OFAC Sanctions List — Practitioner's Guide

Watchpoints — OFAC Sanctions Compliance

The twelve watchpoints below cover where in-house counsel most often gets surprised on OFAC. Each links to a full explainer.

1. The 50% Rule catches you even when the name on the contract isn't sanctioned

If one or more SDNs own 50% or more of an entity — directly or indirectly, individually or in the aggregate — that entity is itself blocked, even if it never appears on the SDN List. Beneficial-ownership diligence is the whole ballgame. (OFAC Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked, Aug. 13, 2014)

Read more → Explainer: The 50% Rule (TBD)

2. Facilitation — approving or referring a deal can violate sanctions even if no U.S. person signs

A U.S. person who approves, finances, guarantees, or even refers a transaction to a non-U.S. person that the U.S. person could not themselves do is "facilitating" — and that alone is a violation. Hands-off routing doesn't clean your hands. Recent OFAC advisories catalog the specific third-party patterns — shell intermediaries, front companies, trade-based schemes — that trigger facilitation liability. Facilitation prohibitions are grounded in IEEPA's general authority and operationalized in each sanctions program's regulations. (50 U.S.C. § 1702)

Read more → Explainer: Facilitation (TBD)

3. OFAC is strict liability — a perfect compliance program does not preclude liability

Civil penalties under IEEPA attach without any showing of intent or knowledge. A robust program is a mitigating factor under the Enforcement Guidelines, not a defense — a point reinforced by recent settlements against firms with mature screening programs that missed specific hits. (50 U.S.C. § 1705; 31 CFR Part 501, Appendix A)

Read more → Explainer: Strict liability + Enforcement Guidelines (TBD)

4. M&A successor liability — you inherit the target's OFAC violations at close

OFAC has explicitly named pre-acquisition sanctions diligence as a Compliance Commitment. Post-close, the acquirer steps into the target's violations. Diligence on historical counterparties and payment flows is not optional. (OFAC Framework for Compliance Commitments, May 2, 2019)

Read more → Explainer: M&A sanctions diligence (TBD)

5. "Knew or should have known" means a missed screening is an aggravating factor

The Enforcement Guidelines weight "actual knowledge or reason to know" heavily. A screening system that could have caught the hit but wasn't run, updated, or tuned turns a technical slip into a willful-adjacent posture. (31 CFR Part 501, App. A, § III(B)(2))

Read more → Explainer: The "reason to know" standard (TBD)

6. Secondary sanctions pull in non-U.S. parties — your foreign subs and counterparties are exposed

CAATSA and CISADA authorize sanctions against non-U.S. persons who engage in certain dealings with Russia, Iran, and others, even with no U.S. nexus. Counsel who frame OFAC as a "U.S. person" problem miss the exposure on their non-U.S. affiliates. (CAATSA § 228, Pub. L. 115-44; CISADA § 104, 22 U.S.C. § 8513)

Read more → Explainer: Secondary sanctions (TBD)

7. General Licenses are narrow exemptions — not safe harbors

GLs authorize specific conduct on specific terms; anything outside the four corners requires a specific license or is prohibited. The surface is volatile — OFAC issues, amends, and lets GLs expire on a weekly cadence — and reading one expansively is among the most common enforcement triggers. (31 CFR § 501.801(a))

Read more → Explainer: General Licenses (TBD)

8. Block vs. reject is prescribed by the program — picking wrong creates a standalone reporting violation

Some programs require blocking (hold the funds, report within 10 business days); others require rejection (return and report within 10 business days). Misclassifying the transaction creates its own violation on top of the underlying one. (31 CFR § 501.603; § 501.604)

Read more → Explainer: Block vs. reject (TBD)

9. The Annual Report of Blocked Property is its own enforcement target

Holders of blocked property must file annually by September 30 using Form TD F 90-22.50, submitted through OFAC's Reporting System (ORS). Missing or late filings are directly penalized — independent of any underlying sanctions violation. (31 CFR § 501.603(b)(2))

Read more → Explainer: Annual blocked property report (TBD)

10. SDN screening misses are usually fuzzy-match failures — and the list shrinks as well as grows

The common failure mode isn't an exact-name match slipping through; it's a transliteration variant, an alias, or an unscreened beneficial owner. Screening has a symmetrical trap on the other side: delistings happen regularly, so a counterparty flagged last quarter may be clear this quarter. Calibration and refresh cadence are both compliance commitments. (OFAC Framework for Compliance Commitments, May 2, 2019)

Read more → Explainer: Screening calibration (TBD)

11. Voluntary self-disclosure has a formal procedural path now — the calculus has changed

OFAC launched a named Voluntary Self-Disclosure Portal on February 6, 2026 at ofac.treasury.gov/disclosure, creating a dedicated electronic channel for self-disclosures. Under the Enforcement Guidelines, a qualifying VSD is a significant mitigating factor — base penalty reductions of up to 50% — but the submission must meet the Guidelines' criteria and typically precedes any government inquiry. With a formal portal in place, the "should we disclose?" question now has a defined procedural answer. (31 CFR Part 501, App. A, § V.B.2.a.i)

Read more → Explainer: Voluntary self-disclosure (TBD)

12. OFAC has named evasion typologies — "we didn't know it was evasion" is a shrinking defense

OFAC has published specific typologies for sanctions evasion — shell intermediaries, front companies, trade-based schemes, payment-chain layering. Once a typology is published, encountering the pattern and not flagging it becomes "reason to know" under the Enforcement Guidelines. The published catalog narrows the space where a compliance program can credibly claim it didn't recognize a red flag. (31 CFR Part 501, App. A, § III(B)(2))

Read more → Explainer: Evasion typologies (TBD)

OFAC — the Treasury Department's Office of Foreign Assets Control — administers U.S. economic and trade sanctions against targeted foreign countries, governments, entities, and individuals. Its authority comes from national security and foreign policy statutes.

Why OFAC lands on deal attorneys' desks:

Strict liability. Civil penalties under IEEPA attach without any showing of intent or knowledge. If the transaction happened, the violation happened. A robust compliance program mitigates under the Enforcement Guidelines — it does not defeat liability. (50 U.S.C. § 1705; 31 CFR Part 501, Appendix A)

Facilitation reaches U.S. persons who never touch the money. Under OFAC regulations, approving, financing, guaranteeing, or referring a transaction to a non-U.S. person that the U.S. person could not themselves do is itself a violation. Deal attorneys who clear a counterparty without running their own screen — or who route a client into a transaction without understanding its sanctions profile — can be within facilitation's reach. (31 CFR § 560.208)

OFAC has named attorneys directly in 2025 enforcement releases. In a November 2025 action against a U.S. person for willful dealings in blocked Russian real estate, OFAC stated that "the responsibilities for blocking and reporting property in the real estate sector — and attendant civil liability for failure to do so — may fall equally upon multiple parties, including those that typically deal with customers and other third parties, such as agents, brokers, title insurers, and attorneys." (Enforcement Release, Nov. 24, 2025) The release followed OFAC's January 2025 settlement with Family International Realty LLC ($1.08M) as part of a stated pattern of real-estate-sector enforcement.

In IPI Partners, LLC (Dec 2, 2025, $11.5M), OFAC settled with a Chicago private equity firm that maintained investments from sanctioned oligarch Suleiman Kerimov for four years after his designation. OFAC's release describes Kerimov's banker as his "gatekeeper" and ends with a direct warning: "receiving advice from outside experts… does not absolve [entities] from liability if they violate U.S. sanctions… for any advice to be effective, it must be based upon a complete picture of all material information available from across an organization."

Gracetown, Inc. (Dec 4, 2025, $7.1M) illustrates the corporate-respondent version of the same dynamic: a New York property management company ignored a direct OFAC Notification of Blocking for over 45 months.

No attorney or law firm has been a named respondent. But OFAC's 2025 enforcement record expressly lists "law firms" and "attorneys" among parties carrying compliance obligations, and facilitation (31 CFR § 560.208) is the doctrinal mechanism that translates those signals into individual attorney exposure.

The practical answer: screening is a deal-lawyer obligation, not just a compliance-department one. The rest of this page walks the three-layer framework for doing it.

The Specially Designated Nationals and Blocked Persons (SDN) List is OFAC's principal blocking list. Dealings by U.S. persons or within U.S. jurisdiction involving SDN-listed parties are generally prohibited, regardless of where the blocked person is located or which country program applies.

Search: sanctionssearch.ofac.treas.gov — free, public, updated in real time.

What to search: Names of all parties: counterparties, beneficial owners, intermediaries, vessel names, aircraft tail numbers. Fuzzy matching matters — "Ivan Petrov" and "I. Petrov" can be the same person.

The 50% Rule: Entities owned 50% or more by SDN-listed persons are automatically blocked, even if the entity itself doesn't appear on the SDN list. This rule applies to aggregated ownership — two blocked persons each owning 30% adds up to 60% and triggers the rule.

This is where most sophisticated violations occur. The entity clears the SDN search. The beneficial owner doesn't.

Russia — Sectoral Program

Russia is NOT a comprehensive sanctions program. Restrictions apply to specific sectors (energy, defense, financial services) and specific designated parties — not all Russian nationals or entities.

The complexity is in the sector definitions. Energy sector: oil, gas, and related services are largely restricted. But some energy-related services have general licenses. Practitioners must check the current program page and applicable general licenses, not just the SDN list.

Key practical point: a Russian national not on the SDN list and not in a restricted sector may transact. Many practitioners over-block on Russia by treating it as comprehensive. Check the sector definitions before refusing a transaction.

Iran — Comprehensive Program

Virtually all transactions with Iran, the Iranian government, and Iranian financial institutions are prohibited for U.S. persons or where U.S. jurisdiction otherwise applies, absent a specific license.

Narrow exceptions exist for food, medicine, and informational materials. These require careful documentation. The comprehensive nature of Iran sanctions means the default answer is no — practitioners should look for a general license that covers their specific transaction, not assume one exists.

Cuba — Comprehensive with Significant General Licenses

Cuba sanctions are comprehensive but with broader general license carve-outs than Iran. General licenses cover travel, remittances, and certain transactions with Cuban nationals living outside Cuba.

Practitioners must check which general license applies to their specific transaction — the carve-outs are real but require knowing the license scope. Many dealings involving the Cuban government and Communist Party remain restricted — any apparent authorization should be checked against the precise general or specific license language before proceeding.

Venezuela — Broad Blocking Program (EO 13884)

Venezuela is often described as a sectoral sanctions program, but Executive Order 13884 (August 5, 2019) effected a broad blocking order on all property and interests in property of the Government of Venezuela. This is effectively a comprehensive blocking program as to the Venezuelan government — not merely a sectoral restriction.

Practitioners must distinguish between: (1) transactions involving the Venezuelan government or government-controlled entities (broadly blocked under EO 13884), and (2) transactions with private Venezuelan nationals and entities not on the SDN list, which may proceed absent an SDN hit or other program restriction (OFAC Venezuela FAQs, topic 1581).

Common error: treating Venezuela as fully comprehensive for all counterparties, or conversely treating it as merely sectoral like the early-stage program. The post-EO 13884 framework is a hybrid — comprehensive as to the government, limited as to private parties. Check whether the specific counterparty has government ties before concluding a transaction is permissible.

General licenses are OFAC-issued permissions that authorize categories of otherwise-prohibited transactions without requiring individual application. If you find a prohibition in Layers 1 or 2, check whether a general license covers your transaction before concluding it's blocked.

How to find them: Each sanctions program page on ofac.treasury.gov lists the applicable general licenses and accompanying FAQs.

The limits: A general license authorizes a defined set of conduct; transactions outside those limits are not authorized. OFAC's FAQs require that all license conditions be strictly observed for the license to apply (FAQ topic 1506). A transaction outside the stated scope is therefore subject to the strict-liability regime under 50 U.S.C. § 1705. Read the actual license text — a summary is not a substitute.

If no general license covers your transaction and you believe you have a legitimate purpose, you can apply for a specific license — a separate process with its own timeline and requirements.

If any layer returns a potential match — stop.

1. Halt the transaction. Don't process, don't wire, don't close.
2. Do not transfer or release the assets. If property appears to be blocked, do not transfer, release, or otherwise deal in it. OFAC regulations impose mandatory blocking and reporting obligations — escalate immediately to sanctions counsel to determine your specific obligations.
3. Document everything. Timestamp when you found the hit, what you searched, what you found.
4. Escalate to compliance counsel. Identifying the hit is the screening function. Deciding what to do with it requires sanctions expertise.

False positives are common. Common names without jurisdiction context generate many false positives. The screening step is to catch and investigate, not to automatically refuse every match. The key question: Is this actually the same person or entity?

Note on commercial screening tools: Large-volume transactional work typically uses commercial screening software (LexisNexis World Compliance, Dow Jones Watchlist, Refinitiv). These are not substitutes for understanding the framework — they are tools for applying it at scale.

This page covers: identifying whether you have an OFAC problem and what kind.

You need specialized counsel when:

• You got a hit and need to determine if it's a true match and what your obligations are
• You received funds you believe may be from a blocked source — mandatory reporting obligations apply
• You want to apply for a specific license — OFAC's licensing process has strategic and legal dimensions
• You're considering voluntary self-disclosure — OFAC's mitigation framework rewards early disclosure, but how you self-disclose matters
• You're in a merger or acquisition — sanctions exposure can become the buyer's problem through successor liability, inherited operations, and post-closing remediation burdens. Pre-closing diligence, not post-closing discovery.
• You're in energy, defense, or financial services — sector-specific programs are more complex and change more frequently

OFAC sanctions compliance is a specialist field. The identification step — which this page covers — is something every practitioner touching international work needs to understand. The resolution step is not DIY.