We have an outgoing wire transfer we are blocking; OFAC has confirmed it is a blockable transaction. The funds are "held" currently but we are opening a new account to hold these funds in accordance to OFAC requirements. According to OFAC FAQ #32 (https://ofac.treasury.gov/faqs/32), banks can open separate accounts for each blocked transaction or open an omnibus accounts titled, for example, "Blocked Libyan Funds." Either method is satisfactory, so long as there is an audit trail which will allow specific funds to be unblocked with interest at any point in the future. This is our first OFAC blocked transaction. We are opening a separate interest-bearing account titled "Blocked OFAC Funds Customer #123456". Who do we consider the "owner" of these funds (i.e. customer or bank)? Additionally, what Tax ID do we use (i.e. customer's or bank's)? Any specific guidance would be helpful. Thank you.

I do not know the answer.

I would venture a guess that you would not report interest earned while the funds are blocked to the IRS.

Call OFAC and ask them.

These are questions for OFAC or a qualified attorney.

since the funds are outgoing, i'll assume the recipient of the intended wire is the blocked party. likely you won't have their tax ID number, but if you've debited your clients account to transfer out, an argument could be made that the funds are no longer your clients.

of course, since it is ofac held and you are opening a "new" account to hold the funds until OFAC gives permission to release, your questions are more for internal purposes based on what your system requires when opening an account, rather than regulatory. OFAC won't care how it is titled as long as you can show the funds were held and you can provide that audit trail.

we used to open a new account and hold, but now we simply place in an internal GL, although it has been years since we did. and yes, paying interest and sending a 1099-INT to the client that was sending the funds is a requirement.