The supplemental appropriations legislation signed into law on April 24, 2024 enacted numerous high-profile provisions addressing aspects of U.S. foreign policy and national security, including provisions that broaden and strengthen the already robust U.S. sanctions regime.
One such provision, known as the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act (the “REPO Act”) authorizes the President to seize, confiscate, or transfer Russian sovereign assets subject to the jurisdiction of the United States and deposit such assets, or the proceeds of the liquidation or sale of such assets, into a newly established Ukraine Support Fund.
Under relevant provisions of that act, the Office of Foreign Assets Control (“OFAC”) on July 23, 2024 released reporting instructions (the “Instructions”) requiring all financial institutions at which Russian sovereign assets are located, and that know or should know of such assets, to provide notice of such assets to OFAC no later than August 2, 2024 or within 10 days of the detection of such assets. Moreover, financial institutions that maintain correspondent or payable-through accounts on behalf of foreign financial institutions are instructed to “exercise reasonable due diligence” to report any Russian sovereign assets held in such accounts.
The Instructions expressly note that financial institutions need not re-report Russian sovereign assets that were previously reported to OFAC pursuant to Directive 4 under E.O. 14024 or in reports of blocked property filed pursuant to 31 C.F.R. § 501.603(b).
The April 2024 legislation contains a number of directives and delegations to OFAC to take action across multiple U.S. sanctions programs, and we expect continued activity from OFAC and its partner agencies to implement these legislative mandates.
For example, Section 3111 of the 21st Century Peace through Security Act, also contained in the April 2024 legislation, extended the statute of limitations for civil and criminal violations of the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) from five years to ten years; and on July 22, 2024, OFAC released guidance announcing that it “may now commence an enforcement action for civil violations of IEEPA- or TWEA-based sanctions prohibitions within 10 years of the latest date of the violation if such date was after April 24, 2019.” OFAC highlighted that the new statute of limitations also applies to the issuance of pre-penalty notices and findings of violations. This same guidance will be instructive for other agencies, such as the Department of Justice, investigating criminal violations of sanctions laws and regulations.
Given the broadened statute of limitations, OFAC also advised that it anticipates publishing an interim final rule extending the accompanying recordkeeping requirements in its regulations from five to ten years to match the new extended statute of limitations. OFAC also notes that it anticipates the extended recordkeeping requirement will become effective six months after publication of the interim final rule, allowing time for the public to provide comment.
If you have any questions regarding the matters covered in this e-mail, please contact Bruce Paulsen (212) 574-1533, Brian Maloney (212) 574-1448, Carmella O’Hanlon (212) 574-1351, or your primary Seward & Kissel attorney.
