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On 5-17-2021, OFAC made substantial amendments to two of its oldest sets of active sanctions regulations; the FNKSR (2000) and NTSR (1997).
The FNKSR blocking-related prohibitions were “modernized” so as to bring the text of the regulations in line with OFAC’s long standing interpretations of them. From their issuance in 2000 through 5-17-2021, the FNKSR contained a provision—FNKSR - Blocking of assets (2000-2021)—that set out a blocking prohibition applicable to certain “property and interests in property...which are owned or controlled by a specially designated narcotics trafficker.” This provision was unique to the FNKSR in that it referred to property “controlled” by a blocked person, rather than property in which a blocked person had an “interest.” 598.203 (removed and reserved in May, 2021) contained the standard language concerning property and interests in property of a blocked person (see https://www.govinfo.gov/content/pkg/CFR-2012-title31-vol3/xml/CFR-2012-title31-vol3-part598.xml).
The irregular structure of the provision was owed to the language of the FNKDA that the FNKSR implement. In theory, the provision might have been taken to mean that the 50% rule did not operate in the FNKSR in the way it operates for typical list-based blocking programs, e.g., such that the assets of an entity controlled by not owned by an SDNTK may not be dealt in as a result of the control of the entity. In practice, this is not (and was not) how OFAC reads the blocking provision of the FNKDA. Instead, the provision appliances such that if an asset is "controlled' by an SDNTK, it is blocked because it is per se an asset in which the SDNTK has an "interest" (see e.g. Case No. FNK-2015-324389-1; Case No. FNK-2016-327936-1), but this is no different from how OFAC interprets all blocking prohibitions (see FAC No. SDGT-197443 - Holy Land Found. Blocking Notice).
See also General Note on "Irregular" Blocking Provisions Interpreted "Regularly" by OFAC (System Ed. Note).
In sum, the May, 2021 changes to the FNKSR’s blocking-related provisions were not substantive, even though the new text is markedly different from the old text (with references to property “controlled’ by SDNTKs being omitted). We keep this provision in the Research System for historical reference purposes, since most FNKSR-related guidance issued from 2000 through early 2021 references this version of .202.