A client asked us (Mr. Watchlist’s employer) why we didn’t combine SDN ownership and SSI entity ownership for purposes of 50 Percent Rule calculation. To me, it was pretty clear – you’ve got the guidance that only mentions “blocked persons” and the separate wording that deals strictly with SSI Directives. Also, from a practical standpoint – without specific guidance from OFAC, which restrictions would apply when an SDN and an SSI Directive 1 party each owned 25% of another firm? If the percentage ownership wasn’t exactly identical, would the restrictions if the larger owner apply? Seems like it was pretty clear, absent specific guidance, which was nowhere to be found in the FAQs or other guidance.
But, Mr. Watchlist offered to ask OFAC. And OFAC originally asked about the transaction details… so Mr. Watchlist clarified he was looking for generalized guidance.
And OFAC sent the following:
Thank you for your inquiry. If you have determined that resolution of the issue you have described below is not readily apparent through a plain-reading of the general licenses and related FAQs, then you may consider submitting an application for interpretive guidance to our Licensing division to gain additional insight into how these issues comport with the regulations.
Generally, issues of a more complex nature, tend to require the submission of an application for formal guidance. Should you choose to do so, you may submit the application by visiting our Licensing division’s website or by visiting here (https://www.treasury.gov/resource-center/sanctions/Pages/licensing.aspx). Applications are accepted from both U.S. and non-U.S. persons.
Sanctions Compliance & Evaluation
Office of Foreign Assets Control (OFAC)
U.S. Department of the Treasury
1500 Pennsylvania Ave. NW
Washington, DC 20220
Toll Free: 1-800-540-6322
So, should Mr. Watchlist be happy – because a plain reading of the existing guidance supports his original supposition – or annoyed because they couldn’t just say something more definitive, even if it was on the order of “we will issue clarifying guidance in the near future”?
For now, I choose to be satisfied – but it wouldn’t hurt if OFAC added an FAQ to specific ally address this issue.