New Voluntary Self-Disclosure Process for OFAC Violations

February 9, 2026 by Leave a comment

OFAC has new standards for filing a voluntary self disclosure!

My law firm has strongly recommended to many clients that there is value in voluntary reporting of export violations to the government, in order to work with the government to solve the immediate issue but also to help the government track trends and provide better compliance support to the industry.

Most voluntary self disclosure (VSD) provisions offer an incentive in the form of a mitigation of penalties. This mitigation is not guaranteed, but we’ve had very good luck in cooperation with the government through VSDs. When we file a VSD on behalf of a client, we typically work with the company on root cause analysis, and corrective actions that are targeted to the root cause. This helps to improve the chances of the corrective action being successful in preventing future recurrence of the underlying issue. It is also important to make sure you are filing your VSD with the right agency, and to recognize that there may be more than one office that needs to receive your VSD (for example some filing issues may also benefit from a Census VSD).

The processes for VSDs are typically ensconced in the regulations, and it is important to pay attention to the regulatory requirements for the VSD processes.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is launching a new online Voluntary Self-Disclosure Portal. This portal provides a streamlined, secure method for submitting voluntary self-disclosures of potential violations of OFAC-administered sanctions programs. By transitioning to this online system, OFAC aims to increase efficiency and transparency for persons submitting information, enabling faster acknowledgment of submissions, clearer communication throughout the review process, and a more user-friendly experience overall. OFAC strongly encourages parties to begin submitting voluntary self-disclosures through the new online portal.

Typically, the initial report needs to be followed by a full narrative that meets the regulatory requirements for final report. If you make an initial report and are not sure what you need in a final report, then you can review the relevant regulations in the Economic Sanctions Enforcement Guideline or contact our office for assistance. The Framework for OFAC Compliance Commitments is also a useful piece of guidance.

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BIS “Affiliates Rule” Postponed for One Year

November 16, 2025 by 1 Comment

A month ago, we reported on the new BIS “Affiliates Rule” that extends a company’s sanctions to any subsidiary business that subject to 50% or more ownership by the sanctioned company. That rule became effective on September 29, 2025, but its implementation is already being postponed!

On November 12, BIS announced that it would be delaying the effective date of the Affiliates Rule for one year:

“This rule will be implemented in two phases. The first phase, effective on November 10, 2025, and ending November 9, 2026, is a one-year suspension of the Affiliates Rule. BIS is temporarily suspending all changes previously made to the EAR by the Affiliates Rule during this period. In the second phase of this final rule, effective November 10, 2026 and extending indefinitely, the changes included in the Affiliates Rule that are removed in the first stage will be added back into the EAR.”

Remember – OFAC policy still extend sanctions to 50%-owned subsidiaries of OFAC-sanctioned companies.

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Export Record Retention Changes from Five to Ten Years

September 11, 2024 by Leave a comment

The Office of Foreign Asset Control (OFAC) plans to issue a new rule that will extend the record retention requirements for export records from five years to ten years (this is found in 31 C.F.R. § 501.601).

The OFAC rule change will likely be published as an interim final rule. This means that it will be published as a direct-final rule without a notice of proposed rulemaking. The OFAC rule is expected to be published on Friday (September 13, 2024) and is expected to be effective 180 days later (probably March 12, 2025).

One of the reasons for this interim-final process is because this record keeping obligation is described by OFAC as a foreign affairs function. Foreign affairs functions are excepted from the requirements of the Administrative Procedures Act (5 U.S.C. § 553(a)(1)), including the requirement for prior notice on a published rule.

The reason for these record keeping extensions is because a law issued earlier this year (Public Law No. 118-50, section 3111) established a ten year statute of limitations for sanctions violations (codified at 50 U.S.C. § 1705(d)). Please note that the statute did not mandate a ten year record retention – this choice was made by OFAC; but commercial record retention decisions are often made based around statutes of limitations.

One of the changes to the rules will extend the penalty for late-filed reports (found in the enforcement guidelines). Now the penalty will continue to increase monthly for ten years.

OFAC plans to collect comments on the interim-final rule. OFAC is expected to specifically request comments on the following topics:

  • Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information has practical utility;
  • The accuracy of the agency’s estimate of the burden of the collection of information;
  • Ways to enhance the quality, utility, and clarity of the information to be collected;
  • Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and
  • Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services required to provide information

We expect there to be a 30 day comment period that will begin when the rule is published. ASA members who are interested in being involved in the Association’s information-gathering and response process should contact ASA Counsel Jason Dickstein immediately. This change in the record retention period may also influence a change in ASA-100 record retention practices.

BIS may also choose to extend its record retention period consistent with the sanctions statute of limitations; however they have not yet chosen to do so. At present, the BIS record retention period rule remains five years. The OFAC record retention requirement, though, should effectively apply to most U.S. exports handled by the aircraft parts community.

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New Treasury Export Reporting Procedures

May 8, 2024 by Leave a comment

The Treasury Department’s export-related functions will soon eliminate paper filings in favor of electronic filings. The Office of Foreign Asset Control (OFAC) plans to issue the new rule in this Friday’s Federal Register.

The current OFAC regulations set forth standard reporting and recordkeeping requirements, license application procedures, and other procedures relevant to the export programs administered by OFAC. OFAC is amending several regulations to require electronic submissions and to remove options for mail submission. The rule change will remove the addresses for physical delivery of such correspondence, and require such correspondence to be communicated electronically according to the new regulatory instructions. Some of the reporting mechanisms that are changed by the rule will be:

  • Annual Reports of Blocked Property (31 C.F.R. § 501.603(d))
  • Reports of rejected transactions (31 C.F.R. § 501.604(d))
  • Required notice to the government of litigation that may affect blocked property or retained funds (31 C.F.R. § 501.605)
  • Seeking export licenses (31 C.F.R. § 501.801)
  • Petitioning for rulemaking (31 C.F.R. § 501.804)
  • Seeking records under the Freedom of Information Act (FOIA) (31 C.F.R. § 501.805)
  • Petitioning for the unblocking of property (31 C.F.R. § 501.806)
  • Petitioning to be removed from a SDN or blocked person list (31 C.F.R. § 501.807)

The rule is expected to be issued as an interim final rule on Friday. This means that the rule will be issued as a direct final rule, but the public is allowed to comment on the final rule, and a subsequent change could be made based on public comments.

The rule is expected to be effective 90 days after publication (if everything stays on schedule then that means August 9, 2024).

If you complete your filings electronically, then be sure to maintain evidence to prove that the filing was properly made. This can include screen shots, copies of sent emails with routing information, etc.

Resources

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Export Week!

October 6, 2023 by Leave a comment

Are you struggling with export compliance? ASA is here to help!

The U.S. government has been actively investigating aircraft parts export transactions. There is a concern about circumvention which could result in aircraft parts from the United States being exported or re-exported to sanctioned destinations.

As part of the Association’s ongoing commitment to compliance, ASA will be hosting Export Week! next week. Export Week! is a series of five webinars discussing export compliance for aircraft parts exporters.

  • Monday, October 9 (11:30 am ET) – Introduction to Export Compliance and OFAC Compliance
  • Tuesday, October 10 (11:30 am ET) – Aircraft Part Compliance: Distinguishing EAR Jurisdiction (BIS) from ITAR Jurisdiction (DDTC); Identifying Your ECCN and Using it to Establish the Destination Restrictions
  • Wednesday, October 11 (11:30 am ET) – Aircraft Part Compliance: Forbidden Parties, Use-based Reasons for Control, Aviation-specific rules
  • Thursday, October 12 (11:30 am ET) – Aircraft Part Compliance: Special Destination Sanctions Including the Russia Sanctions, and Anti-Boycott Provisions
  • Friday, October 13 (11:30 am ET) – Aircraft Part Compliance: Licensing and License Exceptions

Each webinar lasts 45 minutes, with 30 minutes of training and 15 minutes for questions and answers. They are scheduled for 11:30 eastern time (lunch-time on the U.S. east coast — a nice time for a coffee break in other time zones) so grab a lunch, snack, or a cup of coffee and join us to learn about how to keep out of trouble when you export aircraft parts

You can register for the webinar series on ASA’s website. The webinars are free for ASA members. If you are not an ASA member then one registration fee allows you to register for the entire series.

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New Export Restrictions and Controls

February 24, 2023 by Leave a comment

Today the U.S. government announced that it would be sanctioning additional Russian entities. The new sanctions come from several different agencies, so this blog post is divided by agency. The blog post also covers some other changes to the export standards.

OFAC

The new sanctions from the Office of Foreign Asset Control (OFAC) include a number of Russian aviation businesses:

  • “Joint Stock Company Prepreg Advanced Composite Materials, a Russia-based company that produces an assortment of materials used in aircraft engineering.
  • Limited Liability Company Alabuga-Fibre, a Russia-based company that produces various types of carbon fibers used in aerospace and aircraft engineering.
  • Limited Liability Company Prepreg-Dubna, a Russia-based company that produces an assortment of materials used in aircraft engineering.
  • Joint Stock Company Research Institute of Graphite-Based Materials NIIGRAFIT (NIIGRAFIT), a Russia-based research institution and company that was created for the study and development of special types of carbon materials and products. NIIGRAFIT also produces materials used in rocket and space technology and the aviation industry.
  • Joint Stock Company the Urals Scientific Research Institute of Composite Materials, a Russia-based research institution and company that specializes in research, development, and fabrication of composite goods for rocket-and-space hardware.”

This is just a small part of the 22 individuals and 83 entities that were added to the sanctions lists. The new sanctions also include businesses that produce metals and carbon fibers for the aviation industry.

The U.S. Treasury Department called today’s announcement “one of its most significant sanctions actions to date.” The sanctions announcements coincide with the one-year anniversary of the Russian “Special Military Operation” in the Ukraine

BIS

Today, BIS published a new final rule that makes minor modifications to the export rules. Here are some highlights that could affect aviation:

  • ECCN 9A004.g now controls aircraft that are specially designed or modified to be air-launch platforms for sub-orbital craft.
  • Fluorinated silicone fluids were previously controlled under 1C006.b.2 but are now considered EAR99. These can be used as lubricants or fuel additives in aerospace. This does not appear to affect fluorinated silicone in a solid form, such as when used in a seal.
  • Imposes new limits for license exception STA, including as it applies to certain hot section technology
  • Refines the technology controls that apply to technology for certain engine parts including blades, vanes, tip shrouds, combustors, etc.).

On Monday, BIS is expected to publish an order that adds new entities to the denied entities list. All of the new entities are listed because of their support of the Russian military. They are organized by country, here:

Canada

  • CPUNTO Inc., and
  • Electronic Network Inc.

China

  • AOOK Technology Ltd.,
  • Beijing Ti-Tech Science and Technology Development Co.,
  • Beijing Yunze Technology Co., Ltd.,
  • China HEAD Aerospace Technology Co., and
  • Spacety Co. Ltd.

France

  • China HEAD Aerospace Technology Co.

Luxembourg

  • Spacety Co., Ltd.

Netherlands

  • China HEAD Aerospace Technology Co.

Russia

  • Dexias Industrial Products and Trade Limited Company,
  • Innovation and Technologies LLC, and
  • Promtekhkomplekt JSC.

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New Sanctions Against Two Men Located in China: For Supporting North Korean Air Carrier

November 14, 2022 by Leave a comment

The U.S. Treasury Department’s Office of Foreign Asset Control (OFAC) is issuing new sanctions against two persons located in China:

  • RI, Sok
    • Location: Dandong, China
    • DOB 28 Jul 1973
    • nationality North Korea
    • Gender Male
  • YAN, Zhiyong
    • Location:Beijing, China
    • DOB 15 Feb 1980
    • POB Shandong, China;
    • nationality China
    • Gender Male

Both men are sanctioned because they acted on behalf of Air Koryo, the national airline of the Democratic People’s Republic of Korea (North Korea), which is itself a sanctioned business.

All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with either gentleman. Thus, you should ensure that you are not transacting business with either one. You may want to examine your past transactions and identify whether there is information that needs to be self-disclosed to the government.

These sanctions are expected to be published tomorrow, but the sanction orders were effective as of November 7, 2022.

We recommend that you check every export transaction for compliance. For more on aircraft parts export compliance, watch our export webinars, which are available on-demand through ASA. They are free for ASA members and they are available for a nominal fee to non-members.

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New Burmese Sanctions Include Sky Aviator Company

November 14, 2022 by Leave a comment

The U.S. Treasury Department’s Office of Foreign Asset Control (OFAC) is issuing new sanctions against Burmese people and entities, including a business known as Sky Aviator Company.

The new sanctions are scheduled to be published tomorrow, but the sanction orders were effective as of November 8th, 2022.

OFAC sanctions typically prohibit all U.S. persons from engaging in transactions with the blocked parties. If you have a potential transaction with a blocked person or entity (blocked under OFAC sanctions), then you typically need to obtain an OFAC license (or identify an applicable OFAC general license) before you may complete the transaction.

As always, we recommend carefully performing export due diligence on every export transaction. The sanctions lists change almost every day, and many aviation companies are subject to U.S. sanctions. If you are not sure how to perform this due diligence, then we strongly recommend watching our export videos through ASA’s Webinar Series. These videos are free to ASA members and available at a nominal charge to non-members. The on-demand ASA export webinars include:

  • Export Training
  • Export Compliance – A Step-By-Step Approach (Part One: OFAC)
  • Export Compliance – A Step-By-Step Approach (Part Two: BIS)
  • Export Compliance – Licensing and Exceptions: Jason’s Favorite Licensing Exceptions (Part Three)
  • Exporting Defense Material and Complying with the ITAR (Part Four)
  • Exporting Successfully in a Challenging Global Environment (by Elena Mendez, Regional Director, The Export-Import Bank of the United States)

 

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Russia-Sanctions Aimed at Aviation Businesses

March 9, 2022 by Leave a comment

Today, the Bureau of Industry and Security (BIS) published its new additions to the sanctioned entities list. Note that even though it was published today (March 9), it is effective as of March 3, 2022! We reported on this last week, so you should have had a little notice. That list includes aviation as one of the target industries.

Tomorrow, the Federal Register is scheduled to print new Treasury Department Sanctions against Russia. These sanctions include an A340-300 aircraft (MSN 955; registry # M-IABU). Other sanctioned aircraft include a Gulfstream G650 (MSN 6207; registry LX-MOW).

Last week, the Treasury Department Office of Foreign Asset Control (OFAC) updated their lists of Specially Designated Nationals to include aviation maintenance facilities, like JSC 558 Aircraft Repair Plant and airlines, like JSC Transaviaexport Airlines. Both of these companies are in Belarus. OFAC also added SDNs that have not yet been published in the Federal Register – these companies are listed in the SDN list, so they will appear in the government’s consolidated screening list; however the announcement was made in an OFAC press release rather than a Federal Register notice (these are just highlights):

  • ALTITUDE X3 LTD
  • AVANFORT OOO
  • AVIASTAR-SP AIRCRAFT MANUFACTURING ENTERPRISE
  • IRKUTSK AVIATION PLANT
  • IZHMASH-UNMANNED SYSTEMS COMPANY
  • JSC NOVOSIBIRSK AIRCRAFT PRODUCTION ASSOCIATION PLANT
  • KOMSOMOLSK-ON-AMUR AVIATION PLANT
  • ALL-RUSSIAN SCIENTIFIC RESEARCH INSTITUTE OF AVIATION MATERIALS

Remember, if you have property that belongs to any person or entity that has been blocked under the new OFAC Russian sanctions (pursuant to Executive Orders 14024 and 14065), then that property is blocked. The fact that the property is blocked means it may not be transferred, paid, exported, withdrawn, or otherwise dealt in under U.S. law. If, for example, you are managing a U.S. repair for a Russian business who gets added to the OFAC list of Specially Designated Nationals (under the authority of the Executive Order), then you may not return the part to the sanctioned party, nor may you participate in a work-around designed to circumvent the sanctions.

For most members of the ASA community, the BIS prohibitions on unlicensed exports to Russia will put a stop to unlicensed export transactions. But even if you get a BIS license, if your business partner is on the SDN list or is otherwise subject to the limitations of the Russia-related and Ukraine-related Executive Orders then you may also need a license from OFAC, as well.

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Russian Sanctions FAQ: Getting Paid for Past Exports

March 1, 2022 by Leave a comment

QUESTION – Getting Paid for Past Exports: I legally exported aircraft parts to a Russian customer and the export portion of the transaction was complete before February 24, 2022. I am expecting payment soon. Am I allowed to get paid by the Russian customer?

SHORT ANSWER:

The short answer is that this is too broad a question to answer with a simple, bright-line analysis. Some payments may be legal while others may be blocked. Whether your payment is blocked may depend on the identity of the customer who is paying you. If your payment is blocked, then if your transaction is subject to a general license then it may be legal to treat the payment as a winding-up activity that is permitted under the applicable general license. The current general licenses for winding-up are only good through the end of March 25 (12:01 am eastern daylight time on March 26, 2022) so if you think you need to take advantage of one, then you should do it immediately!

LONGER ANSWER:

BIS has imposed sanctions effective February 24, 2022 on exports to Russia; but it appears that the transaction in this fact pattern was completed before those sanctions took place so there does not appear to be a question about whether the prior export was legal.

The Treasury Department has taken a number of steps to sanction Russia, just in the month of February – and this does not even consider the prior sanctions that were imposed in response to other Russian actions. Here is a summary of the February 2022 Treasury actions (taken from the Treasury website):

  • Financial services sector determination.  On February 22, 2022, the Secretary of the Treasury, in consultation with the Secretary of State, issued a determination pursuant to E.O. 14024 that authorizes sanctions against persons determined to operate or to have operated in the financial services sector of the Russian Federation economy.  
  • Correspondent or payable-through account and payment processing prohibitions.  On February 24, 2022, the Office of Foreign Assets Control (OFAC) issued Directive 2 under E.O. 14024, “Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions” (Russia-related CAPTA Directive), which prohibits U.S. financial institutions from:  (i) the opening or maintaining of a correspondent account or payable-through account for or on behalf of foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive; and (ii) the processing of transactions involving foreign financial institutions determined to be subject to the prohibitions of the Russia-related CAPTA Directive.  Annex 1 to the Russia-related CAPTA Directive identifies Public Joint Stock Company Sberbank of Russia and other foreign financial institutions owned 50 percent or more by this bank as subject to these prohibitions, which become effective on March 26, 2022.
  • Blocking certain Russian financial institutions.  OFAC designated specified Russian financial institutions pursuant to E.O. 14024, including the State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB), VTB Bank Public Joint Stock Company, Public Joint Stock Company Bank Financial Corporation Otkritie, Promsvyazbank Public Joint Stock Company, Sovcombank Open Joint Stock Company, Joint Stock Commercial Bank Novikombank, and several of these financial institutions’ subsidiaries.  As a result, all property and interests in property of these entities in the possession or control of U.S. persons, including U.S. financial institutions, or within U.S. jurisdiction, are blocked and must be reported to OFAC.  In addition, all property and interests in property of any entity that is owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.  Accordingly, U.S. persons, including U.S. financial institutions, are prohibited from transacting with these entities unless exempt or authorized by OFAC.  
  • Expanding sovereign debt prohibitions to include the secondary market.  On February 22, 2022, OFAC issued Directive 1A under E.O. 14024, “Prohibitions Related to Certain Sovereign Debt of the Russian Federation” (Russia-related Sovereign Debt Directive), replacing and superseding Directive 1 under E.O. 14024 of April 15, 2021, to extend existing sovereign debt prohibitions to cover participation in the secondary market for ruble or non-ruble denominated bonds issued after March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation.  
  • New debt and equity restrictions involving certain Russia-related entities.  On February 24, 2022, OFAC imposed additional debt and equity restrictions involving Russia-related entities by issuing Directive 3 under E.O. 14024, “Prohibitions Related to New Debt and Equity of Certain Russia-related Entities” (Russia-related Entities Directive), to prohibit certain dealings by U.S. persons, or within the United States, in new debt of longer than 14 days maturity or new equity of Russia-related entities determined to be subject to the prohibitions of the Russia-related Entities Directive.  OFAC determined on February 24, 2022 that the entities listed in Annex 1 to the Russia-related Entities Directive, which include certain major Russian state-owned enterprises and large privately owned financial institutions, are subject to the prohibitions of this directive for new debt or equity issued on or after March 26, 2022. 
  • General Licenses (GLs).  OFAC issued several Russia-related General Licenses authorizing certain transactions otherwise prohibited by E.O. 14024.

Under these sanctions programs, payment for prior sales becomes subject to two different questions.

  • First, is there a standard that prevents me from getting paid?
  • Second, is there a standard that interferes with the banking system getting my money to me?

Depending on the details of your transaction (including the identify of your customer, there may be OFAC restrictions on getting your funds; however there are general licenses that have been issued for winding-up certain types of transactions and activities. These general licenses last through March 26 and are intended to permit an orderly wrap-up to transactions, so they might affect your transaction if payments for prior exports would otherwise be blocked; but only certain transaction models get general licenses so you will need to study them carefully.

The current list of blocked parties is likely to be supplemented with additional names. President Biden’s Executive Order 14024 from last year authorizes the sanctioning of instrumentalities of the Russian Federation, so any company that is identified as an instrumentality is potentially subject to being added to the sanctions list.

One potential example is Aeroflot. The Russian Federation owns a 57.3% stake in Aeroflot. Because Executive Order 14024 authorizes the sanctioning of instrumentalities of the Russian Federation, it is possible that Aeroflot could be named in future sanctions [this is a hypothetical – they are not yet named in OFAC sanctions!!]. If they were so-named as a blocked party, then such a designation could inhibit transaction in that any funds of theirs that would come into the United States would be blocked.

There are some aviation companies that have already been identified as being subject to export sanctions programs, like these:

  • Avia Group LLC
  • PJSC Beriev Aircraft Company
  • Sukhoi Civil Aircraft
  • Sukhoi JSC
  • Russian Aircraft Corporation MiG
  • United Aircraft Corporation
  • KONTSERN AVIAPRIBOROSTROENIE OAO
  • JSC Scientific Research Institute of Aircraft Equipment (NIIAO)
  • Public Joint Stock Company United Aircraft Corporation

And don’t get confused about programs – there is another BIS list of blocked entities that names Russian aviation businesses to whom exports are limited.

Certain Russian banks are is being removed from the SWIFT system, which is the normal agency that banks use for accomplishing cross-border financial transactions. The new banking limits could be even more of an impediment to getting paid, if your customer keeps it money in a bank that has been among those listed in the the Treasury Department sanctions.

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