Under OFAC’s blocking rules, any U.S. person who holds property, or anything that qualifies as an interest in property, connected to a sanctioned party must freeze the asset on the spot, report it to the Office of Foreign Assets Control within 10 business days, and keep it frozen until OFAC issues a license authorizing release. The definitions of “property” and “interest in property” are written broadly on purpose, so the obligation reaches far beyond bank accounts and far beyond people who deal with sanctions for a living.
Willful violations can bring criminal penalties of up to $1,000,000 in fines and 20 years in prison, and civil penalties apply even without proof of willfulness.1Office of the Law Revision Counsel. 50 USC 1705 – Penalties
Who Has to Comply
The rules bind every “U.S. person.” That category includes any U.S. citizen anywhere in the world, any permanent resident, any entity organized under U.S. law (including foreign branches of American companies), and any person physically present in the United States.2eCFR. 31 CFR 560.314 – United States Person; U.S. Person
The duty to block is not limited to financial institutions. A landlord collecting rent, an employer paying wages, an escrow agent, a business partner, a trustee: any U.S. person who ends up in possession of property tied to a sanctioned party has to freeze it.
What Counts as Property
The regulatory definition at 31 C.F.R. § 501.311 is deliberately exhaustive.3eCFR. 31 CFR 501.311 – Property On the financial side, it covers cash, bank deposits, savings accounts, stocks, bonds, options, checks, money orders, and debts or claims for money owed. On the physical side, it covers goods, merchandise, equipment, ships, aircraft, vehicles, and real estate interests of every kind, including land, buildings, leaseholds, and mortgages. Warehouse receipts, bills of lading, and court judgments are property too. So are patents, trademarks, copyrights, contracts, licenses, and powers of attorney.
If it has monetary value or represents control over something that does, assume it fits.
Virtual Currency
Cryptocurrency and other digital assets are treated the same as traditional currency for sanctions purposes. If you determine that you hold virtual currency in which a blocked person has an interest, you have to deny all parties access to it.4U.S. Department of the Treasury. Sanctions Compliance Guidance for the Virtual Currency Industry Two differences from fiat: blocked virtual currency does not have to be converted to U.S. dollars, and the usual requirement to hold blocked funds in an interest-bearing account does not apply.
OFAC has been adding known wallet addresses as identifying information on the Specially Designated Nationals (SDN) List. An unlisted address that shares a wallet with a listed one can create sanctions risk on its own, since the shared wallet may signal an association with a blocked person.4U.S. Department of the Treasury. Sanctions Compliance Guidance for the Virtual Currency Industry
What Counts as an Interest in Property
You do not have to own something outright for OFAC to consider you connected to it. Under 31 C.F.R. § 501.312, an “interest” means any legal, equitable, or beneficial connection, whether present, future, or contingent.5eCFR. 31 CFR 501.312 – Interest in Property A sanctioned person who is the beneficiary of a trust has an interest in that trust’s assets regardless of who serves as trustee. Someone with an equitable claim recognized by a court has an interest even without paperwork showing formal ownership.
The consequence for innocent co-owners is significant. Even a small interest can result in the entire asset being blocked. If a sanctioned individual holds a 5 percent share of a jointly owned property, the whole property is typically frozen, and the non-sanctioned co-owners cannot simply carve out their portion and keep going. They have to apply to OFAC’s Licensing Division for authorization, which OFAC evaluates case by case.6Office of Foreign Assets Control. Entities Owned by Blocked Persons – 50 Percent Rule
The 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 it never appears on a sanctions list by name.6Office of Foreign Assets Control. Entities Owned by Blocked Persons – 50 Percent Rule Ownership by different sanctioned persons is added together, so two designees at 25 percent each produce a blocked entity. The rule also runs through chains: if a blocked person owns 50 percent or more of Company A, Company A is blocked; if Company A owns 50 percent or more of Company B, Company B is blocked; and so on through every layer.
Once a majority-owned entity’s property is blocked, it stays blocked even if the sanctioned person’s ownership later drops below 50 percent. OFAC does not recognize unlicensed transfers of a blocked person’s interest after the block has attached. The only ways out are an OFAC license or removal of the relevant person from the SDN List.6Office of Foreign Assets Control. Entities Owned by Blocked Persons – 50 Percent Rule Due diligence on ownership structures is not optional; the free sanctions list search tool at sanctionssearch.ofac.treas.gov identifies named designees, but the 50 Percent Rule can pull in entities that never appear there.
What You Have to Do Once Property Is Blocked
Freeze it immediately. No transfers, withdrawals, payments, or other dealings are permitted. Blocked funds have to go into an interest-bearing account from which only OFAC-authorized debits may occur. The asset stays frozen until OFAC grants a license releasing it.
Initial Report Within 10 Business Days
You must report the blocking to OFAC within 10 business days of the date you blocked the property.7U.S. Department of the Treasury. Filing Reports with OFAC The report has to include a detailed description of the property, the parties involved, and the sanctions authority under which the block was made. The same 10-business-day deadline applies to virtual currency.4U.S. Department of the Treasury. Sanctions Compliance Guidance for the Virtual Currency Industry
Annual Report by September 30
Anyone holding blocked property has to file an annual report by September 30, covering all blocked assets held as of June 30.8eCFR. 31 CFR 501.603 – Reports of Blocked, Unblocked, or Transferred Blocked Property Each report has to include the identity of the sanctions target, a description of the property, the date it was blocked, the value in U.S. dollars as of June 30, and the legal authority for the block. Filing is through OFAC’s electronic reporting system. If blocked funds sit in omnibus accounts, each blocked asset has to be broken out separately.
Ten-Year Recordkeeping
As of March 2025, OFAC extended the recordkeeping period from five years to ten years, matching the statute of limitations for civil and criminal violations under the International Emergency Economic Powers Act.9Federal Register. Reporting, Procedures and Penalties Regulations Every document related to a blocked transaction or asset has to be retained for the full ten years. Businesses that trained staff on the old five-year rule should update their retention schedules.
When Property Does Not Have to Be Blocked
A few categories sit outside OFAC’s reach, but each has conditions.
The Berman Amendment to IEEPA exempts the import or export of “information or informational materials,” including publications, films, posters, photographs, recordings, compact discs, artworks, and news wire feeds.10Office of the Law Revision Counsel. 50 USC 1702 – Presidential Authorities OFAC reads the exemption narrowly when the real thing moving is money: high-value artwork that functions primarily as an investment asset or medium of exchange does not qualify.11U.S. Department of the Treasury. Advisory and Guidance on Potential Sanctions Risks Arising from Dealings in High-Value Artwork
OFAC has also issued general licenses authorizing certain humanitarian activity. Nongovernmental organizations can engage in disaster relief, food distribution, health services, education, and assistance to displaced populations, provided the NGO itself is not blocked. Separate general licenses permit agricultural products, medicine, and medical devices for blocked individuals in personal-use quantities. These licenses do not authorize fund transfers where the sender knows or has reason to know the ultimate beneficiary is a blocked person, except for narrowly defined payments such as taxes or public utility bills.12Federal Register. Addition of General Licenses to OFAC Sanctions Regulations for Certain Transactions of Nongovernmental Organizations and Related to Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components, or Software Updates for Medical Devices
How Blocked Property Gets Released
OFAC releases blocked property through licenses. A general license authorizes a category of transactions for a class of persons without any application; a specific license is a written authorization issued to a particular person in response to a formal request.13U.S. Department of the Treasury. Frequently Asked Questions – Licenses If a general license already covers your situation, you can act on it without contacting OFAC, but you have to observe every condition.
Where no general license fits, you apply for a specific license through OFAC’s online licensing portal. Applications to unblock funds can be submitted online or on Form TD-F 90-22.54.14eCFR. 31 CFR Part 501 Subpart E – Procedures The application has to disclose all parties, attach the relevant documents, and include OFAC reporting system identification numbers where available.
If your property was blocked because of mistaken identity or a typographical error, there is a faster track. Send a request by email to OFACReport@treasury.gov with the subject line referencing “31 CFR 501.806—Request for a Compliance Release,” including your identification, the value of the blocked property, the blocking date, a government-issued ID, and a narrative explaining the mistake.14eCFR. 31 CFR Part 501 Subpart E – Procedures
A person who has been designated on the SDN List or another OFAC list can petition for removal by writing to OFAC.Reconsideration@treasury.gov. The petition needs proof of identity, the exact listing as it appears, and a detailed explanation of why the designation should be lifted. An attorney is not required.15Office of Foreign Assets Control. Filing a Petition for Removal from an OFAC List
What Noncompliance Costs
Willful violations of IEEPA-based sanctions carry criminal penalties of up to $1,000,000 in fines and up to 20 years in prison for individuals.1Office of the Law Revision Counsel. 50 USC 1705 – Penalties Civil penalties, which do not require proof of willfulness, are adjusted annually for inflation and have recently exceeded $300,000 per violation. Penalties apply per transaction, so a pattern of noncompliance can generate substantial cumulative liability quickly.
These are not penalties reserved for people who knowingly deal with terrorists. A bank that processes a wire without adequate screening, a landlord who keeps collecting rent from a blocked tenant, or a business that misses the 10-business-day report can all face enforcement action. OFAC has stated that ignorance of a designation is not a defense where reasonable due diligence would have revealed the problem.