OFAC and Assets: Rejecting v. Blocking
The Office of Foreign Assets Control (OFAC) often imposes sanctions against foreign entities to regulate who U.S. exporters conduct business with. Rejecting and blocking are two terms used to describe how an individual or entity should act if they come into contact with a listed individual or an entity under a limited or comprehensive restriction by OFAC. Rejecting and blocking are very similar concepts but most OFAC programs use blocking.
Blocking is the complete prohibition of any kind of transaction or access to an interest involving a blocked person or entity. Monetary transactions are the most common to be blocked but in certain situations the access to assets and items of interest have also been blocked. In the latter situation, if an individual realizes they are in possession of an item of interest of a blocked person, the individual is tasked with blocking access to said item and contacting OFAC about the actions that should be taken with the item. OFAC typically freezes property of the blocked person that is physically under U.S. Jurisdiction but the title remains with the blocked individual.
Rejecting is a tactic that is used less often than blocking. Instead of completely blocking an individual or entity’s access to interests, this tactic prohibits certain transactions. The targeted transaction type may be related to a particular activity or industry which the U.S. Treasury Department is monitoring.
With either scenario, the action of rejecting or blocking an entity must be reported to OFAC. Typically a rejection is a single occurrence whereas a blocking of assets may be an ongoing event, especially if the person or entity is being blocked from a physical asset that is under the control of the individual doing the blocking. OFAC requires that an annual report be made detailing specific information about blocked assets and items that an individual may possess. These annual reports alongside the immediate reports, which must be done within 10 days of the blocking or rejecting, should be worked into a corporation's compliance program.
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