How OFAC sanctions work
OFAC was formally created in December 1950. It runs many sanctions programmes: some are comprehensive and prohibit most transactions with a country or region, and others target named persons.
- SDN List: the named individuals and entities whose property is blocked.
- Blocking: property within the United States, or held by a US person, is frozen, not seized, and may not be dealt in.
- 50 Percent Rule: an entity owned 50 percent or more, directly or indirectly, by blocked persons is blocked too, listed or not.
- Reporting: blocked property is reported to OFAC within 10 business days.
- Licences: a general or a specific licence authorises what would otherwise be prohibited.
Who has to comply with OFAC
OFAC states that all US persons must comply: US citizens and permanent residents wherever they are, everyone within the United States, and entities incorporated in the US and their foreign branches. Non-US persons are subject to certain prohibitions too, such as causing a US person to violate sanctions, or evading them.
Violations may bring civil and, in some cases, criminal penalties. OFAC treats voluntary self-disclosure as a mitigating factor.
Why OFAC matters outside the United States
A European or Gulf firm meets OFAC through its partners. Banks that clear US dollars, card schemes and other providers that are US persons apply OFAC's lists to the business they carry for others. Many payment and crypto firms therefore screen against the SDN List alongside the EU, UK and UN lists.
OFAC, OFSI or FinCEN?
- OFSI
- The Office of Financial Sanctions Implementation, part of HM Treasury, which implements financial sanctions in the UK. It was established in March 2016.
- FinCEN
- The US Treasury bureau for anti-money laundering, which receives suspicious activity reports. OFAC deals with sanctions.
- EU Council
- Adopts the EU's sanctions by unanimity. Enforcement is primarily for the Member States, not for one central office.
Where OFAC shows up in a platform
Modules that do the work
- KYC / AMLIdentity checks, screening and ongoing monitoring, with the verification provider you choose.
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
- Fraud & riskReal-time fraud scoring, limits and case management, with the risk engines you already trust.
Platforms that need it
Where it is written
The laws and standards this page's facts come from.
- OFAC, Frequently asked questions: basic information on OFAC and sanctions (US Treasury)
- OFAC, About OFAC (US Treasury)
- OFSI, About us (GOV.UK)
- Council of the EU, How the EU adopts and reviews sanctions
General information, not legal advice: what applies to you depends on your services and your market.