Guide to OFAC Sanctions List

One of the ways the US punishes violations of international law, human rights abuses, and other state-sponsored criminal activities is by imposing economic sanctions against countries, entities, and individuals. The OFAC sanctions regime is implemented and enforced by a dedicated branch of the Treasury Department – the Office of Foreign Assets Control (OFAC). 

What is OFAC? 

The Office of Foreign Assets Control (OFAC) supervises and implements economic sanction programs against countries and other entities – such as terrorist organizations or drug traffickers – to help achieve US foreign policy and national security goals. In its supervisory role, OFAC ensures that US entities and individuals comply with sanctions regulations. It may impose fines where it discovers that violations have occurred.  

Operating under the Office of Terrorism and Financial Intelligence (TFI), OFAC is primarily composed of lawyers and intelligence targeters. While many of OFAC’s targets are set by the White House, the majority of individual cases are developed in light of investigations by OFAC’s Office of Global Targeting (OGT).

Types of OFAC Sanctions

There are two types of sanctions regulation, primary and secondary sanctions: 

• Primary OFAC sanctions regulations apply directly to persons within US jurisdiction, preventing them from doing business with US sanctions targets
• Secondary OFAC sanctions extend US sanctions compliance obligations to third parties resident in foreign countries not directly subject to US jurisdiction 

OFAC primary and secondary sanctions generally impose the following restrictions and prohibitions: 

• Import and export bans on goods, services, and technologies
• Investment bans
• Asset freezes for target countries, organizations, and individuals
• Travel bans for individual targets

OFAC sanctions are implemented in two ways: 

• Comprehensive sanctions to target entire countries 
• Non-comprehensive or selective sanctions to target specific individuals and entities 

The targets of OFAC sanctions are designated on OFAC sanctions lists, which are updated as new designations are added and withdrawn. OFAC may grant licenses that exempt certain US firms from sanctions restrictions under particular circumstances. Firms should apply to OFAC to obtain a general OFAC license or submit a written request for a specific OFAC license. 

What are the OFAC Sanctions Lists?

OFAC lists contain information about the individuals, companies, countries, or groups being targeted, as well as information about the sanctions they are subject to. The two main OFAC sanctions lists are:

• The Specially Designated Nationals List: The SDN list contains the names of individuals and companies which are controlled by or acting on behalf of countries targeted by United States sanctions 
• The Consolidated Sanctions List: A list containing all sanctions information not incorporated into the SDN list

Other US sanctions include the Sectoral Sanctions Identifications List (targeted at Russia), the Foreign Sanctions Evaders List, the more specific non-SDN Palestinian Legislative Council List, and the Iranian Sanctions List. 

Countries Sanctioned by OFAC

OFAC sanctions regulations can vary greatly by country. While some countries, such as Belarus, Libya, and Sudan, are subject to sanctions that prohibit transactions related to activities with specific parties, other countries face more comprehensive restrictions. These include:

• Sanctions against Russia 
• Sanctions against North Korea
• Sanctions against Iran

OFAC Sanctions Guidance

For in-depth information of specific sanctions programs, OFAC issues interpretive guidance and FAQ sheets pertaining to various sectors. Such as:

• Virtual currency industry
• Instant payments systems
• Implementing the Price Cap Policy
• Credit Report Consumers
• Cross-Programmatic Compliance Services

Who has to comply with OFAC sanctions?

All individuals, banks, financial services companies, and other obligated institutions operating under US jurisdiction must comply with OFAC sanctions. For banks and other financial services firms, this means integrating an OFAC sanctions search into internal AML compliance programs and ensuring that new customers and clients are screened against the sanctions list before a business relationship begins. 

OFAC Sanctions Violation Penalties

OFAC considers sanctions non-compliance to be a serious threat to national security and foreign relations and, therefore, an OFAC sanctions violation. Consequently, those who breach OFAC sanctions without obtaining the proper license can face severe legal repercussions. Fines range up to $20 million, depending on the offense, and prison sentences can be as long as 30 years.

If in committing a sanctions violation, a party also violates the Trading with the Enemy Act, it may be penalized with a $65,000 fine per sanctions violation. For violations of the International Emergency Economic Powers Act, the fine increases to $250,000 per sanctions violation. Similarly, breaking provisions of the Foreign Narcotics Kingpin Designation Act can result in fines of up to $1,075,000 per violation.

Naturally, these numbers vary considerably depending on the specific crime committed and the number of times it occurred. The specifics of these sanctions also change very frequently, so it is crucial to stay up to date; this will allow you to ensure both that you are compliant and that you don’t unnecessarily limit your business activity by adhering to sanctions that have been revoked.

How often do sanctions lists have to be checked?

Firms must ensure new customers are screened against global sanctions and watchlists during the onboarding stage. Once a business relationship has been confirmed, and a customer risk rating applied, firms should review the account on an ongoing basis to stay up-to-date with any critical changes in the customer’s risk status. Ideally, sanctions and watchlist screening should be automated and synced with a firm’s data feed, case management system, and CRM. 

How to efficiently check the OFAC Sanctions List?

Performing OFAC sanctions screening manually, can be administratively challenging, costly, and inefficient. Human error may also lead to inaccuracies and the risk of penalty fines. Using an automated watchlists and sanctions screening tool minimizes that risk.

AI and financial crime technology not only build accuracy into AML programs but helps firms quickly and efficiently achieve the compliance standards regulators as OFAC requires.