The funds of a client have been frozen by a financial institution. Subject to the Office of Foreign Assets Control's (OFAC's) regulations, the best…

When a financial institution blocks funds due to Office of Foreign Assets Control (OFAC) regulations, it means the property and interests in property of a sanctioned party are frozen. The institution cannot return, transfer, or allow any dealings with these funds without authorization from OFAC. The correct and official procedure for the affected client to seek permission to access or transact with the blocked funds is to apply for a specific license directly from OFAC. This license is a formal authorization for a transaction that would otherwise be prohibited.

A. Initiating a new transaction from a blocked account, regardless of the currency, is a direct violation of the sanctions and is illegal.

B. The financial institution is legally obligated to block the funds and has no authority to release them without OFAC's explicit permission.

C. While local authorities may need to be aware, the ultimate jurisdiction and authority for unblocking funds under U.S. sanctions rests with OFAC.

1. U.S. Department of the Treasury, Office of Foreign Assets Control. "Apply for an OFAC License." The official OFAC website provides a portal and guidance for submitting license applications, stating, "OFAC has the authority to grant exemptions to prohibitions on a case-by-case basis by issuing specific licenses." This is the designated channel for seeking relief from a blocking action. (Source: https://ofac.treasury.gov/apply-for-an-ofac-license)

2. Code of Federal Regulations (CFR). Title 31, Part 501, Subpart E — "Licenses, Authorizations, and Statements of Licensing Policy." Section 501.801, "Licensing," outlines the general procedures for applying for specific licenses to engage in transactions that are prohibited by OFAC regulations. This subpart establishes the legal framework for the licensing process.

3. ACAMS CGSS Study Guide. The guide details the core functions of OFAC, including its enforcement actions of blocking assets and its authority to issue general and specific licenses to authorize certain transactions that would otherwise be prohibited. The application for a specific license is presented as the primary recourse for parties whose assets have been blocked. (Reference: ACAMS Certified Global Sanctions Specialist (CGSS) Study Guide, Chapter on "Sanctions Evasion and Enforcement").