News

OFAC issues statute of limitations guidance for US sanctions violations and recordkeeping

26 July 2024

The US Department of the Treasury’s Office of Foreign Assets Control has released guidance following on Congress’ extension of the statute of limitations for violations of certain sanctions and related recordkeeping requirements.

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued guidance (Guidance) in connection with Congress’ recent extension of the statute of limitations (SOL) from five years to 10 years for civil and criminal violations of the International Emergency Economic Powers Act (IEEPA) or the Trading with the Enemy Act (TWEA). Please see our Alert for more information on the SOL extension enacted in section 3111 of the 21st Century Peace through Strength Act, Pub. L. No. 118-50, div. D.

The Guidance confirmed that the new 10-year SOL became effective on April 24, 2024 when the Act was signed into law. OFAC can now commence enforcement actions for civil violations of IEEPA- or TWEA-based sanctions prohibitions within 10 years of the latest date of the violation, if the date of such violation was after April 24, 2019. Accordingly, any potential civil violation that occurred on or after April 25, 2019 could be subject to an enforcement action by OFAC through April 25, 2029 and beyond.

OFAC anticipates publishing an interim final rule (with opportunity to provide comment) extending the OFAC recordkeeping requirements at 31 C.F.R. § 501.601 from five years to 10 years. OFAC anticipates that the 10-year recordkeeping requirement would become effective six months after publication of the interim final rule.

Next steps

Companies should prepare for the full implementation of the extended SOL period. OFAC expects to amend its recordkeeping requirements to correspond to the 10-year statute of limitations, so companies should begin the process of updating recordkeeping practices to ensure a smooth transition when the interim final rule become effective. Further, companies and financial institutions should consider whether to revise diligence requests on a sanctions risk basis so that they capture the expanded period in the M&A context and assess whether sanctions-related representations and warranties should account for the longer statute of limitations. Companies also should be prepared to respond to diligence requests covering an expanded period. It is important to note that the statute of limitations for violations of the export control laws generally remain five years.

For assistance with establishing and maintaining robust sanctions compliance programs, compliance investigations, and transaction due diligence, please reach out to any of the listed contacts.

Authored by Andrea Fraser-Reid, Beth Peters, and Ashley Roberts.