Export Record Retention Changes from Five to Ten Years

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.