The OFAC list is the popular name for the sanctions rosters maintained by the U.S. Treasury’s Office of Foreign Assets Control, most prominently the Specially Designated Nationals and Blocked Persons List (the SDN List). It names people, companies, and organizations that Americans generally cannot transact with, and whose U.S. assets must be frozen on sight.1Legal Information Institute. Specially Designated Nationals and Blocked Persons List If you run a business, work in finance, or are about to send money abroad, screening against it isn’t optional.
What the SDN List Actually Is
OFAC is a division of the Treasury Department that enforces economic and trade sanctions against foreign countries, terrorist organizations, drug traffickers, and other threats to U.S. national security.2U.S. Department of the Treasury. About OFAC The SDN List is its main public database. It identifies parties that are owned or controlled by targeted countries, or that act on behalf of sanctioned governments, terrorist groups, or major narcotics trafficking networks.1Legal Information Institute. Specially Designated Nationals and Blocked Persons List
Once a party is listed, U.S. banks, businesses, and individuals are broadly prohibited from dealing with them, and any assets those parties hold in the United States must be frozen. Designations flow from Executive Orders or statutory authority tying a person or entity to activities that threaten U.S. foreign policy or national security. OFAC updates the list regularly, sometimes adding hundreds of entries at once when a new sanctions program launches or an existing one expands.
The Other OFAC Lists
The SDN List draws the most attention, but it isn’t the only OFAC list. The agency also maintains the Sectoral Sanctions Identifications List (SSI), the Foreign Sanctions Evaders List, the Non-SDN Chinese Military-Industrial Complex Companies List, the Correspondent Account or Payable-Through Account Sanctions List, and others, all published in a single consolidated data set.3U.S. Department of the Treasury. OFAC Consolidated and Other Sanctions Lists Page
The restrictions differ from list to list. SDN parties face a full asset freeze and a blanket ban on U.S. dealings. SSI parties, by contrast, are not automatically subject to an asset freeze, but specific transactions with them, such as new debt or equity dealings, are still prohibited.4Office of Foreign Assets Control. Specially Designated Nationals SDN List and Other OFAC Sanctions Lists Screening only against the SDN List leaves gaps.
The 50 Percent Rule: Blocked Without Being Named
A party doesn’t have to appear on any OFAC list to be blocked. Under 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 OFAC has never named it.5Office of Foreign Assets Control. Entities Owned by Blocked Persons 50 Percent Rule If Blocked Person X owns 25 percent of a company and Blocked Person Y owns another 25 percent, that company is blocked, even though neither individually holds a majority.
Ownership interests aggregate across sanctions programs. Indirect ownership counts too: if a blocked person owns 50 percent of Company A, and Company A owns 50 percent of Company B, Company B is blocked because the sanctioned party indirectly owns 50 percent of it. The rule speaks to ownership, not control. An entity that a sanctioned person controls but does not own at the 50 percent threshold isn’t automatically blocked under this rule, though OFAC can designate it separately.
Who Has to Comply
OFAC’s rules bind every “U.S. person.” The regulations define that term to include any U.S. citizen, permanent resident, entity organized under U.S. law (including its foreign branches), and any person physically present in the United States.6eCFR. 31 CFR 560.314 United States Person U.S. Person That last category catches foreign nationals here on a visa, or even in transit. A French executive closing a deal on U.S. soil is a U.S. person for OFAC purposes while they are here.
The obligation follows Americans everywhere. A U.S. citizen working abroad cannot process a transaction with a sanctioned party just because the deal closes overseas. Foreign branches of U.S. companies carry the same duties as the home office. Some programs impose secondary sanctions on top of this, letting OFAC penalize foreign companies that are not U.S. persons when they engage in transactions that undermine U.S. sanctions objectives.
What Violations Cost
Penalties are large enough to threaten a company’s survival. The governing statute sets civil penalties at the greater of $250,000 or twice the value of the underlying transaction.7Office of the Law Revision Counsel. 50 USC 1705 Penalties That $250,000 base adjusts for inflation each year. As of January 2025, the cap stands at $377,700 per violation under the International Emergency Economic Powers Act, with different statutes carrying different adjusted caps.8U.S. Department of the Treasury. Federal Register Vol 90 No 9 Civil Monetary Penalty Inflation Adjustment For a $5 million transaction, the “twice the transaction” prong applies, putting a single violation at $10 million.
Willful conduct crosses into criminal territory. A conviction can bring a fine of up to $1 million and imprisonment of up to 20 years for an individual.7Office of the Law Revision Counsel. 50 USC 1705 Penalties Even in civil cases, enforcement actions are published on OFAC’s website, and the reputational hit can rival the fine.
Recordkeeping failures have their own price. Failing to provide information OFAC requests can cost up to $29,150 per incident, and up to $72,876 when OFAC believes the underlying transaction exceeds $500,000.8U.S. Department of the Treasury. Federal Register Vol 90 No 9 Civil Monetary Penalty Inflation Adjustment Records of covered transactions must be kept for at least 10 years, and records tied to blocked property must be kept for the entire time the property is blocked plus 10 years after.9eCFR. 31 CFR 501.601 Records and Recordkeeping Requirements
How to Screen a Name Against the List
OFAC publishes a free Sanctions List Search tool that checks against the SDN List and all other OFAC lists at once.10U.S. Department of the Treasury. Sanctions List Search Tool You can search by name, address, or identification number such as a passport or tax ID.11U.S. Department of the Treasury. Sanctions List Search The tool uses fuzzy logic, so it flags potential hits even when spellings differ slightly.
The Minimum Name Score slider controls how broad your results are. A score of 100 returns only exact character matches; lowering it to 50 returns anything the system considers at least 50 percent similar.12Office of Foreign Assets Control. How to Search OFACs Sanctions Lists For compliance work, casting a wider net is safer. You can rule out false positives after the fact, but you cannot fix a missed hit after the money moves.
Handling a Match
A name match doesn’t automatically mean the person in front of you is sanctioned. OFAC expects human judgment. Compare the matched entry’s descriptors, including date of birth, nationality, address, and identification numbers, against what your customer or counterparty has provided.13Office of Foreign Assets Control. Dealing with an OFAC Alert If the name is similar but the other details do not line up, you likely have a false positive. When the match is ambiguous, OFAC recommends contacting the agency’s compliance hotline before blocking the transaction.
Blocking, Rejecting, and Reporting
If a hit is real, the transaction doesn’t always end up in a frozen account. OFAC draws a line between blocking and rejecting. A transaction is blocked when a sanctioned party has a property interest in the funds that must be frozen. A transaction is rejected, meaning returned to the sender, when the transaction is prohibited but no sanctioned party holds a blockable interest.14Office of Foreign Assets Control. Blocking and Rejecting Transactions A wire between two non-sanctioned companies to ship goods to a comprehensively sanctioned country, for example, would be rejected rather than blocked, because no SDN owns the funds.
Both blocked and rejected transactions must be reported to OFAC within 10 business days. For blocked property specifically, holders must also file an annual report covering all blocked property held as of June 30, due by September 30 of the same year.15eCFR. 31 CFR 501.603 Reports of Blocked, Unblocked, or Transferred Blocked Property Blocked funds must be placed into interest-bearing accounts at federally insured U.S. banks, or invested in money market funds or Treasury bills through a registered broker-dealer, so that value is preserved if the designation is eventually reversed.16eCFR. 31 CFR 591.203 Holding of Funds in Interest-Bearing Accounts
When a Prohibited Transaction Is Allowed Anyway: Licenses
Not every dealing with a sanctioned party is permanently off-limits. OFAC issues two kinds of authorizations.17Office of Foreign Assets Control. What Is a License A general license authorizes a defined category of transactions for anyone who meets its criteria. OFAC might issue one allowing all U.S. persons to export food or medicine to a sanctioned country, and if you fit the terms you can proceed, provided you follow every condition.
A specific license is a written authorization issued to a particular applicant in response to a formal request. Applications go through OFAC’s online licensing portal and must disclose every party involved along with supporting documents.18eCFR. 31 CFR Part 501 Subpart E Procedures Processing times vary widely with the complexity and sensitivity of the request.
If You Discover You Made a Mistake
Reporting a prohibited transaction to OFAC voluntarily, before the agency finds out on its own, can cut the base civil penalty in half.19U.S. Department of the Treasury. Office of Foreign Assets Controls Voluntary Self-Disclosure Policy The disclosure must come before OFAC or another government agency discovers the violation or a substantially similar one. Waiting for a subpoena and then volunteering information doesn’t qualify. Paired with a solid compliance program and prompt remedial action, a voluntary disclosure can, in some cases, reduce the outcome to no penalty at all.
Getting Off the List
If you or your organization has been designated, you can petition OFAC for removal under the procedures at 31 C.F.R. ยง 501.807. The petition goes by email to OFAC.Reconsideration@treasury.gov; OFAC does not accept removal requests by phone.20U.S. Department of the Treasury. Filing a Petition for Removal from an OFAC List
The petition should present arguments or evidence that the original basis for the designation was wrong (mistaken identity, for example) or that the circumstances behind the designation no longer apply.21eCFR. 31 CFR 501.807 Procedures Governing Delisting from the Specially Designated Nationals and Blocked Persons List Petitioners can also propose remedial steps such as corporate reorganization or removal of sanctioned individuals from leadership. For blocked property like a vessel, the owner can propose selling the asset and depositing the proceeds into a blocked interest-bearing account.
There is no statutory deadline for OFAC to respond, and petitioners often wait months or longer. If the administrative process fails, designated persons can seek judicial review in federal court under the Administrative Procedure Act.22Office of the Law Revision Counsel. 5 USC Ch 7 Judicial Review Courts tend to give significant deference to the executive branch on national security designations, which makes successful challenges difficult in practice.