United States — Sanctions & Embargoes

The Office of Foreign Assets Control (OFAC), an agency within the U.S. Department of the Treasury, administers and enforces economic sanctions programs in support of U.S. national security and foreign policy objectives. OFAC derives its authority primarily from the International Emergency Economic Powers Act (IEEPA), enacted in 1977 and codified at 50 U.S.C. §§ 1701–1706, as well as from the older Trading with the Enemy Act (TWEA, 50 U.S.C. § 4301 et seq.) and various other statutes. Most modern U.S. sanctions programs are implemented under IEEPA.

## IEEPA procedural framework

IEEPA authorizes the President to regulate or prohibit a wide range of economic transactions after declaring a national emergency in response to "any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States" (50 U.S.C. § 1701(a)). The President exercises these authorities by issuing an executive order that (1) declares a national emergency under the National Emergencies Act (50 U.S.C. §§ 1601 et seq.), (2) designates targeted persons and establishes criteria for future designations by the Secretary of the Treasury, and (3) specifies prohibited transactions. The Secretary of the Treasury, through OFAC, promulgates implementing regulations codified in 31 C.F.R. Chapter V. Each sanctions program—targeting countries, regimes, or classes of conduct such as narcotics trafficking or terrorism—has its own subpart within that chapter.

## Who must comply: U.S.-person jurisdiction

All U.S. persons must comply with OFAC sanctions, regardless of where they are located. The term "U.S. person" is defined in the regulations for each sanctions program (see, e.g., 31 C.F.R. § 560.314 for the Iranian Transactions and Sanctions Regulations; similar definitions appear in other program parts). The standard definition includes:

• Any U.S. citizen, wherever located;
• Any permanent resident alien (green-card holder), wherever located;
• Any entity organized under the laws of the United States or any U.S. jurisdiction (including corporations, partnerships, and LLCs), including their foreign branches (branches are not separately organized entities and remain part of the U.S. parent); and
• Any person physically in the United States, regardless of nationality.

Foreign subsidiaries (separately organized entities owned or controlled by U.S. persons) are not themselves "U.S. persons" under the standard definition. However, in certain programs—most notably Iran (31 C.F.R. § 560.215) and North Korea (31 C.F.R. § 510.214)—U.S. persons are liable for violations by their foreign subsidiaries if the subsidiary is owned or controlled by the U.S. person. OFAC generally aggregates interests of multiple U.S. persons in determining control; a foreign entity is deemed U.S.-owned or -controlled if one or more U.S. persons, in the aggregate, holds a 50% or greater equity interest (by vote or value) or a majority of board seats. This liability rule is program-specific; consult the implementing regulations for the relevant sanctions program.

## Extraterritorial reach and non-U.S. persons

Non-U.S. persons (foreign individuals and entities organized outside the United States without U.S. ownership above the control threshold) are not generally bound by OFAC prohibitions. Important exceptions include:

• Secondary sanctions: Certain statutes and executive orders impose penalties on non-U.S. persons who engage in specified activities—such as transacting with designated Russian defense or energy sectors, facilitating evasion of U.S. sanctions, or engaging in significant transactions with certain Iranian entities—even when those activities occur entirely outside U.S. jurisdiction. Such persons may be added to OFAC's Specially Designated Nationals (SDN) List or subjected to other blocking or denial measures. Secondary-sanctions authority varies by program; consult the authorizing statute and implementing regulations for each.
• U.S.-nexus transactions: A non-U.S. person who causes a U.S. person to violate OFAC regulations, or who routes a prohibited transaction through the U.S. financial system (e.g., a wire transfer that touches a U.S. correspondent bank account), may face enforcement action.
• Goods and technology of U.S. origin: Some programs restrict re-export of U.S.-origin items by non-U.S. persons. Overlap with the Export Administration Regulations (15 C.F.R. Parts 730–774, administered by the Bureau of Industry and Security, U.S. Department of Commerce) is common, but OFAC's authority is distinct and can reach transactions outside BIS jurisdiction.

## Enforcement and penalties

OFAC has both civil and criminal enforcement authority. Under IEEPA, civil penalties for a violation are the greater of a statutory maximum (currently adjusted for inflation under the Federal Civil Penalties Inflation Adjustment Act and published annually by OFAC) or twice the amount of the underlying transaction (50 U.S.C. § 1705(b)). Criminal penalties for willful violations may include fines up to $1 million and imprisonment up to 20 years (50 U.S.C. § 1705(c)). The statute of limitations for civil enforcement was extended from five to ten years by the 21st Century Peace through Strength Act (Pub. L. 118-50, enacted April 24, 2024), now codified at 50 U.S.C. § 1705(d) for IEEPA violations and 50 U.S.C. § 4315(d) for TWEA violations. OFAC's enforcement framework—including voluntary self-disclosure incentives, settlement procedures, and the applicable-schedule-amount penalty matrix—is set forth in the Economic Sanctions Enforcement Guidelines, Appendix A to 31 C.F.R. Part 501.

Source: 50 U.S.C. § 1701 et seq. (International Emergency Economic Powers Act) Source: 31 C.F.R. Part 501 (Reporting, Procedures and Penalties Regulations) Source: 31 C.F.R. Part 501, Appendix A (Economic Sanctions Enforcement Guidelines) Source: OFAC Frequently Asked Question 11 (Who must comply with OFAC sanctions?) Source: 50 U.S.C. § 1705 (IEEPA civil and criminal penalties and statute of limitations, as amended 2024)

A blocked person includes not only those individuals and entities named on OFAC's Specially Designated Nationals and Blocked Persons (SDN) List, but also any entity owned 50 percent or more, directly or indirectly, in the aggregate by one or more blocked persons—even if the entity itself does not appear on the SDN List. This interpretive rule, known as the 50% Rule, is a bright-line ownership test that determines when a non-listed entity becomes subject to U.S. blocking prohibitions. All U.S. persons—U.S. citizens, permanent resident aliens, entities organized under U.S. law (including their foreign branches), and persons physically in the United States—must comply with the blocking requirement.

## Bright-line 50% ownership threshold

OFAC published revised guidance on the 50% Rule on August 13, 2014 (and has restated the rule in Frequently Asked Questions 398–402). The rule provides that the property and interests in property of entities directly or indirectly owned 50 percent or more in the aggregate by one or more blocked persons are considered blocked, regardless of whether the entity itself is listed in the annex to an executive order or placed on the SDN List. A U.S. person may not engage in any transactions with such an entity unless authorized by OFAC.

Ownership only; not control. The 50% Rule speaks only to ownership and not to control. An entity that is controlled—but not owned 50 percent or more—by one or more blocked persons is not automatically blocked pursuant to the 50% Rule. OFAC may, however, designate such an entity under available sanctions criteria and add it to the SDN List; U.S. persons are urged to exercise caution when transacting with non-blocked entities in which blocked persons hold significant (but sub-50%) ownership stakes or which blocked persons control by means other than majority ownership. Minority ownership alone does not block an entity unless aggregate ownership by one or more blocked persons reaches or exceeds the 50 percent threshold.

## Aggregate ownership across multiple SDNs

OFAC aggregates ownership interests of all blocked persons when calculating the 50 percent threshold. If Blocked Person X owns 25 percent of Entity A, and Blocked Person Y owns another 25 percent of Entity A, Entity A is considered blocked because it is owned 50 percent or more in the aggregate by one or more blocked persons. For the purpose of calculating aggregate ownership, the ownership interests of persons blocked under different OFAC sanctions programs are aggregated (FAQ 399). Thus an entity with a 30% ownership stake held by a Russian SDN and a 25% stake held by a narcotics-trafficking SDN is blocked.

## Indirect ownership and multi-tier structures

Indirect ownership refers to one or more blocked persons' ownership of shares of an entity through another entity or entities that are 50 percent or more owned in the aggregate by the blocked person(s). OFAC FAQ 401 provides detailed worked examples for complex multi-tier structures; the key rule is that indirect ownership chains through any intermediate entity that is itself at least 50% owned by blocked persons.

• Example 1 (single-tier chain): Blocked Person X owns 50% of Entity A, and Entity A owns 50% of Entity B. Entity B is considered blocked (because Entity A, itself a blocked person under the 50% Rule, owns 50%).

• Example 2 (additive indirect ownership): Blocked Person X owns 50% of Entity A and 50% of Entity B. Entities A and B each own 25% of Entity C. Entity C is considered blocked. Through its 50% ownership of Entity A, Blocked Person X is considered to indirectly own 25% of Entity C; and through its 50% ownership of Entity B, Blocked Person X is considered to indirectly own another 25% of Entity C. When totaled, Blocked Person X's indirect ownership of Entity C equals 50%. Entity C is also blocked due to 50% aggregate ownership by Entities A and B, which are themselves blocked entities.

• Example 3 (direct + indirect): Blocked Person X owns 50% of Entity A and 10% of Entity B. Entity A owns 40% of Entity B. Entity B is blocked. Through its 50% ownership of Entity A, Blocked Person X is considered to indirectly own 40% of Entity B; when added to Blocked Person X's direct 10% ownership, the total is 50%.

• Example 4 (break in the chain): Blocked Person X owns 50% of Entity A and 25% of Entity B. Entities A and B each own 25% of Entity C. Entity C is not blocked. Although Blocked Person X indirectly owns 25% of Entity C through Entity A, Entity B is not 50% or more owned by Blocked Person X, so Blocked Person X is not considered to indirectly own any of Entity C through its part ownership of Entity B. Blocked Person X's total ownership of Entity C does not equal or exceed 50%.

## Divestment and de-blocking

If one or more blocked persons divest their ownership stake such that the resulting combined ownership by blocked persons is less than 50 percent, the entity is no longer considered automatically to be a blocked entity going forward (FAQ 402). However, any such divestment transactions must occur entirely outside of U.S. jurisdiction and must not involve U.S. persons, because any blocked property or interests in property that come into the possession or control of a U.S. person must be blocked and reported to OFAC, and OFAC does not recognize any subsequent unlicensed transfers of such property.

Property that was already blocked remains blocked. When property of an entity owned 50 percent or more by one or more blocked persons comes within the United States or into the possession or control of a U.S. person and is blocked, the property remains blocked even if the blocked person's ownership of the entity subsequently falls below 50 percent. This is so because the blocked person is considered to have an interest in the blocked property, and OFAC does not recognize the unlicensed transfer of the blocked person's interest after the property becomes blocked. Persons holding such property may request authorization from OFAC's Licensing Division to transfer or otherwise deal in that property.

## Due-diligence obligation and program-specific exceptions

OFAC urges persons considering a potential transaction to conduct appropriate due diligence on entities that are party to or involved with the transaction or with which account relationships are maintained in order to determine relevant ownership stakes.

Program-specific exceptions. Some sanctions programs (e.g., the Crimea region of Ukraine, Cuba, Iran, North Korea, Syria, and Venezuela) block certain persons without an OFAC designation; these blockings are based on criteria separate from the 50% Rule, such as the blocking of persons that meet the definition of a blocked government (FAQ 398). For these programs, consult the program-specific regulations in 31 C.F.R. Chapter V.

Source: OFAC Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked (August 13, 2014) Source: OFAC FAQ 398 (50% Rule — ownership vs. control) Source: OFAC FAQ 399 (aggregate ownership across multiple SDNs) Source: OFAC FAQ 401 (indirect ownership in complex structures) Source: OFAC FAQ topic page — Entities Owned by Blocked Persons (50% Rule)

The Specially Designated Nationals and Blocked Persons List (SDN List) is OFAC's master list of individuals and entities whose property and interests in property are blocked under U.S. sanctions programs. The list includes blocked persons, specially designated nationals, specially designated terrorists, specially designated global terrorists, foreign terrorist organizations, specially designated narcotics traffickers, and blocked vessels. All U.S. persons are prohibited from engaging in any transactions with SDN List targets and must block any property in their possession or control in which an SDN has an interest.

## Who appears on the SDN List

As part of its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries, as well as individuals, groups, and entities such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called "Specially Designated Nationals" or "SDNs." Their assets are blocked and U.S. persons are generally prohibited from dealing with them.

SDNs are individuals and entities located throughout the world that are blocked pursuant to the various sanctions programs administered by OFAC. SDNs can be front companies, parastatal entities, or individuals determined to be owned or controlled by, or acting for or on behalf of, targeted countries or groups. They also can be specially identified individuals such as terrorists or narcotics traffickers.

SDNs are designated primarily under the statutory authority of the Trading with the Enemy Act (TWEA), the International Emergency Economic Powers Act (IEEPA), the Anti-Terrorism and Effective Death Penalty Act, and the Foreign Narcotics Kingpin Designation Act. Each designation is made pursuant to a specific executive order, statute, or regulation; the program codes or "tags" following each sanctions list entry indicate the sanctions program pursuant to which the person has been blocked, designated, or identified.

## Information on the list

The SDN List provides the following information (to the extent known) concerning blocked persons: (1) For blocked individuals: Name and title (known aliases); address(es); other identifying information, such as date of birth, place of birth, nationality, and passport or national identification number; the notation "(individual)"; and [sanctions program under which the individual is blocked]. (2) For blocked entities: Name (known former or alternate names); address(es); other identifying information, such as national tax identification number(s); and [sanctions program under which the entity is blocked]. The list also includes blocked vessels (with IMO number, flag, and other vessel identifiers) and blocked aircraft.

## Update frequency and change tracking

The SDN list is frequently updated. There is no predetermined timetable, but rather names are added or removed as necessary and appropriate. This Specially Designated Nationals and Blocked Persons List is updated frequently and at irregular intervals to incorporate changes reflected in notices of blocking, designation, identification, and delisting actions, all of which are published in the Federal Register.

For historical information about names that have been added to, updated, or removed from OFAC's Specially Designated Nationals List or one of OFAC's other sanctions lists, persons may consult OFAC's Archive of Changes page. Designation, removal, and update information is organized chronologically by list and by year. In addition, all changes to OFAC's lists are announced on OFAC's recent actions pages and OFAC maintains all of its recent actions records going back to 2001.

## How to access and search the list

OFAC's Sanctions List Service (SLS) provides users with easy access to the most up-to-date Sanctions Lists and Sanctions list data ready for immediate download. Users can choose to download from either the Specially Designated Nationals (SDN) List or the Consolidated (non-SDNs) List. The SDN List is available at https://ofac.treasury.gov/sanctions-list-service.

SLS includes OFAC's Sanctions List Search application. This application is designed to facilitate the use of the Specially Designated Nationals and Blocked Persons list and other Non-SDN lists administered by OFAC. The Sanctions List Search tool is accessible at https://sanctionssearch.ofac.treasury.gov/.

OFAC's Sanctions List Search tool employs fuzzy logic on its name search field to look for potential matches on the Specially Designated Nationals (SDN) List and on its Non-SDN Consolidated Sanctions List. This consolidated list includes the Foreign Sanctions Evaders List, the Sectoral Sanctions Identifications List, the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions, the Non-SDN Palestinian Legislative Council List, the Non-SDN Menu-Based Sanctions List, and the Non-SDN Communist Chinese Military Companies List.

Sanctions List Search is a free tool provided by OFAC to assist the public in complying with sanctions programs. It is intended to be used by individual users that are looking for potential matches on OFAC's sanctions lists. In addition to returning results that are exact matches (when the match threshold slider bar is set to 100%), Sanctions List Search can also provide a broader set of results using fuzzy logic. This logic uses character and string matching as well as phonetic matching. Only the name field of Sanctions List Search invokes fuzzy logic when the tool is run.

## Machine-readable formats for compliance systems

The list is disseminated in a number of different formats, including XML and fixed field/delimited files that can be integrated into databases. OFAC's SDN list is available in XML, fixed-field and delimited formats that can be imported into a variety of software programs. OFAC publishes the SDN data in a comma separated values format (CSV). This format is recognized by Excel and other spreadsheet programs and can be imported into spreadsheet format by simply opening the file in your default spreadsheet application.

Compliance systems that perform automated screening should download the full SDN List data files (not rely on the Sanctions List Search web interface, which is designed for individual manual lookups). The SDN list and OFAC's non-SDN Consolidated lists are comprehensive. Database administrators can overwrite any old data in their systems with the latest versions of the list's data files, thus ensuring that their database is current.

## Due-diligence and screening obligation

U.S. persons conducting business with foreign parties are expected to perform appropriate due diligence to ensure they are not transacting with SDNs or entities owned 50 percent or more by SDNs (subject to the 50% Rule covered in a separate section of this guide). If a name match is identified manually or by using software, further research is appropriate. Is it an exact name match, or very close? Is the customer located in the same general area as the SDN or another entry on one of OFAC's sanctions lists? If not, it may be a "false hit." If there are many similarities, contact OFAC's hotline for verification.

Best practice: Many financial institutions, exporters, and importers integrate automated SDN screening into their transaction-processing and customer-onboarding systems. While OFAC does not mandate a specific screening technology or approach, U.S. persons are liable for violations regardless of whether screening was performed; the obligation to comply with blocking requirements rests on the U.S. person, not on the availability of a screening tool.

## Other OFAC sanctions lists

OFAC also administers several other sanctions lists including the Foreign Sanctions Evaders (FSE) List and the Sectoral Sanctions Identifications (SSI) List. Aside from the SDN List, OFAC publishes and maintains other sanctions lists that have different prohibitions associated with them. For example, OFAC's Sectoral Sanctions Identification (SSI) List identifies persons operating in certain sectors that are subject to restrictions other than blocking. Note that the SSI List is not part of the SDN List; however, persons on the SSI List may also appear on the SDN List.

The Consolidated Sanctions List aggregates all non-SDN lists and is available in machine-readable formats from OFAC's Sanctions List Service. Practitioners screening counterparties should review both the SDN List and the Consolidated Sanctions List (or use the Sanctions List Search tool, which queries both).

Source: OFAC FAQ topic page — Specially Designated Nationals (SDNs) and the SDN List Source: OFAC Sanctions List Service Source: OFAC Sanctions List Search Tool Source: 31 C.F.R. Ch. V, App. A (Information Pertaining to the Specially Designated Nationals and Blocked Persons List, updated URL) Source: OFAC FAQ topic page — How to Search OFAC's Sanctions Lists Source: OFAC FAQ 10 (overview of SDN List and other sanctions lists)

OFAC authorizes transactions that would otherwise be prohibited through two types of licenses: general licenses (pre-authorized categories of transactions published in regulations) and specific licenses (individualized written authorizations issued by OFAC in response to applications). Understanding the difference is fundamental to sanctions compliance: a general license is self-executing and requires no application, whereas a specific license must be requested and granted before the transaction occurs.

## General licenses — self-executing authorizations

A general license authorizes a particular type of transaction for a class of persons without the need to apply for a license (31 C.F.R. § 501.801(a)). General licenses may be issued to authorize, under appropriate terms and conditions, certain types of transactions that are subject to the prohibitions in 31 C.F.R. Chapter V (OFAC's consolidated regulations). General licenses are self-executing, meaning they allow persons to engage in certain transactions involving the United States or U.S. persons without needing to apply for a specific license from OFAC, provided the transactions meet all terms and conditions described in the general license.

Location. General licenses are set forth in Subpart E of each sanctions-program part in 31 C.F.R. Chapter V, made available on OFAC's website (ofac.treasury.gov), or published in the Federal Register (31 C.F.R. § 501.801(a)). For example, the Iranian Transactions and Sanctions Regulations (31 C.F.R. Part 560, Subpart E) contain general licenses specific to the Iran sanctions program; the Russian Harmful Foreign Activities Sanctions Regulations (31 C.F.R. Part 587, Subpart E) contain general licenses specific to the Russia program. Each general license is program-specific — a general license in one sanctions program does not authorize transactions in another program unless expressly stated.

Common categories. Typical general-license categories across multiple sanctions programs include: official business of the United States government; official business of certain international organizations (United Nations, OSCE, NATO, and others); transactions related to the exportation or reexportation of agricultural commodities, medicine, and medical devices; noncommercial personal remittances; humanitarian activities and support for civil society; transactions related to telecommunications and internet services; journalistic activities; and payment of legal fees and costs for designated persons (subject to strict conditions). OFAC has published a curated list of selected general licenses on its website; however, practitioners must consult the full text of the applicable sanctions-program regulations to identify all available general licenses and confirm current terms.

Reporting and recordkeeping. Persons availing themselves of certain general licenses may be required to file reports and statements in accordance with the instructions specified in those licenses (31 C.F.R. § 501.801(a)). Failure to file timely all required information in such reports or statements may nullify the authorization otherwise provided by the general license and result in apparent violations of the applicable prohibitions that may be subject to OFAC enforcement action. For example, general licenses authorizing release of blocked funds or certain categories of exports often require post-transaction reporting within a specified number of days. Compliance officers relying on a general license should flag any reporting obligation at the time the transaction is approved internally.

Policy bar on redundant specific licenses. It is OFAC's policy not to grant applications for specific licenses authorizing transactions to which the provisions of a general license are applicable (31 C.F.R. § 501.801(a)). In other words, if a general license fully authorizes a proposed transaction, the applicant cannot obtain a specific license for that same transaction. Practitioners sometimes request a specific license as a form of comfort or written confirmation that a general license applies; OFAC will deny such requests and direct the applicant to rely on the general license. No further permission from OFAC is required to engage in transactions by a person who meets all criteria in a general license.

## Specific licenses — case-by-case written authorizations

Transactions subject to OFAC prohibitions that are not authorized by general license may be effected only under specific license (31 C.F.R. § 501.801(b)(1)). A specific license is a written document issued by OFAC to a particular person or entity, authorizing a particular transaction or series of transactions in response to a written license application. In contrast to general licenses, which authorize certain transactions for all persons who meet the conditions described in the license, specific licenses only authorize the named licensee(s) to engage in certain transactions that would otherwise be prohibited.

Application procedure. Applications for specific licenses to engage in any transactions prohibited by or pursuant to 31 C.F.R. Chapter V must be signed (manually or electronically) and filed through OFAC's Reporting and License Application Forms page (https://licensing.ofac.treas.gov/) or, if that option is unavailable, by mail addressed to the Office of Foreign Assets Control, Licensing Division, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Freedman's Bank Building, Washington, DC 20220 (31 C.F.R. § 501.801(b)(2)). Applications for the unblocking of funds may be submitted via OFAC's online portal or by using Form TD-F 90-22.54, "Application for the Release of Blocked Funds," or a submission that otherwise contains all of the information provided for in that form. Most license applications do not have to be submitted on a particular form, but it is essential to include in the request all necessary information as required in the application guidelines or the regulations pertaining to the particular sanctions program. When applying for a license, provide a detailed description of the proposed transaction, including the names and addresses of any individuals or companies involved.

Information requests and supplemental submissions. Applicants may be required to furnish such further information as is deemed necessary to assist OFAC in making a determination (31 C.F.R. § 501.801(b)(2)). Any applicant or other party in interest desiring to present additional information may do so at any time before or after OFAC makes its decision with respect to the application. If the application is filed by an agent, the agent must disclose the name of his or her principal(s). Such documents as may be relevant shall be attached to each application as a part of such application, whether filed electronically or by mail, except that documents previously filed with OFAC may, where appropriate, be incorporated by reference. For applications for the release of blocked funds, applicants are encouraged to include, when available, the OFAC Reporting System (ORS) transaction and submission identification numbers.

Oral presentations. Any requests to make an oral presentation must be submitted via the OFAC License Application Page to the attention of the Licensing Division, referencing the relevant Case ID number and a "Request for Oral Presentation." Such requests are rarely granted (31 C.F.R. § 501.801(b)(2)).

Issuance and finality. Specific licenses normally will be issued by OFAC (31 C.F.R. § 501.801(b)(3)). OFAC will advise each applicant of the decision respecting filed applications. The decision of OFAC acting on behalf of the Secretary of the Treasury with respect to an application constitutes final agency action (31 C.F.R. § 501.802). A denial by OFAC of a license application constitutes final agency action. The regulations do not provide for a formal process of appeal. However, OFAC will reconsider its determinations for good cause, for example, where the applicant can demonstrate changed circumstances or submit additional relevant information not previously made available to OFAC.

Confidentiality. Information submitted to OFAC pursuant to this section will be protected from disclosure under the Freedom of Information Act (FOIA, 5 U.S.C. § 552) and the provisions of 31 C.F.R. Part 1 if OFAC reasonably foresees that disclosure would harm an interest protected by a FOIA exemption or disclosure is prohibited by law (31 C.F.R. § 501.801(b)(6)).

Processing times and best practices. OFAC processes a high volume of cases, generally in the order that the applications are received. OFAC published best practices in December 2024 recommending that applicants: provide a detailed, fact-focused explanation of the purpose of the transaction (consider including a cover letter with a complete narrative); provide supporting documentation, such as copies of identification documents or relevant invoices; describe how the transaction does or does not meet the criteria of a relevant general license; note important dates that have bearing on the request up front, such as a life-saving medical treatment date or a court-imposed deadline; and submit a request to renew a specific license at least 60 to 90 days in advance of the current license's expiration. Applicants are cautioned not to submit multiple applications for the same request because a response has not yet been received, and not to submit an application for an OFAC specific license via email or sites other than OFAC's Licensing Portal.

Source: 31 C.F.R. § 501.801 (Licensing) Source: 31 C.F.R. § 501.802 (Decisions — general) Source: OFAC FAQ 74 (What is a license?) Source: OFAC License Application Page Source: OFAC Best Practices: License Applications (Dec. 2024)

When a U.S. person identifies property in which a blocked person has an interest, the property must be immediately blocked and the blocking must be reported to OFAC within 10 business days (31 C.F.R. §§ 501.603(b)(1), OFAC FAQ 49). Understanding the mechanics of blocking—what it means, how to segregate the asset, and the three-tier reporting framework (initial, annual, and unblocking reports)—is fundamental to sanctions compliance.

## What "blocking" means

Blocking (also called "freezing") prohibits transferring, paying, exporting, withdrawing, or otherwise dealing in property in which a blocked person has an interest. Blocked property must be held such that the blocked person cannot access it and the U.S. person holding the property maintains an audit trail (31 C.F.R. § 501.603). Title to the blocked property remains with the blocked person; the U.S. person holding it acts as custodian and may not use, sell, transfer, or dispose of the property without OFAC authorization (OFAC FAQ 9).

Who must block. 31 C.F.R. § 501.603(a)(1) requires any U.S. person holding, unblocking, or transferring property blocked pursuant to 31 C.F.R. Chapter V to submit the relevant reports. The term "U.S. person" varies by program (see the jurisdiction section in this guide for detail); the standard definition includes U.S. citizens and permanent residents wherever located, entities organized under U.S. law (including their foreign branches), and any person physically in the United States. This obligation applies to financial institutions and non-financial businesses alike—a manufacturer, landlord, or service provider in possession of blocked property is equally obligated to block and report.

What constitutes "property." The term is defined broadly in OFAC regulations. OFAC FAQ 9 explains that "property" includes financial property (money, checks, savings accounts, stocks, bonds, debt, or other financial instruments), real, tangible, and intangible assets (goods, merchandise, ships, land, contracts, real estate), and any other property or interests therein present, future, or contingent. Program-specific definitions appear in each sanctions regulation (e.g., 31 C.F.R. § 560.314 for Iran). A wire-transfer instruction, a purchase order, an accounts-payable obligation, proceeds from a sale, and a contingent claim under a settlement agreement can all constitute blockable property if a blocked person has an interest.

## Initial blocking report — 10 business days

31 C.F.R. § 501.603(b)(1)(i) requires that any U.S. person holding blocked property must file an initial blocking report within 10 business days of the date the property was blocked. The 10-day clock begins when the U.S. person knows or has reason to know that it is in possession or control of property in which a blocked person has an interest.

Where and how to file. 31 C.F.R. § 501.603(d)(1) mandates that initial blocking reports must be filed electronically through the OFAC Reporting System (ORS), available at https://ofac.treasury.gov/ofac-reporting-system. Persons who can provide evidence of unique and extraordinary circumstances that would not allow electronic reporting (such as lack of internet access) may request permission to file by an alternative method by calling 202-622-2490; such requests are subject to a presumption of denial and granted only in writing (31 C.F.R. § 501.603(d)(1)).

Required information. Each initial blocking report must include (31 C.F.R. § 501.603(b)(1)(ii)):

• Name and address of the U.S. person holding the blocked property and a contact from whom OFAC may obtain additional information;
• Description of any transaction associated with the blocking, including dates, amounts, parties, account numbers, and other identifying information;
• Name and identifying information of the sanctions target(s) whose property is blocked, or a reference to any OFAC written communication if the target is unknown;
• Description of the blocked property and its location;
• Date the property was blocked;
• Actual or estimated value in U.S. dollars;
• Legal authority or authorities under which the property is blocked (this may include a reference to the sanctions program on OFAC's website, the applicable part of 31 C.F.R. Chapter V, an executive order, or a statute; the term "SDN" is generic and cannot be used to identify the legal authority);
• Copy of any payment or transfer instructions, check, letter of credit, bill of lading, invoice, or any other relevant documentation received in connection with the transaction.

Failure to report. Failure to file a timely initial blocking report constitutes a violation of the Reporting, Procedures and Penalties Regulations and may result in a civil monetary penalty or other enforcement action, even if the underlying blocking itself was legally required.

## How to hold blocked property

OFAC FAQ 25 states that once blocked, funds must be placed in an interest-bearing account on the U.S. person's books from which only OFAC-authorized debits may be made. Financial institutions may open separate blocked accounts for each SDN or transaction, or may use omnibus accounts titled, for example, "Blocked Libyan Funds." Either method is satisfactory provided there is an audit trail that will allow specific funds to be unblocked with interest at any future date (OFAC FAQ 25).

Interest requirement. OFAC FAQ 25 indicates that OFAC regulations require blocked funds to earn interest at a commercially reasonable rate—i.e., a rate currently offered to other depositors on deposits or instruments of comparable size and maturity. The specific interest rules are set forth in the program-specific regulations in 31 C.F.R. Parts 500–599; compliance officers should consult the implementing regulations for the relevant sanctions program.

Service charges. OFAC FAQ 39 notes that in most cases (with program-specific exceptions) OFAC regulations contain provisions to allow a financial institution to debit blocked accounts for normal service charges, which are described in each set of regulations. Always verify whether the relevant program permits such debits; when in doubt, apply for a specific license before debiting a blocked account.

## Annual Report of Blocked Property — due September 30

31 C.F.R. § 501.603(b)(2)(i) requires any U.S. person holding blocked property as of June 30 of the current year to file an Annual Report of Blocked Property (ARBP) by September 30 of that year. The ARBP is a comprehensive inventory of all blocked property held as of the June 30 snapshot date. OFAC FAQ 50 confirms that persons that did not hold any blocked property as of June 30 do not need to file an ARBP for that year.

What to report. Property that was unblocked by a general or specific license, or that was previously blocked under a sanctions program that OFAC terminated on or before June 30, is not considered blocked property and should not be reported in the ARBP (see OFAC's September 2025 ARBP reminder). A restricted account of a person ordinarily resident in Iran is not blocked (unless a blocked person has an interest in the account) and should not be reported.

Format and submission. 31 C.F.R. § 501.603(b)(2)(ii) provides that the ARBP shall be submitted either using the most recent version of Form TDF 90-22.50, Annual Report of Blocked Property, or by another official reporting option as specified by OFAC on its website. OFAC FAQ 50 directs filers to the standardized spreadsheet form and notes that filers wishing to use a different format should contact OFAC's Compliance hotline. Reports must be filed through ORS or sent to OFACReport@treasury.gov (31 C.F.R. § 501.603(d)(1)).

Failure to file. OFAC has publicly stated that failure to submit a required ARBP by the September 30 deadline constitutes a violation of the RPPR (see OFAC's September 2022 and September 2023 public reminders). Accurate and timely filing of the ARBP is a key element of a risk-based sanctions compliance program.

## Unblocking and transfer reports — 10 business days

When blocked property is unblocked or transferred, the U.S. person must file a report with OFAC within 10 business days (31 C.F.R. § 501.603(b)(3)(i)). This requirement applies when property is unblocked or transferred pursuant to:

• An OFAC general or specific license;
• A valid order from a U.S. government agency or U.S. court;
• OFAC's removal of a person from the SDN List; or
• Any other means (e.g., pursuant to the end or amendment of a sanctions program).

Exceptions (no report required). 31 C.F.R. § 501.603(b)(3)(i) lists four situations in which unblocking reports do not need to be filed:

• Authorized debits to blocked accounts for normal service charges (as permitted by the relevant sanctions program regulations);
• Unblocking authorized by a general license that expressly states that reports under § 501.603(b)(3) are not required (such general licenses may impose their own program-specific reporting requirements);
• Unblocking pursuant to a general or specific license or to the end or amendment of a sanctions program when the authorization or amendment expressly provides that no report under § 501.603(b)(3) is required; or
• Unblocking due to mistaken identity or typographical or similar errors (discussed below).

Information required. Unblocking reports must be submitted electronically via email at OFACReport@treasury.gov or through ORS (31 C.F.R. § 501.603(d)(2)). Each report must include (31 C.F.R. § 501.603(b)(3)(ii)):

• Name and address of the reporting institution and contact information;
• Description of the unblocked or transferred property and its value;
• Date the property was unblocked or transferred;
• Name and identifying information of the sanctions target;
• Information regarding the reason for the unblocking or transfer (e.g., cite the specific general license number, the specific license case ID, the court order, or OFAC FAQ 1196 for mistaken identity);
• Copy of the original blocking report filed under § 501.603(b)(1) and the OFAC Reporting System report identification numbers, when available; and
• Relevant documentation (court orders, license approval letters, wire confirmations).

Mistaken blocking. OFAC FAQ 1196 addresses situations in which property is blocked due to mistaken identity or typographical or similar errors. In such cases, the U.S. person may unblock the property and file an unblocking report citing FAQ 1196 to indicate that the property was released due to error, rather than pursuant to a general or specific license. Caution: OFAC FAQ 1196 warns that unblocking property in which a blocked person does in fact have an interest without OFAC authorization could expose the U.S. person to civil penalties. When in doubt, do not unblock; instead, apply for a specific license or seek a Compliance Release under 31 C.F.R. § 501.806. OFAC FAQ 1196 strongly encourages organizations to develop risk-based compliance programs and not to use the Compliance Release process as a substitute for proper internal due diligence.

## Rejected transactions — reporting requirement

Rejecting a transaction is distinct from blocking. OFAC FAQ 36 explains that a transaction is rejected (rather than blocked) when the transaction is prohibited by OFAC regulations but there is no blockable interest of an SDN or other blocked person in the funds or property. For example, a U.S. bank receiving a wire-transfer instruction to finance an export to Iran (where the Iranian counterparty is not on the SDN List and is not otherwise blocked) must reject the wire transfer because processing it would constitute a prohibited export of services to Iran under the Iranian Transactions and Sanctions Regulations—but the bank does not block the funds because the Government of Iran or an SDN does not have an interest in them. The rejected wire is simply returned to the originator (OFAC FAQ 36).

Reporting rejected transactions. 31 C.F.R. § 501.604(a) provides that any U.S. person (not only financial institutions) that rejects a transaction or dealing must report the rejection to OFAC. OFAC FAQ 819 notes that effective June 21, 2019, the requirement to report rejected transactions was expanded from U.S. financial institutions alone to all U.S. persons. The rejected-transaction report must be filed within 10 business days of the rejection (31 C.F.R. § 501.604(c)).

Information required. 31 C.F.R. § 501.604(b) lists the information that must be included in a rejected-transaction report: the name and address of the reporting person and a contact from whom OFAC may obtain additional information; a description of the rejected transaction; the date of the rejection; the legal authority or authorities under which the transaction was rejected; and a copy of any relevant documentation received in connection with the transaction. OFAC FAQ 820 states that OFAC expects U.S. persons to provide all required information that is in the filer's possession, but generally does not expect filers to seek additional information from their counterparty solely to complete the report. At a minimum, all reports should include the submitter information, rejection date, legal authority, and relevant documentation (OFAC FAQ 820).

Rejected-transaction reports are filed through ORS or by email to OFACReport@treasury.gov (31 C.F.R. § 501.604(c)). The same 10-business-day deadline and the same electronic-filing requirement apply as for blocking reports.

Source: 31 C.F.R. § 501.603 (Reports of blocked, unblocked, or transferred blocked property) Source: 31 C.F.R. § 501.604 (Reports of rejected transactions) Source: OFAC Reporting System (ORS) Source: OFAC FAQ topic — Filing Reports with OFAC Source: OFAC FAQ 49 (Reporting deadlines) Source: OFAC FAQ 50 (Annual report of blocked property) Source: OFAC FAQ topic — Blocking and Rejecting Transactions

The Sectoral Sanctions Identifications (SSI) List is a sanctions list maintained by the Office of Foreign Assets Control (OFAC) under specific executive orders, notably Executive Order 13662 (March 20, 2014) and related authorities, targeting key sectors of the Russian economy. Unlike the Specially Designated Nationals (SDN) List, which triggers a full blocking (freezing) of property, SSI List designations impose targeted restrictions on U.S. persons’ dealings with identified entities in prescribed ways. The SSI List is most significant for the Russian financial, energy, and defense sectors under the Ukraine-/Russia-related Sanctions program.

Scope and covered entities

The SSI List identifies entities operating in sectors specified by executive order—primarily Russian financial institutions, energy companies, and defense contractors. SSI List entries include specific legal entities (often parent companies); the restrictions apply to both those entities and, under OFAC's 50 Percent Rule, any entity owned 50 percent or more by one or more persons on the SSI List (see 31 C.F.R. § 589.406). However, property and interests in property of SSI List entities are not blocked.

Prohibited transactions

OFAC imposes four Directive-based restrictions under the Ukraine-/Russia-related Sanctions Regulations (31 C.F.R. Part 589):

• Directive 1: Prohibits U.S. persons from engaging in transactions or dealings in new debt of longer than a specified maturity (originally 90 days, later tightened to 14 days) or new equity for certain Russian financial institutions.
• Directive 2: Restricts similar transactions for designated energy sector entities, with different debt maturity thresholds.
• Directive 3: Imposes restrictions on new debt for designated defense and related material sector entities.
• Directive 4: Prohibits provision of goods, services (except financial), or technology for certain deepwater, Arctic offshore, or shale projects.

Each SSI List entry references the relevant Directive and the entity’s sector. Obligations for U.S. persons (and entities inside the U.S.) are prescribed by these Directives, not by the mere presence on the SSI List.

Comparison to SDN blocking

SSI List designations do not require U.S. persons to block (freeze) property or reject all transactions. Instead, only specifically prohibited transactions (e.g., dealing in new debt/equity, or certain export services) are barred. U.S. persons may continue non-prohibited dealings (such as payments for goods already delivered) unless another restriction applies. This is a key distinction from the SDN List, where any direct or indirect dealing (except as licensed) is generally banned.

Compliance requirements

U.S. persons must screen business counterparties against both the SDN and SSI Lists. For SSI List matches, due diligence must determine whether any covered transaction (under the Directives) is at issue, and block only prohibited activity. The 50 Percent Rule applies (aggregate 50% ownership by SSI parties triggers sectoral restrictions for the subsidiary). OFAC publishes comprehensive FAQs, the full text of the four Ukraine-/Russia-related Directives, and regular updates to the SSI List on its website. The SSI List is updated as necessary and publicly accessible: https://ofac.treasury.gov/other-ofac-sanctions-lists#ssi-list.

Source: 31 C.F.R. § 589.201 (prohibitions on certain transactions for SSI entities) Source: OFAC SSI List homepage Source: Ukraine-/Russia-related Sanctions — Sectoral Directives Source: OFAC FAQ 398 (50 Percent Rule application to SSI)

Secondary sanctions allow OFAC to penalize or restrict non-U.S. persons (foreign individuals, companies, banks) who conduct certain transactions with U.S. sanctions targets—even if no U.S. person, U.S.-origin goods, or U.S. dollar flows are involved. This authority is fundamentally different from the baseline that only “U.S. persons” are directly obligated under OFAC’s core prohibitions.

## Secondary sanctions: program-by-program reach Most U.S. sanctions programs bind only “U.S. persons,” defined in each rule. However, for specific high-priority regimes—including Iran, Russia, North Korea, and under the Global Magnitsky program—Congress and the President authorize OFAC to take punitive action against non-U.S. persons who materially support, transact significantly with, or provide certain goods/services to primary sanctions targets. The details and scope are program-specific:

• Iran. E.O. 13846 (2018) and implementing guidance (e.g., 31 C.F.R. § 560.211 notes; OFAC FAQ 828) authorize blocking sanctions, correspondent account bans, and other restrictions on foreign financial institutions or persons that conduct “significant transactions” with designated Iranian SDNs, or the Iranian energy, shipping, or metals sectors. This authority does not require a U.S. nexus. See E.O. 13846 and FAQ 828.
• Russia. CAATSA § 228 and E.O. 14024 provide similar secondary-sanctions tools for non-U.S. persons that engage with targeted sectors, defense, or designated entities. The mechanics and statutory triggers vary—see program-specific FAQ 704.

Not all OFAC programs have secondary sanctions; the triggers and consequences depend strictly on the executive order, statute, or regulation for that regime. Always review the current sanctions program’s foundational authority.

## “Causing” violations and facilitation liability Separately, most OFAC programs include a rule making it unlawful for any person—including a non-U.S. party—to cause a violation by a U.S. person, even indirectly. For the Iran program, 31 C.F.R. § 560.208 states: “No person, including a foreign person, may cause any person to violate, attempt to violate, conspire to violate, or evade any of the prohibitions contained in this part.” Comparable language appears in other sanctions programs (see their program regulations for precise scope).

OFAC FAQ 657 clarifies: if a non-U.S. company arranges for a U.S. person to be involved in a prohibited transaction (e.g., covertly routing goods, payments, or services), or processes transactions in a way that indirectly causes a U.S. person to violate the rules, OFAC may bring an enforcement action—even if the underlying transaction began outside the United States.

## Compliance takeaways (anchored to primary guidance)

• Secondary sanctions may result in SDN List designation, correspondent account bans, or bar from U.S. business, even without U.S. person involvement—but only if the governing statute or executive order for a program provides that power. (See E.O. 13846, FAQ 828.)
• Any person (including non-U.S.) risking “causing” a U.S. person violation faces OFAC enforcement exposure whenever they induce, conspire with, or facilitate a prohibited act by a U.S. party. (See 31 C.F.R. § 560.208, FAQ 657.)
• Voluntary self-disclosure and robust screening can mitigate, but not eliminate, risk.

Source: OFAC FAQ 828 (secondary sanctions and non-U.S. persons, Iran) Source: OFAC FAQ 657 (facilitation and “causing” violations, Iran, general) Source: 31 C.F.R. § 560.208 (facilitation and causing violations, Iran) Source: E.O. 13846 (Iran secondary sanctions) Source: OFAC FAQ 704 (secondary sanctions, Russia)

OFAC administers and updates more than 35 separate economic sanctions programs, each defined by its statutory authority, executive order, covered transactions, and regulatory carve-outs. For compliance, the critical first step remains matching counterparties, activities, and jurisdictions to the current universe of OFAC sanctions programs—because each program’s legal scope, exceptions, restrictions, and reporting mechanics are anchored in that mapping.

Country-wide embargoes: A designated set of country programs continues to impose comprehensive restrictions on U.S. persons’ dealings unless specifically licensed. As of July 2026, embargoes with variable scope and carve-outs remain in effect for Cuba (31 C.F.R. Part 515), Iran (Part 560), North Korea (Part 510), and Syria (Part 542), with regular program maintenance and updates continuing through July 2026. Recent material updates include the Democratic Republic of the Congo–Related Sanctions (July 10, 2026), Iran Sanctions (July 7, 2026), Russia-Related Sanctions (July 8, 2026), and Sudan/Darfur Sanctions (June 26, 2026). Practitioners must closely review the precise prohibition and exception structure of each program—typical carve-outs may apply for informational materials, humanitarian goods, or financial services. The list and boundaries of comprehensive programs shift via Executive Order, statutory amendment, or regulatory action; vigilance is required for current status.

Sectoral and focused regimes: Other programs target only specified sectors or parties:

• Russia: energy, finance, defense sectors (Directives 1–4; 31 C.F.R. Part 589; updated July 8, 2026)
• Venezuela: government, defense, and select financial operations (Part 591), with continuing regular amendments
• Belarus, DRC, Global Magnitsky, and others: regime officials, cronies, or specific entities—usually via SDN blocking, not an all-country embargo

Sectoral restrictions and which parties or activities are captured shift frequently with administrative updates or new SDN/SSI listings. Consult the program-specific Directive, SDN/SSI tags, and regulations for transaction-level scope.

Thematic and global blocking authorities: Many OFAC programs designate targets based on conduct or class rather than jurisdiction—Counter Terrorism, Counter Narcotics Trafficking, Global Magnitsky (human rights), nonproliferation, cyber-related, and transnational criminal organizations. Notably, the Counter Terrorism and Counter Narcotics Trafficking sanctions were materially updated on July 1, 2026. These thematic regimes generally block designated individuals/entities rather than imposing blanket country sanctions.

Mandatory: consult the official list before every decision: The OFAC “Sanctions Programs and Country Information” page is the authoritative live index to every active sanctions program—showing program name, legal foundations, coverage, last-updated date, and links to controlling regulations and executive orders. Program scope and covered parties change unpredictably, sometimes without advance notice. Practitioners must verify current status before making compliance decisions. The official list and last-modified timestamps are accessible below and must be checked for every compliance assessment.

Source: OFAC Sanctions Programs and Country Information — official live index (accessed July 11, 2026)

OFAC has broad authority to impose civil penalties for violations of U.S. economic sanctions, with the maximum penalty levels and process governed by the Economic Sanctions Enforcement Guidelines (31 C.F.R. Part 501, Appendix A).

Maximum Civil Penalties and Adjustments For acts after April 24, 2024—when the IEEPA statute of limitations rose from five to ten years—civil penalties for most violations may reach up to the greater of approximately $377,700 per violation or twice the value of the underlying transaction (for IEEPA-based programs; 50 U.S.C. § 1705(b), as adjusted). This amount, adjusted for inflation, continues to apply into 2026, with no further increase announced as of July 2026. (See OFAC Civil Penalties Inflation Adjustments, updated source below.)

Statute of Limitations and Recordkeeping (2024–2026) The statute of limitations for civil penalty enforcement under IEEPA is ten years for violations occurring after April 24, 2024, under the 21st Century Peace Through Strength Act (P.L. 118-50). In line with this, OFAC recordkeeping requirements were extended by interim rule to require retention of all required records for ten years—effective March 12, 2025 (31 C.F.R. § 501.601; see OFAC publication for implementation guidance). This aligns the retention period with the new limitations period.

Voluntary Self-Disclosure (VSD) and New Filing Portal A party that discovers an apparent violation and submits a complete VSD to OFAC before the agency or another government body detects the conduct is eligible for a penalty reduction—generally up to 50% off the base penalty, per Appendix A § III(B). Effective February 6, 2026, OFAC launched an online Voluntary Self-Disclosure Portal for streamlined submission of disclosures (see ofac.treasury.gov/disclosure for access and instructions). Submission through this portal or by traditional written means is required to initiate mitigation consideration. VSDs must be completed, accurate, and submitted before OFAC or another government body initiates an inquiry.

Penalty Determination Factors OFAC’s penalty matrix, published in Appendix A, provides guidance on aggravating and mitigating factors, including willfulness, knowledge, harm to U.S. sanctions objectives, volume, compliance program effectiveness, and cooperation with OFAC (including use of the VSD process). These factors drive the ultimate penalty amount, subject to the statutory maximum.

Process: From Prepenalty Notice to Final Penalty When OFAC believes a violation has occurred, it issues a prepenalty notice (PPN), provides a right to respond, and (if not resolved by settlement) issues a final penalty notice. The process is fundamentally unchanged but is now governed by the updated recordkeeping and limitation periods.

Key 2024–2026 Changes

• Maximum per-violation civil penalty is $377,700 (IEEPA; inflation-adjusted; as of 2026).
• Statute of limitations is 10 years for post-April 24, 2024 violations.
• Record retention obligation is 10 years for records created or received after March 12, 2025.
• Voluntary self-disclosures must be filed via the new OFAC online portal (or in writing) beginning February 6, 2026; mitigation reduction framework remains unchanged.

Source: 31 C.F.R. Part 501, App. A (Economic Sanctions Enforcement Guidelines) Source: 50 U.S.C. § 1705 (IEEPA civil penalties/statute of limitations, as amended 2024) Source: OFAC Civil Penalties and Enforcement Information (2024–2026 Inflation Adjustments) Source: OFAC Voluntary Self-Disclosure Portal (2026) Source: 31 C.F.R. § 501.601 (OFAC recordkeeping requirements)

Effective August 8, 2024, procedures for requesting removal ("delisting") from OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) or other sanction lists have materially changed. Pursuant to the interim final rule published May 10, 2024, all petitions for administrative removal under 31 C.F.R. § 501.807 must now be submitted electronically—either through the OFAC Reporting System (ORS) or by email. Mail submissions are no longer accepted as of this date.

Who may file and what to include Any listed person or entity may submit a written petition for removal. Per 31 C.F.R. § 501.807(a), the petition must include:

• The petitioner's full identifying information.
• Specific arguments and supporting documentation showing either (1) the original designation was erroneous, or (2) circumstances have changed such that designation criteria are no longer met (e.g., change in ownership or controlling conduct).
• Information addressing each relevant designation criterion for the sanctions program under which the party was listed.

Submission process (effective August 8, 2024)

• Petitions must be submitted electronically. Acceptable methods are:
• OFAC Reporting System (ORS): Use OFAC's secure online portal for submission of reconsideration petitions.
• Email: Send to OFAC.Reconsideration@treasury.gov as instructed on OFAC's website.
• Mail submissions are no longer permitted. OFAC FAQ 400 and the new regulatory text emphasize that electronic submission is now the only authorized process.
• The document must present all available evidence, legal explanations, affidavits, and supporting materials relevant to OFAC's original basis for designation.

OFAC review process and outcomes Upon receipt, OFAC reviews the petition and may request additional information. Petitioners can supplement their submission before a determination is made. OFAC will then issue a written decision to:

• Remove (delist) the party,
• Refuse removal, or
• Request further information.

There is no regulatory deadline for OFAC’s review. If delisting is granted, OFAC updates the relevant public list and notifies the petitioner.

Unblocking of property and further recourse Once delisted, property blocked solely due to designation becomes eligible for unblocking. U.S. persons holding such property should confirm the party's removal from official OFAC lists before conducting any transactions. No formal regulatory appeal exists, but judicial review under the Administrative Procedure Act is available in federal court, with substantial deference generally afforded to OFAC.

Recent material change (May–August 2024): Petitions for delisting under § 501.807 must be filed electronically as of August 8, 2024. This change eliminates mail submission, standardizing all applications through ORS or email.

Source: 31 C.F.R. § 501.807 (Procedures governing delisting from OFAC lists, updated for electronic submission rule) Source: OFAC FAQ 400 (delisting process and best practices) Source: Federal Register — Interim final rule mandating electronic filing (May 10, 2024) Source: OFAC Filing a Petition for Removal (2026 process details)

OFAC frequently issues “wind-down” general licenses (G.L.s) to authorize U.S. persons to engage in otherwise prohibited transactions for a limited period following the imposition, amendment, or expansion of sanctions. These licenses allow parties to “wind down” or terminate pre-existing business activities with sanctioned parties or in sanctioned jurisdictions, reducing the risk of abrupt defaults and market disruption. Understanding the precise scope, permitted activities, deadlines, and compliance obligations under wind-down G.L.s is essential for timely, lawful disengagement.

Legal basis and publication: OFAC’s authority to issue general licenses—including wind-down G.L.s—flows from the statutory and executive order authority underlying each sanctions program (see 31 C.F.R. § 501.801(a) and relevant program regulations in 31 C.F.R. Chapter V). Wind-down licenses are published on OFAC’s website and in the Federal Register, often concurrent with or shortly after a new sanctions action. Each license specifies its effective date and expiration—practitioners should verify current G.L.s using the OFAC General Licenses Index. For example, in the wake of new Russia-related sanctions, OFAC issued "General License 8F," authorizing the wind-down of transactions with certain Russian financial institutions through a specified date (see current and historical General Licenses at the cited index).

Scope: Wind-down G.L.s authorize only those transactions “ordinarily incident and necessary to the wind-down” of previously existing operations or contracts. This does not provide carte blanche to initiate new transactions or expand a business relationship. Payments usually must be for pre-sanctions obligations; new extensions of credit or new supply contracts are almost always excluded. OFAC’s FAQ 1127 cautions that the specific terms of each wind-down G.L. govern and must be reviewed for scope—do not assume that all activity with listed parties is authorized during the wind-down window.

Deadlines and reporting: Each wind-down G.L. includes an explicit expiration date—after which any activity covered by the G.L. becomes prohibited unless otherwise authorized. Most wind-down G.L.s require prompt wind-down efforts; delays or attempts to stretch activity beyond the stated deadline can constitute violations. Reporting or recordkeeping requirements may also apply, particularly for financial institutions. Failure to comply with license terms (including deadlines and any required reporting) exposes the filer to civil penalty risk; see 31 C.F.R. Part 501, Appendix A.

Effect of amendment, expiration, or revocation: If OFAC amends, revokes, or allows a wind-down G.L. to expire, no further wind-down activity is authorized after the deadline. Outstanding transactions must cease unless authorized by a new general or a specific license. Penalties for post-deadline activity are assessed in accordance with OFAC’s published enforcement guidelines and recent actions (refer to Appendix A and the Enforcement Information page in the cited sources).

Practical compliance:

• Track effective dates and expiration closely—OFAC does not guarantee extension.
• Document all transactions performed during the wind-down window and preserve correspondence and contracts.
• Cease all activity outside the strict scope of the license; when in doubt, seek specific license authorization or legal review.

Source: 31 C.F.R. § 501.801(a) (General licenses) Source: OFAC FAQ 1127 (wind-down general licenses and permissible conduct) Source: OFAC General Licenses Index and recent wind-down G.L.s

A rejected transaction under OFAC-administered sanctions is a transaction that a U.S. person must refuse to process because it would violate sanctions—but that does not involve an interest in property of a blocked person and therefore does not require blocking. The distinction between rejected and blocked transactions lies at the heart of day-to-day sanctions compliance, especially for financial institutions and exporters.

## What counts as a rejected transaction

Under 31 C.F.R. § 501.604 and OFAC FAQ 36, a transaction is rejected (rather than blocked) when the activity is prohibited by sanctions regulations but does not involve any property interest of an SDN or other blocked party. This is not any business refusal, but specifically one made due to an OFAC prohibition. The classic example is a payment ordered to a non-blocked Iranian entity (not on the SDN List) under the Iranian Transactions and Sanctions Regulations (ITSR) (31 C.F.R. Part 560). A U.S. bank receiving a payment order for goods to Iran—where the beneficiary is not named as a blocked person—must reject and return the funds, rather than blocking and holding them.

## Who is required to report

Since June 21, 2019, all U.S. persons—not only financial institutions—must report rejected transactions to OFAC within ten business days after the rejection (31 C.F.R. § 501.604(c); OFAC FAQ 819). The obligation applies to anyone subject to the jurisdiction of the United States, including businesses, service providers, and individuals, whenever they refuse to deal or process a transaction as required by OFAC regulations.

## Required content and method of reporting

Each report (per 31 C.F.R. § 501.604(b)) must include:

• Name and address of the rejecting party and contact details
• Description of the rejected transaction (including date, amount, parties, and relevant identifiers)
• Legal authority under which the transaction was rejected (e.g. specific sanctions regulation)
• Any relevant documentation (wire instructions, contracts, correspondence)

Reporting is via the OFAC Reporting System (ORS) or by email to OFACReport@treasury.gov within ten business days.

## Practical examples

• A U.S. goods exporter refuses an order for goods to Syria, where the counterparty is not listed on the SDN List, specifically because export to Syria would violate 31 C.F.R. Part 542—required to reject and report.
• A U.S. financial institution returns a wire transfer initiated by a Venezuelan entity not appearing on an OFAC list, but the underlying transaction is prohibited by 31 C.F.R. Part 591—rejection and reporting apply.

OFAC does not expect filers to obtain information beyond what is in their possession to complete a report (FAQ 820), but expects all known details to be submitted.

Source: 31 C.F.R. § 501.604 (Reports of rejected transactions) Source: OFAC FAQ 36 (blocking vs. rejecting transactions) Source: OFAC FAQ 819 (reporting rejected transactions) Source: OFAC FAQ 820 (information required in rejected transaction reports)

OFAC’s civil enforcement of sanctions violations is set out in Subparts D and G of 31 C.F.R. Part 501 and detailed in the Economic Sanctions Enforcement Guidelines (Appendix A to Part 501). The process moves through several procedural steps: investigation, information requests (including administrative subpoenas), prepenalty notices, possible settlement, and, if not resolved, issuance of a penalty notice and publication of enforcement details.

Information requests and investigative process

Under 31 C.F.R. § 501.602, OFAC may require any person (domestic or foreign, natural or legal) to furnish records or testimony about any transaction under its jurisdiction. OFAC can issue an administrative subpoena or written request demanding records, reports, or testimony. The regulation authorizes OFAC to seek transaction records, emails, policies, and other documents it deems relevant. Failure to comply with a subpoena or document request is made unlawful by this provision and may subject the person to civil penalties under the same part.

Apparent violations: Prepenalty notice and response

If OFAC determines there has been an apparent violation, it will issue a prepenalty notice (31 C.F.R. § 501.705). This states the legal basis, underlying facts, and proposed civil penalty. The subject of a notice has the right to make a written response and to provide arguments or evidence refuting the apparent violation or penalty. The regulations specify this right but do not fix a response deadline in all situations—OFAC customarily allows 30 days, but practitioners should confirm the specific notice language in any given case.

Settlement and penalty notice

Settlement may be offered at any point after the prepenalty notice. The process is guided by the factors listed in the Economic Sanctions Enforcement Guidelines (Appendix A), with key mitigation and aggravation factors including willfulness, cooperation, voluntary self-disclosure, compliance program design, prior violations, and harm to sanctions objectives (see Appendix A, §§ III–IV). OFAC may issue a final penalty notice under 31 C.F.R. § 501.706 if the matter is not settled, specifying the final penalty. The party is then expected to pay or face possible collection action.

Publication of enforcement actions and regulatory silence on appeal

Significant civil enforcement actions are summarized and published by OFAC, including details of the conduct and penalty, and sometimes OFAC commentary on compliance issues illustrated by the case. The regulations do not specify timelines for the investigation or review, nor do they set out a formal right to judicial appeal; they are silent on post-notice contest except as otherwise available under general principles of administrative law.

Source: 31 C.F.R. § 501.602 (Requests for information, subpoenas) Source: 31 C.F.R. § 501.705 (Prepenalty Notices) Source: 31 C.F.R. § 501.706 (Penalty Notices and payment) Source: 31 C.F.R. Part 501, Appendix A (Economic Sanctions Enforcement Guidelines) Source: OFAC Enforcement Information and Releases

OFAC expects every U.S. company, including importers, exporters, financial institutions, and service providers, to implement a risk-based sanctions compliance program tailored to its specific profile. While OFAC regulations do not mandate a particular compliance architecture, the agency sets explicit expectations for program structure and elements in its May 2019 guidance, "A Framework for OFAC Compliance Commitments." This framework is the touchstone used by OFAC when evaluating the adequacy of a company’s sanctions compliance controls in enforcement actions and penalty assessments since its publication.

Five Pillars of an Effective Compliance Program:

1. Management commitment. Senior leadership must actively support and resource the sanctions compliance program. This means visible engagement, formal policies, integration of compliance into the company's business planning, and prompt remediation of deficiencies.

1. Risk assessment. The company must identify and periodically update its assessment of inherent sanctions screening risks specific to its lines of business, customers, supply chain, counterparties, geographies, and transaction flows. Risk assessment is foundational to resource allocation and the tailoring of control measures.

1. Internal controls. Policies and procedures must be documented and enforced for screening, blocking, reporting, license management, and transaction rejection. Controls should be systematized to the extent feasible (automated screening for SDN/SSI List matches, escalation of potential hits, recordkeeping protocols), and reviewed and updated when OFAC or company risk contours change.

1. Testing and auditing. OFAC expects regular testing and auditing of the entire compliance program—by internal audit or external providers—to identify gaps and weaknesses. This includes audit trail reviews, transaction sample testing, IT system effectiveness checks, and correction of any identified compliance gaps.

1. Training. Training must be tailored to an employee’s role, risk exposure, and business unit, and updated regularly. OFAC expects both onboarding and periodic ongoing training, including timely updates when regulations or internal procedures change.

OFAC Enforcement Lens: In every recent published enforcement action, OFAC references the Framework’s elements, treating deficiencies as aggravating factors, and the existence of a mature, risk-based program as a mitigating factor for penalty assessment. Practitioners should align their internal policies and controls as closely as possible with this published guidance.

OFAC’s Framework includes detailed illustrative root causes observed in enforcement cases—such as lack of testing, failure to update screening software for new SDNs, or lack of management resources. These are instructive for program design and gap analysis.

The full "Framework for OFAC Compliance Commitments" and recent public enforcement actions should be the starting points for any sanctions compliance assessment or remediation effort.

Source: A Framework for OFAC Compliance Commitments (May 2019) Source: OFAC Enforcement Information and Releases

OFAC's "Consolidated Sanctions List" aggregates several targeted lists apart from the SDN (Specially Designated Nationals) and SSI (Sectoral Sanctions Identifications) Lists. As of June 2026, these include the Foreign Sanctions Evaders (FSE) List, the CAPTA List (Correspondent Account or Payable-Through Account Sanctions), the Non-SDN Menu-Based Sanctions (NS-MBS) List, the Non-SDN Palestinian Legislative Council List, the NS-CMIC List (Non-SDN Chinese Military-Industrial Complex Companies), and the Non-SDN Communist Chinese Military Companies List. Not all entities on these lists are "blocked persons": each carries program-specific restrictions, with compliance duties determined by the precise listing and its underlying statute or executive order.

Foreign Sanctions Evaders (FSE) List: Per OFAC FAQ 295, U.S. persons are prohibited from "all transactions or dealings, whether direct or indirect," with persons on the FSE List that involve "goods, services, or technology... exported from or by the United States, or involving a U.S. person, wherever located." The prohibition is not identical to full SDN blocking; for example, property of an FSE is not automatically required to be blocked unless also designated on the SDN List.

CAPTA List: Entities on the CAPTA List (designated foreign financial institutions, FFI) are generally subject to a prohibition on the opening or maintaining of correspondent or payable-through accounts in the United States, as described in 31 C.F.R. § 561.201. Only U.S. financial institutions are directly obligated: they must terminate such accounts and report the action to OFAC. This obligation is specific and does not trigger a broad blocking or asset freeze unless separately designated as SDNs.

Non-SDN Menu-Based Sanctions (NS-MBS) List: OFAC assigns entities to the NS-MBS List when they are subject to certain "menu-based" sanctions, such as restrictions on U.S. financial services, loans, exports, or investments, typically by statute or executive order relating to Russia, Iran, North Korea, or weapons proliferation. Only the particular restrictions listed in the sanctions legend or regulation apply—there is no universal blocking imposed by virtue of appearance on this list (see OFAC FAQ 979).

NS-CMIC, NS-PLC, and related lists: The NS-CMIC List designates companies subject to U.S. restrictions on investment in Chinese military-industrial firms (per E.O. 13959, amended). U.S. persons are prohibited from purchasing or selling publicly traded securities, or derivative-linked instruments, of listed companies, but are not required to block assets or wholly embargo dealings (see OFAC FAQ 879). The Non-SDN Palestinian Legislative Council List and related lists impose program-specific restrictions, as stated in linked FAQs and legends.

Consolidated List screening practices: OFAC FAQ 979 states that "list screening can be performed against the Consolidated Sanctions List" and that it is "designed for use by compliance professionals in the financial sector and international trade" to identify party-based restrictions. The FAQ cautions that prohibition triggers differ by list; compliance procedures must always consult the program tag/legend on a match. OFAC does not require U.S. persons to block property based solely on a match to the FSE, CAPTA, or NS-MBS Lists, unless specifically required by the underlying program. For any match, practitioners should carefully review program-specific FAQs and legal authorities to determine the required compliance action—blocking, reporting, rejection, or, in some instances, no action if the activity is not covered by the relevant prohibition.

OFAC Consolidated List download files and Sanctions List Search tool are the authoritative sources for up-to-date designations and legend details. Enforcement for violations is governed by the penalty and reporting provisions of the underlying program, such as 31 C.F.R. § 561 for FSE and CAPTA matters.

Source: OFAC FAQ 979 (Consolidated Sanctions List contents and compliance duties) Source: OFAC Consolidated Sanctions List & Download Page Source: 31 C.F.R. § 561.201 (Sanctions on Foreign Financial Institutions, including CAPTA and FSE) Source: OFAC FAQ 295 (Foreign Sanctions Evaders List compliance)