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Dealing with OFAC License Denials

March 21, 2024 Uncategorized

Dealing with OFAC License Denials

Having your OFAC license application denied can really bum you out. But take a deep breath – the situation isn’t hopeless. This article will go over some strategies to deal with the denial, from filing an appeal to finding other options.

First Things First – Understand Why It Was Denied

When that denial letter comes in from OFAC, read through it closely to get what reasoning they used to make their decision. The most common reasons licenses get rejected are:

  • The transaction you proposed goes against U.S. policy or messes with the sanctions program.
  • You didn’t put enough information in the application.
  • You or your company have a history of breaking sanctions rules.

If you get why they said no, you can put together a better next move.

Ask OFAC to Reconsider

If you think OFAC made a mistake or you’ve got new information that could change their minds, you can send a letter asking them to reconsider their decision. Lay out clearly why you think they should take another look. Send along any other details or paperwork that helps explain your side of things.

While OFAC isn’t required to give it another look, they might if you’ve got a compelling reason. For instance, if the situation has changed since you applied or you can show the transaction doesn’t actually break the sanctions rules.

File an Appeal

Sending an official appeal is another choice, but there isn’t really a formal appeals system in place. By law, when OFAC says no, that’s considered the final say by the agency. There’s no built-in appeals process to follow. But you still have options like:

  • Writing an appeal letter telling OFAC where you think they messed up.
  • Taking them to federal court over the denial.

The problem is judges often side with OFAC’s decisions. Unless the denial clearly broke some administrative law, appeals rarely get overturned in these cases.

Apply For a New License

Instead of asking OFAC to rethink your old license, you can apply for a brand new one. This can be smarter if the first application had issues, was missing info, or the situation has evolved.

When writing the new application, be sure to tackle any weak spots from the first one. Give plenty of details about the transaction and explain how it follows OFAC’s rules.

Get an Informal Opinion from OFAC

Rather than reapply after a denial, you could ask for an informal opinion from OFAC. Explain your proposed action and ask if they would approve a license for it. If they say they’d reject it, you skip the time and money of a whole new application.

Look Into Alternatives

Sometimes the best move is finding another way that doesn’t need a license at all. For instance:

  • Doing business with companies not facing sanctions.
  • Using an intermediary company that isn’t under OFAC.
  • Structuring the deal to avoid sanctions issues.

Talking to an OFAC compliance lawyer can help come up with options. Even if a license seems out of reach, you may still have legal ways to meet your business goals.

Apply for a General License

While a specific license only covers one case, a general license broadly allows certain transactions. For example, you could provide legal services to a sanctioned group under a general license versus applying each time.

Check OFAC’s site to see if a general license fits your activity. These don’t require an application and tend to be faster than the specific licensing process in most cases.

Wait and Reapply Later

If your original license request was really complex or controversial, OFAC may need more time to review it fully. Consider waiting a few months or longer before trying again. Over time, sanctions priorities can shift based on world events.

You can also contact OFAC to check your application status. That could give you a sense of timing or any issues needing attention on their end.

Talk to an Attorney

Navigating OFAC’s licensing process can be tough, especially after a denial. Speaking with an experienced OFAC sanctions lawyer can help develop a winning strategy and improve your odds.

A lawyer can assess your situation, spot potential arguments for an appeal or reconsideration request, and assist with new applications. They can also advise on structuring deals to comply with the rules.

Don’t Lose Hope

While OFAC denials can be a real downer, there are still ways forward. Carefully reviewing the reasons given, filing appeals or reconsideration requests, and getting guidance from sanctions pros can help overcome initial rejections. With determination and the right game plan, many applicants do eventually get OFAC’s green light.

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