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#2201606 - 12/28/18 02:06 PM OFAC Ukraine sanctions
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We rarely get a true OFAC hit and have come across one yesterday.

It is a bank in Russia and it is hitting on the Ukraine EO 13662. It's a non-SDN.

Our understanding is that we reject the transaction and report to OFAC (rather than block the funds). OFAC hotline is closed with government shut-down in full swing so BOL is next-best-thing smile Can someone with more experience in OFAC hits confirm that this is correct or if we are missing something?

Thank you!
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#2201621 - 12/28/18 03:02 PM Re: OFAC Ukraine sanctions Compli(cated)
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You are here
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#2201623 - 12/28/18 03:13 PM Re: OFAC Ukraine sanctions Compli(cated)
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either way if you block or reject the funds you must report to OFAC.

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#2201634 - 12/28/18 04:11 PM Re: OFAC Ukraine sanctions Compli(cated)
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Thanks for the responses!

Yes, I am aware that we'll need to report either way, but looking for confirmation on what to do with the actual money. And I did read the information at the link, EdAudit, but have not previously had to make this determination so want to make sure that I am not missing something there. Any different interpretations?
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#2201655 - 12/28/18 05:54 PM Re: OFAC Ukraine sanctions Compli(cated)
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if you block the funds you will need to put them into an interest bearing account until they can be released.
"Some banks have opted to open separate accounts for each blocked transaction, while others have opted for omnibus accounts titled, for example, "Blocked Libyan Funds." Either method is satisfactory, so long as there is an audit trail which will allow specific funds to be unblocked with interest at any point in the future. [09-10-2002]"

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#2201657 - 12/28/18 06:01 PM Re: OFAC Ukraine sanctions Compli(cated)
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Thanks for the response, SmallBankBSA - this is all information we are aware of already.

My question is whether we have to block at all or not based on the Ukraine Sanctions in this case...
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#2201658 - 12/28/18 06:07 PM Re: OFAC Ukraine sanctions Compli(cated)
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Are you indicating that they are on the Sectoral Sanctions Identifications List?
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#2201661 - 12/28/18 06:21 PM Re: OFAC Ukraine sanctions Compli(cated)
Buddy the Elf Offline
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Before you block anything, be sure you read the Ukraine Sanctions and what is covered under them. Just because a transaction occurs through a bank listed there doesn't mean that the transaction isn't allowed. The sanctions are pretty detailed as to what is allowed and what isn't.

Edited to add: "EO 13662 applies to new debt or equity, all transactions in, provision of financing for, and other dealings in new debt of longer than 14 days maturity or equity of persons determined to be subject to this Directive.

All other activities with these persons or involving their property or interests in property are permitted."

If you provide additional details on the transaction in question, it would help determine if it is, in fact, one that needs to be blocked.
Last edited by Justin Case; 12/28/18 06:28 PM.
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#2201666 - 12/28/18 06:28 PM Re: OFAC Ukraine sanctions Compli(cated)
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Yes, rlcarey, the bank is on the Sectoral Sanctions list for the financial industry.

But it is not a bank itself sending money to our account-holder, but a third-party (that is not on any lists and is in Czech Republic based on online info). It would then appear that we can allow the transaction as we are only not supposed to facilitate investments/debt with the entities on the Sectoral Sactions lists.

But the transaction (wire) is between two forensic technology companies and then the prohibition on import/export of technology would apply.

Except that under General License 9, maybe it does not. And also the actual party is not in Russia as far as we can tell, so this would not be import/export from/to the Crimea region anyway.

I am going in circles on this so any insight would be highly appreciated.
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#2201686 - 12/28/18 07:10 PM Re: OFAC Ukraine sanctions Buddy the Elf
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Justin Case, looks like we were posting at the same time - do the additional details make anything clearer?
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#2201920 - 01/02/19 09:06 PM Re: OFAC Ukraine sanctions Compli(cated)
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Just an update - found a lot of good information on this website that actually tied it all together more comprehensively than OFAC had. Thanks everyone!

https://ofaclawyer.net/economic-sanctions-programs/ukraine-related/crimea-blocked-frozen-sdn/
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