasons for designation – Meticulously respond to each allegation and piece of evidence cited in your administrative record. Highlight any inaccuracies, omissions, mistaken identity, or lack of context.
• Provide exonerating evidence – Gather exculpatory materials like financial records, sworn affidavits, business documents, or expert analysis that undermine OFAC’s assertions.
• Demonstrate mistaken identity – If OFAC sanctioned you because of confusion over names or identifiers, include documentation like passports, incorporation records, bank documents, etc. that confirm your identity.
• Show changed circumstances – If the basis for your designation no longer applies, emphasize meaningful steps you’ve taken like instituting compliance programs, cutting ties with sanctioned entities, or undergoing leadership changes.
• Highlight proportionality issues – OFAC sanctions should not be excessively punitive. If the designation creates undue hardship compared to your alleged misconduct, bring this to OFAC’s attention.
• Request partial mitigation – As an alternative to complete delisting, propose lesser restrictions like being moved to the Foreign Sanctions Evaders list instead of the SDN list.

Additionally, your petition should clearly articulate the adverse impacts of being designated, such as reputational damage, lost revenues, and severed business relationships. Demonstrating the designation’s harmful effects can help persuade OFAC to reassess.

Working with an Experienced Sanctions Lawyer

Given the complexities involved, it is highly advisable to enlist an attorney experienced in OFAC delisting cases. The right lawyer can provide invaluable assistance such as:

• – Guiding you through the petition process and applicable laws
• – Obtaining and analyzing the unclassified portions of your administrative record
• – Identifying potential grounds for rebuttal
• – Gathering exonerating documentary evidence
• – Drafting a compelling and persuasive delisting petition
• – Submitting the petition and communicating with OFAC on your behalf
• – Providing ongoing counsel if the petition is initially denied

When vetting OFAC sanctions lawyers, look for those who have successfully handled delisting cases similar to yours. Check client testimonials and case studies to get a sense of their experience and track record.

What to Expect During the OFAC Review Process

Once your petition is submitted, OFAC will conduct a thorough review of your delisting request. Here is an overview of what you can expect during this process:

• – Administrative review – OFAC attorneys will closely analyze your petition, included evidence, and the original designation package.
• – Interagency consultation – OFAC may coordinate with intelligence, law enforcement, and other agencies involved in your initial designation.
• – Request for additional information – OFAC may come back to you or your lawyer with follow-up questions or requests for supplementary materials.
• – Petition denied – If OFAC rejects your petition, they will send a letter explaining the decision while keeping classified evidence confidential.
• – Petition approved – If satisfied you should be removed, OFAC will delist you and publish the update in the Federal Register.

Understanding the petition review procedure sets appropriate expectations. With an experienced attorney’s assistance, you can thoughtfully respond to OFAC’s information requests and denial rationales throughout the process.

Steps after Removal from the SDN List

If your OFAC delisting petition succeeds, you will be removed from the SDN list or other sanctions lists. However, this is not necessarily the end of the road. Here are some next steps to take after getting delisted:

• – Notify partners and customers – Spread the word about your changed status and have your lawyer provide confirmation letters.
• – Request license for blocked funds – Petition OFAC for a specific license to regain access to any frozen assets.
• – Update compliance programs – Review and strengthen internal controls to prevent any repeat sanctions issues.
• – Monitor credit and reputation – Unfortunately, the impacts of designation don’t disappear overnight. Be proactive about rehabilitating your image.
• – Stay up to date on sanctions – Regularly check OFAC resources so you don’t inadvertently trigger enforcement actions.

With perseverance and the right legal support, it is possible to successfully contest an OFAC designation. This guide covers the key considerations – now the hard work begins. Don’t hesitate to reach out to an experienced sanctions lawyer for personalized guidance on navigating the delisting process.

Here are some additional tips for rehabilitating your credit and reputation after being removed from an OFAC sanctions list:

– Get copies of your credit reports and review them for any lingering indicators of the OFAC designation. Dispute any inaccurate information with the credit bureaus and request removal of any outdated OFAC alerts.

– If needed, provide an explanatory statement to attach to your credit report highlighting that you were erroneously designated and have since been delisted.

– Ask credit bureaus to proactively monitor your reports for unfair OFAC-related credit denials for a period of time after delisting.

– Obtain updated letters from your bank, creditors, and business partners confirming your good standing and changed OFAC status.

– Leverage press releases, website updates, social media, and other publicity to inform the public and business community that you are no longer designated.

– Consider reputational management services to shape more positive search engine and online results about your designation history.

– Seek expungement of any criminal charges improperly brought against you due to the erroneous OFAC designation.

– For severe reputation damage, explore the possibility of lawsuits for defamation or financial compensation through government programs.

– Above all, emphasize through words and actions that you are committed to integrity and compliance going forward.

Rebuilding credit and trust after an OFAC mistake takes time and effort. But being proactive and transparent in setting the record straight can help restore your standing.