Blocked funds on the SDN list belong to the person or entity named on the list, not to the U.S. government. The Treasury Department’s Office of Foreign Assets Control (OFAC) freezes the assets in place, which suspends every practical right attached to the property, but legal title stays with the sanctioned party the entire time the blocking order is active.
Blocking Is Not Forfeiture
This distinction trips up almost everyone new to the sanctions system. In civil or criminal forfeiture, the government asks a court to transfer legal title to the United States. If it wins, it owns the property outright and can liquidate it into the Treasury or the Department of Justice Asset Forfeiture Fund.
Blocking works differently. The government never asks a court for title and never receives it. The funds remain a liability on the books of whatever financial institution holds them, credited to the account of the sanctioned party. On paper, nothing about ownership changes.
The design is deliberate. If a person is later removed from the SDN list, there is no complicated legal proceeding needed to reverse a forfeiture. The bank simply unfreezes the account, and the owner picks up where they left off, including any interest that accrued while the account was frozen.
What the Listed Party Can Actually Do With the Money
Legal title without access is close to worthless in the short term. Once property is blocked, no one may transfer, pay, export, withdraw, or otherwise deal in it without authorization from OFAC. The prohibition reaches direct transactions like wire transfers out of a blocked account, and it also reaches indirect dealings: providing funds, goods, or services to or for the benefit of the blocked person, or receiving anything of value from them. Even endorsing a security registered in a blocked person’s name is prohibited.
The listed party keeps the label of owner. What they lose is the ability to spend, move, invest, lend, gift, or use the funds in any way. That suspension lasts as long as the blocking order does, with no fixed end date built into the sanctions themselves.
Joint Accounts and Partly Owned Companies
Ownership questions get sharper when the sanctioned party is not the only person with a claim to the property.
For joint bank accounts, the rule is blunt. When one co-owner is designated, the entire account is blocked because the sanctioned party has an interest in the property. The non-sanctioned co-owner cannot simply withdraw “their half.” They would need to apply to OFAC for a specific license authorizing access to the portion of the funds that belongs to them, and approval is not guaranteed.
For companies, OFAC applies what it calls the 50 Percent Rule. Any entity that is directly or indirectly owned 50 percent or more, in the aggregate, by one or more blocked persons is itself treated as blocked property. The entity does not need to be separately listed. If Blocked Person A owns 30 percent of a company and Blocked Person B owns another 25 percent, OFAC aggregates those stakes and treats the company as blocked because blocked persons collectively own 55 percent of it. The company’s assets then belong, in the sanctions sense, to a mix of blocked and non-blocked owners, but they are frozen in full.
Control alone does not trigger the rule. An entity that a blocked person controls through board seats or contractual arrangements, but does not own at the 50 percent threshold, is not automatically blocked. OFAC has publicly cautioned that dealing with such entities is still risky, because they could become the subject of future designations.
Interest, Fees, and How the Balance Changes During the Freeze
Federal regulations require the institution to place blocked funds into an interest-bearing account located in the United States. The interest that accrues does not belong to the bank or to the government. It becomes blocked property itself, subject to the same restrictions as the original balance, and ultimately belongs to the account holder if and when the blocking order is lifted.
Banks are authorized to debit blocked accounts for normal service charges, including custody fees, postage, wire charges, minimum balance fees, and similar routine costs. The regulation does not set a specific dollar cap on these fees, but they must be the kind the institution would normally charge any customer. What banks cannot do is treat a blocked account as an opportunity to extract unusual fees from a customer who has no ability to move their money elsewhere.
So the balance moves during the freeze. It grows through interest that the listed party still owns, and it shrinks through ordinary service charges that the bank is entitled to collect. Both movements happen inside an account whose title never leaves the sanctioned party.
The Narrow Wartime Exception Where Title Does Transfer
There is one situation in which the United States can go beyond blocking and actually take ownership. When the country is engaged in armed hostilities or has been attacked, the President can confiscate property of foreign persons who planned or aided those hostilities. In that scenario, title does vest in the U.S. government.
This confiscation power is separate from ordinary blocking and has only been invoked in limited circumstances. For the overwhelming majority of names on the SDN list, it does not apply, and the ownership rule stated at the top of this article stands: the listed party keeps title, and the government does not.
How Ownership Becomes Usable Again
Because the sanctioned party never lost title, restoring their control over the funds is an administrative act rather than a return of ownership. There are two main paths.
OFAC Licenses
A general license is a blanket authorization published in the Code of Federal Regulations that permits certain categories of transactions without requiring anyone to apply individually. General licenses commonly authorize the provision of legal services to blocked persons, including legal advice on sanctions compliance and defense against the sanctions designation itself.
A specific license covers everything general licenses do not. The application is filed online through OFAC’s licensing portal, and the applicant must fully disclose all parties involved in the proposed transaction and explain why it should be permitted. OFAC typically takes 60 to 90 days to review an application, though complex cases can stretch to 180 days or longer. If an application has been pending for six months without any update, OFAC’s own guidance suggests contacting a licensing specialist to check on its status.
A license does not change who owns the money. It authorizes a specific movement of funds that would otherwise be prohibited, while leaving the underlying blocking order in place.
Removal From the SDN List
Delisting is the more permanent solution. A sanctioned party can petition OFAC for removal by emailing a written request to OFAC’s reconsideration office. The petition should include arguments or evidence that the original basis for the listing no longer applies. OFAC’s published guidance identifies several situations that may lead to delisting: a genuine change in behavior, the death of the listed individual, a determination that the original basis for designation no longer exists, or evidence that the listing was based on mistaken identity.
There is no statutory deadline for OFAC to act on a delisting petition. The process can take anywhere from several months to several years depending on the complexity of the case, the strength of the evidence, and OFAC’s workload. When certain sanctions programs involve designations led by the State Department rather than Treasury, the delisting petition goes to State instead.
If the government determines that the threat justifying the designation has been adequately addressed, the blocking order is rescinded and the financial institution holding the assets is instructed to release them. The funds, including all accumulated interest, revert to the full control of the owner. The legal title that never actually changed hands finally means something again.