On July 22, 2024, the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury issued a Guidance on Extension of Statute of Limitations (the "Guidance"). The Guidance calls attention to the recently enacted 21st Century Peace Through Strength Act, Pub. L. No. 118-50, div. D (the "Act"), which extends the statute of limitations for both 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. Most OFAC sanctions programs are based on IEEPA, either by itself or in conjunction with other legislation. OFAC sanctions imposed on Cuba are based on TWEA. The new statutes of limitation are codified at 50 U.S.C. Secs. 1705(d) and 4315(d), respectively.
For civil enforcement actions, the ten-year clock begins as of the last date of the violation upon which the civil fine, penalty, or forfeiture is based. The commencement of a civil enforcement action includes issuance of a pre-penalty notice or a finding of violation. For criminal prosecutions, the 10-year clock begins to run from the latest date of the violation upon which the indictment or information is based. Any violation not time-barred by the five-year statute of limitations as of the effective date of the Act (April 24, 2024) is subject to the ten-year statute of limitations.
Title 31, Part 501, Subpart C mandates preparation and preservation of various records and reports pertaining to compliance with sanctions rules and regulations, including blocked and unblocked property reports; rejected transaction reports; and reports on litigation, arbitration, and dispute resolution involving sanctioned parties or blocked property. 31 C.F.R. Sec. 501.601 currently requires preservation of such documents for five years.
In the Guidance, OFAC has announced that it expects to publish an interim final rule that extends the recordkeeping requirement of 31 C.F.R. Sec. 501.601 from five years to ten, and that this requirement will take effect six months after OFAC publishes the interim final rule.
We recommend that banks, law firms, and other affected businesses alert their personnel to the forthcoming expanded recordkeeping requirement, and be prepared to adapt their document retention policies to comply with the anticipated new rule. Katten stands ready to assist with any questions.
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