OFAC Regulatory Provisions - 31 CFR § 501.806 Procedures for unblocking funds believed to have been blocked due to mistaken identity.

Ed. Note: if you’re new to TURBOFAC, please take note that the text string filtration function generally shouldn’t be used for terms such as “ordinarily resident,” “causing” or “new debt”. For research on the meaning of words and phrases such as those, i.e. terms central to the key legal issues in sanctions law that appear on a cross-programmatic basis, you’re typically better off locating and checking the appropriate box in the “Key Legal Issues” search category, which will limit the results to those that have been manually assessed as being relevant for the interpretation of the terms at issue.

Try typing your search term (“ordinarily resident,” “new debt,” or something else) in the “Find a Search Filter” box at the top of the page, and the corresponding “Key Legal Issues” check box will pop up instantly, if one exists. Once you check the box (e.g. “new debt,” with ~55 results), you can always use the text string filtration function to further refine your search (e.g. by typing “invoice” and narrowing the ~55 results to ~10).

Note in addition that the same applies to text string searches such as “14071” (if you’re looking for items related to EO 14071). By typing “14071” in the “Find a Search Filter” field up top, you will be able to instantly narrow the results down to items manually assessed as relating to EO 14071. Ditto terms such as “515.204” or “Iran General License G” (try the “Discrete Legal Provision” search category). Please contact [email protected] or [email protected] with any questions on search results and efficiency.

Please click "Apply Text String Filters" again after clicking the "Close" button immediately below.

TURBOFAC Commentary (330 words)

Update – on 5-8-24, OFAC published an “Interim final rule” announcing amendments to this provision and others, to be effective 90 days after its 5-10-24 publication in the FR. The left side of the screen includes the revised provision and the pre-existing provision. See the back of the PDF file for the Interim final rule and a redline comparing the revised and pre-existing versions.

The differences between the revised and pre-existing versions are certain non-substantive technical changes; specifying that the provision applies to property in general, not just “funds”; specifying that the provision applies to removal from all OFAC-administered lists (not just the List); specifying that property other than “vessels” (e.g. aircraft) can be removed from the list; specifying that the petition should include an argument that the “circumstances resulting in the sanction no longer apply”.

On 10-7-24, OFAC issued FAQ # 1196, in which for the first time OFAC introduces a "do it yourself" alternative to the process articulated at 501.806 (see comments thereto).

Note that the comments below have not yet been amended to reflect the issuance of the 5-8-24 Interim final rule and FAQ # 1196.

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Notes:

1) Note the difference between "mistaken identity," e.g. a person named Joaquin Guzman that is not the famous Mexican drug kingpin, and "mistaken identity" as in the funds were send to a person that we did not intend to send them to. In the latter cases, OFAC's practice appears be rather unforgiving See e.g. Case No. FNK-2016-333921-1 [Documents related to subsequent legal challenge in original PDF (Comercializadora Transpacifico, S.A. v. Mnuchin et al (1:17-cv-21807) (SDFL, 2017)) and Bank Soyuz v. Office of Foreign Assets Control, Case No. 1:05CV01073 (D.D.C.) (Complaint in action against OFAC resulting in release of frozen assets; OFAC correspondence reproduced), and comments thereto.

2) Provision amended in 2019 to specify that requests for unblocking of funds can be made electronically.

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31 CFR § 501.806 Procedures for unblocking funds believed to have been blocked due to mistaken identity (With Version Proposed in 5-8-24 Interim Final Rule)

TURBOFAC Commentary (330 words)