More Trade Groups Critical of OFAC's Amended Reporting Regulations, in Filed Comments

The Office of Foreign Assets Control’s amendments to its reporting, procedures and penalties regulations are unclear and too broad, the Association of University Export Control Officers and The Clearing House Association said in July 22 comments, joining a series of trade associations that have been critical of the regulations' amendments.

OFAC’s June 21 interim final rule, which expands the scope of certain transactions that must be reported to the Treasury to include “rejected transactions,” would substantially increase the regulatory burden on U.S. companies and OFAC while providing OFAC with information it doesn't need, the AUECO said in its comments. It also joined other trade associations, such as the National Customs Brokers & Forwarders Association of America (see 1907290015) and the American Association of Exporters and Importers (see 1907230054), in saying OFAC did not provide a clear definition for “rejected transaction.”

“The expansive and ambiguous scope of” the revised regulations “could significantly increase the regulatory burden,” the AUECO said.

The AUECO said it’s unclear at what point an “activity” becomes a transaction. “If a university decides internally not to pursue a contemplated or proposed activity due to sanctions concerns, is this a rejection?” the association said. If it is, universities would be required to report all “internal decisions” to OFAC, which would cause a “substantial increase in regulatory burden” for U.S. universities, companies and OFAC. The association asked the agency to revise the scope of the transactions that must be reported or issue guidance clarifying the regulations.

TCH also said the interim final rule should be changed to clarify the scope of rejected transactions, saying the current scope covers “a number” of transaction types, including “wire transfers, trade finance, securities, checks, foreign exchange and goods or services.” TCH specifically said the “goods or services” category “creates an extremely broad category that may result in a dramatic increase in reporting of situations in which there are no funds, documents, or other instruments to report.”

OFAC should issue examples of the types of goods and services and the threshold for reporting them, TCH said. The agency should also clarify whether a “party is relieved from the obligation to report the transaction” if another party has already reported it, the association said.

TCH also objected to OFAC’s preference that rejected transaction reports be submitted through email because “email submission is problematic for some member institutions.” The association said its members will receive no proof of delivery of the email, “which creates challenges for internal documentation and audit purposes,” and “email transmission to the OFAC address is not encrypted.”