On July 22, 2024, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") released guidance ("Guidance") on how it will implement the new authority it was granted in the April 24, 2024 National Security Supplemental ("the Act"). The Act extended the statute of limitations for civil, criminal, and forfeiture violations of sanctions programs promulgated pursuant to the International Emergency Economic Powers Act ("IEEPA") or the Trading with the Enemy Act ("TWEA") from five to 10 years.
In the Guidance, OFAC addressed two of the larger questions the new statute of limitations raised for businesses and compliance professionals surrounding scope and recordkeeping requirements.
First, OFAC clarified that the 10-year statute of limitations applies to any civil violation of IEEPA- or TWEA-based sanctions prohibitions that was not time-barred at the time of the Act's enactment. In other words, OFAC may now commence enforcement actions for such violations within 10 years of the latest date of the violation, if such date was after April 24, 2019. By way of example, here is how OFAC's Guidance would apply depending on the date of the violation:
- Violation occurred before April 24, 2019: Remains time-barred.
- Violation occurred after April 24, 2019: Previously would have been subject to a five-year statute of limitations; now that time period runs for 10 years.
OFAC considers the issuance of a pre-penalty notice or finding of violation to be the commencement of an action for statute of limitation purposes, and the 10-year statute of limitations starts at the time of the most recent violation.
Second, while OFAC has yet to amend its recordkeeping requirements, which today generally only require records to be kept for five years, OFAC anticipates publishing an interim final rule, with an opportunity to provide comment, extending the recordkeeping requirement to 10 years under 31 C.F.R. § 501.601, in order to correspond with the new statute of limitations. OFAC anticipates the final rule will likely become effective six months after the publication.
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