Don't Forget to File Your 2025 OFAC Annual Report of Blocked Property
The annual September 30 deadline for submitting the Annual Report of Blocked Property (ARBP) to the U.S. Department of Treasury Office of Foreign Assets Control (OFAC) is fast approaching. Under OFAC regulations, all U.S. persons in possession or control of blocked property are required to file an ARBP.[1]
In addition to submitting the ARBP by September 30, U.S. persons must report blocked property as well as transactions rejected pursuant to OFAC regulations ("rejected transactions") within 10 business days from the date that property becomes blocked or the transaction is rejected. Rejected transactions are not reported annually like blocked property.[2]
A recent OFAC Interim Final Rule, effective August 8, 2024, and Final Rule, effective November 7, 2024 (collectively, the "Rule"), implement several new requirements effective for the 2025 ARBP process and rejected transactions reporting.[3]
Annual Report of Blocked Property
Covered holders of "blocked property" must file the ARBP with OFAC by September 30 of each year. The ARBP is a comprehensive report[4] of all blocked property held as of June 30 of the reporting year.[5]
The blocked property reporting requirements, including the requirement to file an ARBP, apply to any U.S. person, or person subject to U.S. jurisdiction under the Cuban Assets Control Regulations, that holds, unblocks, or transfers property blocked pursuant to OFAC regulations.[6] Blocked property includes property of SDNs blocked under OFAC sanctions programs, such as "financial property (e.g., money, checks, savings accounts, stocks, bonds, debt, or any other financial instruments), real, tangible, and intangible assets (e.g., goods, merchandise, ships, land contracts, and real estate), and any other property or interests therein present, future, or contingent."[7]
U.S. persons, including financial institutions engaged in payments or transfers, should review the SDN List to prevent the flow of blocked property to or from a sanctioned nation, region, entity, or individual. If blocked property is identified, such property must be frozen and held by the U.S. person. OFAC guidance explains that while title to blocked property remains with the targeted entity, the exercise of ownership rights over blocked property is prohibited without OFAC authorization.[8]
The ARBP generally must be submitted through the OFAC Reporting System (ORS).[9] The ARBP requires information regarding, among other things, the ownership, geographic location, value, and asset classification of the blocked property. OFAC provides additional guidance and instructions on its website.
Note that no ARBP need be filed:
- if a person is not holding blocked property;
- regarding property that has been unblocked by a general or specific license (even if the property has not yet been returned);[10]
- regarding property that was blocked pursuant to a now-terminated sanctions program; or
- if the only property at issue is a certain type of Iranian account, which is restricted but not blocked.[11]
A person's failure to timely submit an ARBP constitutes a violation of 31 C.F.R. Part 501 and may subject the entity to substantial civil[12] and, at least in theory, criminal penalties.
Rejected Transaction Reports
In addition to the requirement to submit an ARBP, OFAC rules also require the ongoing submission of rejected transaction reports within 10 business days of a rejected transaction.[13] Like ARBPs, rejected transaction reporting must be filed via ORS.[14]
The Rule revised and clarified the following rejected transaction reporting items:
- A "transaction," for purposes of rejected transaction reporting, "includes wire transfers, trade finance, transactions related to securities, checks, or foreign exchange, and sales or purchases of goods or services." The Rule clarified that securities, checks, foreign exchange, and goods and services "are not in and of themselves transactions, when not provided as part of a transaction."
- "U.S. persons" subject to rejected transaction reporting include all U.S. persons, and not just U.S. financial institutions.
- Rejected transaction reports need only include the information available to the filer at the time the transaction was rejected. OFAC recognized that it would be burdensome and sometimes impractical for filers to seek out additional information about transactions that they have already rejected.
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Please let us know if you have any questions or need assistance in completing or submitting the Annual Report of Blocked Property, or the rejected transaction or unblocked property reports.
[1] 31 C.F.R. § 501.603.
[2] 31 C.F.R. § 501.604.
[3] The Rule implements several new requirements not discussed in this article, including requirements related to "Compliance Release" requests for property blocked due to mistaken identity or other errors, the availability of information under FOIA, procedures for delisting entities from the Specially Designated Nationals and Blocked Persons (SDN) List administered by OFAC, and the reporting of certain transactions to aid in the identification of blocked property.
[5] 31 C.F.R. § 501.603(b)(2)(i).
[6] 31 C.F.R. § 501.603(a)(1).
[8] Id.
[9] While ORS has been usable for many years on a voluntary basis, the Rule mandated its use as of August 8, 2024 (unless a submitter requests to submit reports in an alternative manner due to unique or extraordinary circumstances, such as lack of access to the internet, and OFAC grants the request). Because registration is required to access ORS, filers who have not yet registered should do so in advance of the September 30 deadline to ensure timely filing of their ARBP.
[10] Note, however, that the unblocking of property may require the submission of additional reports outside of the ARBP context. These reports "shall be submitted to OFAC within 10 business days from the date blocked property is unblocked or transferred." See 31 C.F.R. § 501.603(b)(3) and the Rule for more requirements applicable to the reporting of unblocked property. On September 19, 2025, OFAC published a new submission form – Unblocking/Transfer Report Form TD F 93.10 – for complying with this reporting requirement. The new, simplified form is available on OFAC's website.
[11] See 31 C.F.R. § 560.517.
[12] Failure to timely report blocked assets may result in a civil penalty of up to $3,642, if the report is filed within the first 30 days after the report is due, a penalty of up to $7,289 if filed more than 30 days after the report is due, and may include an additional $1,459 for every 30 days that the report is overdue, up to five years. 31 CFR Appendix A to Part 501 IV.B, as adjusted by Inflation Adjustment of Civil Monetary Penalties, 90 Fed. Reg. 3687 (Jan. 15, 2025).
[13] 31 C.F.R. § 501.604; OFAC FAQ 36 distinguishes rejected transactions from blocked transactions as follows: "In some cases, an underlying transaction may be prohibited, but there is no blockable interest (i.e., that of a Specially Designated National (SDN) or blocked person or government) in the transaction. In these cases, the transaction is simply rejected, or not processed and returned to the originator."
[14] See Fn. 9.