Orrick’s banking and international trade teams recently succeeded in obtaining an unusual decision by the U.S. Treasury Department’s Office of Foreign Assets Controls (“OFAC”) to de-block funds held for alleged connections to a “specially designated national” (“SDN”).
SDNs are non-U.S. individuals and entities identified by OFAC with whom U.S. persons are forbidden to engage in any direct or indirect business transactions. A U.S. bank coming into possession of funds in which an SDN has an interest is required to block such funds and cut off the funds’ owner and any other third parties from accessing the funds indefinitely.
In December 2012, a leading New York-based bank blocked approximately $7.3 million of funds being transferred by our client, a major international bank, on the grounds that the money was connected to an SDN. Ordinarily, OFAC does not second guess a U.S. bank’s determination that funds have a sufficiently close connection to an SDN to merit blocking. Over the past six months, however, Orrick submitted an application to de-block the funds on behalf of our client and repeatedly presented the case that there was no legally cognizable connection between our client’s funds and the SDN. In late August, Orrick’s determination finally paid off, and OFAC instructed the blocking bank to release the funds to our client.
"This is an exceptional result for our client given the challenges involved in OFAC blocking cases," said Harry Clark, who led Orrick’s application for de-blocking the funds. "We applaud the efforts of all involved, including OFAC, for seeing through transaction complexities to avoid depriving an innocent financial institution of its property."
The Orrick team was led by international trade and compliance partner Harry Clark and included international trade and compliance associate Elizabeth Zane.
The names of parties involved in this matter cannot be disclosed for confidentiality reasons.