What are frozen assets?
Frozen assets refer to money, property, or bank accounts that have restricted or prohibited access. The freezing of assets results from violations of regulatory measures or sanctions. These actions are taken by government bodies, international organizations, or financial institutions in accordance with national laws and international legal acts. Freezing assets serves as a tool for preventing illegal activities, ensuring compliance with international sanctions, and maintaining financial stability.
For both individuals and legal entities, it’s crucial to understand the legal nuances of frozen assets. Ignoring relevant laws can lead to being placed on the OFAC (Office of Foreign Assets Control) list of blocked persons. This can result in financial losses, legal liabilities, and damage to your business reputation. Additionally, having a frozen bank account or a situation where assets in that account are frozen can significantly limit your ability to conduct business and carry out financial transactions.
What happens to frozen money, property, and bank accounts under OFAC?
When assets are frozen, owners won’t be able to manage them. You won’t be able to carry out transactions, withdraw funds, or transfer ownership. The presence of a freeze indicates involvement in illegal activities – money laundering, financing terrorism, or failing to comply with sanctions.
Most countries adopt laws at the national level to comply with international obligations. In the European Union, Regulation No. 2580/2001 establishes measures for freezing assets in the fight against terrorism. The United States has passed a law that expands the powers of government agencies to combat terrorism financing and money laundering, including asset freezing.
Asset freezing can be temporary or permanent. The duration depends on the outcomes of investigations and court decisions. During a freeze, assets may be under the control of government agencies or appointed administrators. In some cases, assets can be confiscated and turned over to the state treasury by court order. This is particularly relevant for complex financial structures, where the assets of a trust wallet are frozen, potentially leading to prolonged legal disputes.
How can OFAC subpoenas, investigations, or violations impact a person’s immigration status?
Receiving a summons from OFAC or being involved in an investigation related to violating sanctions regimes can have serious consequences for an individual’s immigration status. According to the U.S. Immigration and Nationality Act, individuals suspected of involvement in terrorist activities or actions that pose a threat to national security may be deemed inadmissible for entry or subject to deportation.
The Office of Foreign Assets Control (OFAC) maintains a list of individuals and entities that are blocked under U.S. sanctions. Being included on this list can lead to the freezing of assets and a prohibition on conducting financial transactions with American entities. This also negatively impacts the ability to obtain a visa or permanent resident status.
Immigration services have broad authority to deny benefits based on suspicions or the presence of negative information. If there is no court conviction or official charge, merely being involved in an investigation can lead to a visa denial or its revocation if it has already been issued. Additionally, you could be denied permanent resident status.
International agreements, such as the UN Convention against Corruption and the UN Convention against Transnational Organized Crime, require countries to cooperate on matters of extradition and legal assistance. This can lead to the deportation or extradition of individuals suspected of financial crimes, especially if their assets are frozen and they are included on international sanctions lists.
What common mistakes can lead to receiving a summons?
Failing to comply with laws and regulatory acts is the primary reason for receiving an OFAC summons. Common mistakes include:
- Failing to conduct comprehensive due diligence on counterparties. Not thoroughly vetting clients, partners, or counterparties can lead to collaboration with individuals who are under sanctions or involved in illegal activities;
- Violation of anti-money laundering (AML) requirements. Failure to report suspicious transactions that exceed established thresholds, or breaches of internal control procedures, can be considered as non-compliance with AML laws;
- Ignoring sanction lists. Failing to update information on sanction lists, such as the OFAC SDN list or the EU consolidated list, can lead to unintentional violations of sanction regimes;
- Inadequate control over exports and imports. Violating export control laws, including the transfer of dual-use technologies or goods without the appropriate licenses, can lead to serious legal consequences;
- Untrained staff. The lack of training for employees on compliance requirements and regulatory acts increases the risk of errors and violations;
- Failure to comply with reporting and document retention requirements. Non-compliance with documentation standards can complicate the audit process and raise suspicions of information concealment;
- Participation in dubious financial schemes. Engaging in transactions with opaque ownership structures or offshore companies without a clear business purpose can raise suspicions of money laundering or tax evasion.
To mitigate risks, it’s recommended to implement effective compliance programs that meet international standards. These programs help ensure adherence to requirements and avoid issues such as being unable to access funds, for example, when assets in a particular wallet are frozen.
Regular training for staff on sanctions issues helps to increase awareness. This can help reduce the risk of non-compliance, allowing you to avoid the freezing of trust wallet assets, transaction blocks, and more.
Using specialized tools, like software for monitoring transactions and vetting counterparties, makes it easier to comply with regulatory requirements. Consulting with experts—legal and compliance specialists—can provide valuable advice on complex issues of international law and regulatory requirements, helping to avoid situations where a bank account gets frozen.
