Nicaragua Sanctions: Prohibitions, Penalties, and SDN Removal

U.S. sanctions on Nicaragua freeze the U.S.-based property of designated Nicaraguan officials, their family members, state-linked companies, and anyone operating in the country’s gold sector, and they bar any person or business subject to U.S. jurisdiction from dealing with those people or their assets. The program is run by the Treasury Department’s Office of Foreign Assets Control (OFAC), and violations carry civil penalties reaching $377,700 per transaction and criminal penalties of up to 20 years in prison when willful.

What the Sanctions Prohibit

Once OFAC designates a person or entity, the rule is absolute: all of their property and interests in property that are in the United States, come into the United States, or fall within the possession or control of any U.S. person are frozen. No U.S. person can transfer, pay, export, withdraw, or otherwise deal with those assets.¹ “Property” is read broadly to include bank accounts, real estate, contracts, financial instruments, and any other economic interest. Any transfer that violates these prohibitions is automatically void, and no court judgment, lien, or garnishment can attach to blocked property without an OFAC license.²

The program also reaches beyond individuals to a full economic sector. Executive Order 14088 targets the gold sector of the Nicaraguan economy, meaning anyone operating in Nicaraguan gold mining or trade may have their property blocked, and it authorizes restrictions on new U.S. investment in designated sectors and on imports of certain Nicaraguan-origin products.³ The Treasury Secretary can add sectors without a new executive order, so the list can expand.

Who Is Covered

The starting point is OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), which names every person and entity whose property is blocked under U.S. sanctions programs.⁴ For Nicaragua, designees typically include senior government officials, family members, state-owned enterprises, and linked financial institutions. OFAC keeps adding names; in February 2026, for example, it designated five more Nicaraguan individuals.⁵

Designation criteria are wide. OFAC can target anyone found to be responsible for or complicit in serious human rights abuse, undermining democratic institutions, corruption involving misappropriation of public assets or bribery, or threatening Nicaragua’s peace and stability, along with anyone who materially assisted, financed, or acted on behalf of an already-designated person, and officials who served in the Nicaraguan government at any point since January 10, 2007.¹

The 50 Percent Rule

An entity does not have to appear on the SDN List to be blocked. Under OFAC’s 50 Percent Rule, any entity owned 50 percent or more, in the aggregate, by one or more blocked persons is itself treated as blocked, even if OFAC has never named it.⁶ Ownership aggregates across different blocked persons and across sanctions programs. If Blocked Person X owns 25 percent of a company and Blocked Person Y owns another 25 percent, the company is blocked.

The rule follows the ownership chain. If a blocked person owns 50 percent of two intermediary entities, and each intermediary owns 25 percent of a third company, the blocked person is treated as indirectly owning 50 percent of that third company, so it too is blocked. The chain breaks when the blocked person’s stake in an intermediary drops below 50 percent, because downstream ownership no longer attributes upward. Working through the math on beneficial ownership is where most due diligence effort belongs.

What Is Still Allowed

Not every transaction touching Nicaragua is prohibited. OFAC uses general licenses to authorize categories of activity without requiring individual applications. Nongovernmental organizations that are not themselves blocked can carry out activities that directly benefit the Nicaraguan civilian population, including:

Humanitarian relief such as food, nutrition, and medicine distribution, health services, and assistance for displaced or vulnerable populations
Democracy building, rule of law, transparency, human rights, and civil society work
Education programs, including literacy, international exchanges, and reform projects
Non-commercial development related to health, food security, water, and sanitation
Environmental protection, natural resource management, and pollution remediation

These authorizations cover transactions “ordinarily incident and necessary” to the listed activities.² Emergency medical services are separately authorized regardless of recipient. Personal communications that transfer nothing of value are fully exempt, as is routine travel to and from Nicaragua, including lodging and personal expenses. Agricultural commodities, medicine, and medical devices may be provided to blocked individuals in quantities consistent with personal, non-commercial use.

If nothing covers your situation, you can apply for a specific license through OFAC’s online Licensing Portal. Applications should include a detailed factual description of the transaction, supporting documents such as invoices or identification, and any deadlines. Renewal requests on expiring specific licenses should be submitted 60 to 90 days before expiration.⁷

What Businesses Have to Do

Any organization under U.S. jurisdiction is expected to run a risk-based sanctions compliance program. In practice, this means screening every customer, counterparty, and transaction against the SDN List, running a 50 Percent Rule analysis on entities with possible ties to blocked persons, training staff on red flags, keeping records, and auditing the process. OFAC treats the absence of an adequate program as an aggravating factor when it calculates penalties.⁸

Freezing and Reporting

If you come into possession or control of property belonging to a blocked person, freeze it immediately. Blocked funds must sit in an interest-bearing account in the United States, earn a commercially reasonable rate, and cannot be invested in instruments with maturities over 180 days.² You then have 10 business days to file an initial blocking report with OFAC describing the transaction, identifying the parties, and providing reference numbers and dates.⁹

Rejected transactions are a separate reporting obligation. If you decline or stop a transaction because it involves a blocked person, report the rejection to OFAC within 10 business days.¹⁰ Banks encounter this frequently on incoming wires that name an SDN as originator or beneficiary.

Penalties

OFAC enforces the program with both civil and criminal penalties. Civil penalties can reach the greater of $377,700 per violation or twice the value of the underlying transaction.¹¹ The $377,700 figure reflects the January 2025 inflation adjustment of the statutory base and is adjusted annually, so the current cap may be slightly higher. On large transactions, the “twice the transaction value” alternative can dwarf the per-violation ceiling.

Criminal penalties apply when a violation is willful, meaning the person knew the conduct was unlawful and not merely that they intended the act. A willful violation of the International Emergency Economic Powers Act carries a fine of up to $1,000,000 and, for individuals, imprisonment of up to 20 years.¹² OFAC can refer matters to the Department of Justice for prosecution.

Voluntary Self-Disclosure

Finding a violation internally and reporting it before OFAC or another agency discovers it substantially reduces exposure. For non-egregious violations disclosed voluntarily, OFAC sets the base penalty at half the transaction value rather than the statutory maximum. For egregious violations with voluntary disclosure, the base drops to half the applicable statutory maximum. Substantial cooperation beyond the initial disclosure can lower penalties further.¹³ The disclosure has to reach OFAC before the government finds the violation on its own.

Getting Off the SDN List

Designation is not permanent. A designated person, or someone holding a majority interest in blocked property, can petition OFAC for removal by submitting arguments or evidence that the basis for designation was insufficient or that the underlying circumstances no longer apply.¹⁴

The petition goes to OFAC’s reconsideration email address. A petitioner can propose remedial steps such as corporate reorganization or the resignation of implicated individuals from positions in a blocked entity. Someone holding a majority interest in blocked property can propose selling the asset and placing proceeds into a blocked interest-bearing account. OFAC may request more information, may agree to a meeting at its discretion, and eventually issues a written decision.

Sanctions From Other Countries

The U.S. program is not the only one that reaches Nicaragua. Canada has designated Nicaraguan officials under its Special Economic Measures (Nicaragua) Regulations across multiple rounds, coordinating with U.S. and U.K. actions.¹⁵ The European Union has imposed asset freezes and funding prohibitions on designated Nicaraguan individuals.¹⁶ Switzerland and the United Kingdom maintain their own restrictions.¹⁷ If your business operates outside the United States, screening against a single list is not enough; a European bank clearing a payment involving someone designated by both the EU and the United States has to satisfy both regimes.

1
GovInfo. Executive Order 13851 – Blocking Property of Certain Persons Contributing to the Situation in Nicaragua
2
eCFR. 31 CFR Part 582 Nicaragua Sanctions Regulations
3
The American Presidency Project. Executive Order 14088 – Taking Additional Steps To Address the National Emergency With Respect to the Situation in Nicaragua
4
U.S. Department of the Treasury. Sanctions List Search
5
Office of Foreign Assets Control. Nicaragua-related Designations – Recent Actions
6
Office of Foreign Assets Control. Entities Owned by Blocked Persons (50 Percent Rule)
7
OFAC. Quick-Reference Guide – License Applications
8
OFAC. A Framework for OFAC Compliance Commitments
9
eCFR. 31 CFR 501.603 – Reports of Blocked, Unblocked, or Transferred Blocked Property
10
eCFR. 31 CFR 501.604 – Reports of Rejected Transactions
11
Federal Register. Inflation Adjustment of Civil Monetary Penalties
12
Office of the Law Revision Counsel. 50 USC 1705 Penalties
13
Legal Information Institute. 31 CFR Appendix A to Subpart F of Part 501 – Economic Sanctions Enforcement Guidelines
14
eCFR. 31 CFR 501.807 – Procedures Governing Delisting From the SDN List
15
Government of Canada. Canada Imposes Third Round of Sanctions in Response to Ongoing Human Rights Violations in Nicaragua
16
European External Action Service. Nicaragua – EU Imposes Sanctions on Eight More Individuals
17
Government of Canada. Canadian Sanctions Related to Nicaragua