Quick Answer: What Is OFAC?
OFAC stands for the Office of Foreign Assets Control — a financial intelligence and enforcement agency of the U.S. Department of the Treasury. OFAC is a division of the Treasury’s Office of Terrorism and Financial Intelligence (TFI). It administers and enforces U.S. economic and trade sanctions against countries, entities, and individuals that pose threats to U.S. national security and foreign policy. As of 2026, OFAC oversees 30+ active sanctions programs and maintains the SDN List with thousands of designated names. Maximum civil penalties reach $1.3 million per violation, and criminal penalties can reach $1 million plus 20 years in prison.
What Is OFAC? Office of Foreign Assets Control Defined
OFAC — the Office of Foreign Assets Control — is one of the most powerful financial regulatory and enforcement agencies in the United States. Operating under the U.S. Department of the Treasury, OFAC is responsible for administering and enforcing economic and trade sanctions grounded in U.S. foreign policy and national security objectives.
The OFAC meaning goes far beyond its name. When people ask “what is OFAC,” the short answer is: it is the agency that controls whether — and with whom — U.S. persons and companies may conduct financial business anywhere in the world. Its decisions directly affect banks, corporations, law firms, individuals, and entire economies.
OFAC was formally established in 1950, building on wartime emergency controls dating back to World War II. Its legal authority flows primarily from the International Emergency Economic Powers Act (IEEPA), the Trading with the Enemy Act (TWEA), and numerous country-specific legislative mandates. Today, OFAC operates around the clock, updating its sanctions lists, issuing licenses, and pursuing enforcement actions against violators worldwide.
OFAC Is a Division of What Department?
OFAC is a division of the U.S. Department of the Treasury, specifically housed within the Office of Terrorism and Financial Intelligence (TFI). This organizational placement is deliberate: by positioning OFAC within the financial arm of the U.S. government rather than the military or intelligence apparatus, the United States gains the ability to deploy economic coercion as a foreign policy tool — cutting off access to money, credit, and trade rather than resorting to military force.
OFAC works in close coordination with the U.S. Departments of State, Commerce, and Justice, as well as with the intelligence community, law enforcement agencies, and international partners. Understanding that OFAC is a division of Treasury explains why its reach is so broad: virtually any financial transaction touching the U.S. dollar, U.S. financial institutions, or U.S. persons anywhere in the world falls within its jurisdiction.
Key Facts About OFAC (2026)
| Attribute | Details |
|---|---|
| Full Name | Office of Foreign Assets Control |
| Abbreviation | OFAC |
| Parent Agency | U.S. Department of the Treasury |
| Division Within Treasury | Office of Terrorism and Financial Intelligence (TFI) |
| Established | 1950 (successor to WWII-era controls) |
| Headquarters | Washington, D.C., USA |
| Active Sanctions Programs | 30+ country-specific and thematic programs |
| Primary Enforcement Tool | SDN List (Specially Designated Nationals and Blocked Persons) |
| 2025 Enforcement Total | $266 million across 14 public enforcement actions |
| Max Civil Penalty | $1.3 million per violation (or 2× the transaction value) |
| Max Criminal Penalty | $1 million fine + 20 years imprisonment |
| 2025 New Designations | 1,300+ individuals and entities |
What Does OFAC Do? Core Functions Explained
Many people ask “what does OFAC do” and assume it is merely a list-keeper. In reality, OFAC performs a broad set of regulatory, intelligence, and enforcement functions that touch nearly every sector of the global economy.
OFAC’s core functions include:
- Designating sanctioned parties — Adding individuals, entities, vessels, and governments to sanctions lists, including the SDN List, based on intelligence and interagency recommendations.
- Administering sanctions programs — Implementing and updating the legal frameworks for 30+ country-specific, thematic, and sectoral sanctions programs.
- Issuing licenses — Granting both general and specific licenses that authorize otherwise-prohibited transactions for humanitarian, diplomatic, legal, or business purposes.
- Enforcing compliance — Investigating potential violations, imposing civil monetary penalties, and referring criminal cases to the Department of Justice.
- Providing guidance — Publishing FAQs, compliance frameworks, advisories on sanctions evasion tactics, and technical guidance for regulated industries.
- Blocking and freezing assets — Directing U.S. financial institutions to block transactions and freeze assets of designated parties.
- Coordinating international sanctions — Working with allies including the EU, UK (OFSI), and UN to impose coordinated multilateral sanctions.
A critical point about OFAC’s jurisdiction: it applies to all U.S. persons (citizens, permanent residents, U.S.-incorporated entities) regardless of where they are in the world, as well as to anyone inside the United States and any transaction that clears through the U.S. financial system. In 2026, OFAC has expanded its “gatekeeper” enforcement focus, targeting investment advisors, accountants, and attorneys who fail to conduct adequate due diligence on their clients’ sanctions exposure.
OFAC Sanctions Programs: A Comprehensive Overview
OFAC administers more than 30 active sanctions programs, which fall into two broad categories: comprehensive embargoes (near-total bans on transactions with a specific country) and targeted/sectoral sanctions (restrictions on specific individuals, entities, sectors, or types of transactions).
| Sanctions Program | Type | Primary Focus | 2026 Status |
|---|---|---|---|
| Iran | Comprehensive | Nuclear program, terrorism support, human rights | Active; temporary oil sanction lift through Apr 19, 2026 |
| Cuba | Comprehensive | Communist government, human rights abuses | Active; limited humanitarian exemptions |
| North Korea | Comprehensive | WMD proliferation, illicit finance | Active; facilitators sanctioned March 2026 |
| Syria | Comprehensive | Assad regime, chemical weapons, terrorism | Active; post-Assad transition licensing |
| Russia | Targeted/Sectoral | Ukraine invasion, energy, finance, defense | Active; GL 134A issued March 2026; SSI updates Jan 2026 |
| Venezuela | Targeted | Maduro regime, corruption, narcotics | Active; GL 5V amended March 2026 |
| Belarus | Targeted | Lukashenko regime, human rights | Active |
| Myanmar (Burma) | Targeted | Military junta, human rights abuses | Active |
| Global Magnitsky | Thematic/Global | Corruption, human rights violators worldwide | Active; ongoing designations |
| Counter-Terrorism (SDGT) | Thematic/Global | Terrorist organizations and financiers | Active; Hamas-linked orgs targeted 2026 |
| Counter-Narcotics (SDNTK) | Thematic/Global | Drug trafficking organizations, cartels | Active; cartel-linked fraud networks 2026 |
| WMD Proliferators | Thematic/Global | WMD development and finance | Active |
| Democratic Republic of Congo | Country-Targeted | Conflict minerals, armed groups | Active |
| Yemen (Houthis) | Country-Targeted | Houthi movement, Red Sea attacks | Active; expanded 2025-2026 |
| Somalia | Country-Targeted | Al-Shabaab, political instability | Active |
In 2025, OFAC’s “maximum pressure” campaign against Iran resulted in sanctions on 155 Iranian persons and the designation of over 180 vessels linked to Iran’s shadow oil fleet. The Russia program saw significant updates in January 2026 with new SSI List additions involving Ukrainian-related executive orders and Russian financial institutions.
The SDN List Explained: What It Is and What It Means
The Specially Designated Nationals and Blocked Persons List (SDN List) is OFAC’s primary enforcement tool and arguably the most consequential financial blacklist in the world. It contains thousands of individuals, companies, vessels, and aircraft whose assets within U.S. jurisdiction must be immediately frozen, and with whom U.S. persons are generally prohibited from transacting.
The SDN List is not merely a government record — it functions as a near-universal financial exclusion mechanism. Banks worldwide, including non-U.S. banks operating in the global dollar system, conduct SDN screening as a matter of routine compliance. Being added to the SDN List effectively cuts a person or entity off from the international financial system. If you or your company is listed, our lawyers can guide you on how to get off the OFAC SDN List.
What Happens When You Are Listed on the SDN List?
- All assets and property interests within U.S. jurisdiction are immediately blocked (frozen)
- U.S. persons and businesses are prohibited from any dealings with you — including contracts, payments, loans, or services
- Non-U.S. banks and financial institutions globally typically refuse to process transactions involving SDN-listed parties
- The listing is public and searchable, severely damaging reputation and business relationships
- Secondary sanctions risks arise for non-U.S. persons who continue dealing with you
- You may be unable to access bank accounts, investment portfolios, or real estate
Beyond the SDN List, OFAC also maintains other specialized lists:
- Sectoral Sanctions Identifications (SSI) List — Entities subject to targeted restrictions in specific sectors (used primarily for Russia)
- Foreign Sanctions Evaders (FSE) List — Non-U.S. persons who have violated U.S. sanctions
- Non-SDN Palestinian Legislative Council (NS-PLC) List — Hamas-affiliated PLC members
- CAPTA List — Foreign financial institutions subject to correspondent account restrictions
- Non-SDN Menu-Based Sanctions (NS-MBS) List — Entities subject to menu-based sanctions
If you or your company has been designated on the OFAC SDN List, you have the right to challenge the designation through an administrative reconsideration process. Our attorneys have extensive experience with the OFAC SDN List removal process and can assess your options in a free consultation.
OFAC Enforcement and Penalties: 2025–2026 Actions
OFAC enforcement has grown increasingly aggressive. In 2025, OFAC completed 14 public enforcement actions resulting in $266 million in total penalties — with GVA Capital’s $215 million settlement representing the largest single action. The agency shows no signs of slowing enforcement in 2026.
OFAC’s penalty structure is severe:
- OFAC civil penalties: Up to $1.3 million per violation, or twice the value of the transaction — whichever is greater
- Criminal penalties (IEEPA): Up to $1 million per violation plus up to 20 years imprisonment
- Criminal penalties (TWEA): Up to $1 million per violation
- Mitigating factors: Voluntary self-disclosure, robust compliance program, and cooperation can significantly reduce penalties
Notable Recent OFAC Enforcement Actions (2025–2026)
| Date | Subject | Amount / Action | Violation |
|---|---|---|---|
| Feb 2026 | IMG Academy, LLC | $1.72 million settlement | Cuba sanctions violations |
| 2025–2026 | TradeStation Securities | $1.11 million settlement | 481 violations — services to Iran, Syria, Crimea |
| 2025 | GVA Capital | $215 million settlement | Russia sanctions violations (largest 2025 action) |
| Oct 2025 | Colombian President Petro | SDN designation | Narcotics/political pressure |
| Dec 2025 | Maduro associates | Multiple SDN designations | Venezuela program violations |
| Mar 2026 | Hamas-linked organizations | SDN designations | Counter-terrorism (SDGT) |
| Early 2026 | Cartel-linked fraud networks | SDN designations | Timeshare fraud, narcotics |
A key 2026 enforcement trend is OFAC’s intensified focus on “gatekeepers” — the professional intermediaries (lawyers, accountants, investment advisors, corporate service providers) who may unknowingly — or willfully — facilitate sanctions evasion. OFAC has explicitly warned that robust due diligence beyond mere corporate formalities is expected of all gatekeepers, and has published advisories on sham transaction evasion tactics.
OFAC Licensing: General and Specific Licenses
Not all interactions with sanctioned parties or countries are entirely prohibited. OFAC has a licensing system that can authorize otherwise-prohibited transactions when the policy rationale supports it.
General Licenses (GLs)
General Licenses are broad, standing authorizations published in the Code of Federal Regulations or OFAC’s website. They authorize all U.S. persons to engage in specific categories of otherwise-prohibited transactions without needing individual approval. Examples include GLs authorizing humanitarian aid to sanctioned countries, wind-down periods for transactions with newly designated parties, and personal remittances.
Recent examples from 2026 include Russia-related GL 134A (authorizing certain Russian oil sales in specific circumstances) and amended Venezuela GL 5V (expanding certain authorized activities).
Specific Licenses
Specific Licenses are individual, case-by-case authorizations issued directly by OFAC upon application. They are used for unique situations not covered by existing General Licenses. The applicant must demonstrate that the proposed transaction serves U.S. policy interests. Examples include licenses for legal representation of sanctioned parties, recovery of blocked assets for U.S. creditors, or specific humanitarian projects in embargoed countries.
Navigating the licensing process is complex and time-sensitive. Our OFAC lawyers can prepare and submit OFAC license applications on your behalf, substantially improving your chances of approval.
How to Comply With OFAC: A Practical Guide for Businesses
Every U.S. business — and many non-U.S. businesses operating in the global dollar economy — must maintain an effective OFAC compliance program. OFAC has published a detailed compliance framework, and regulators across financial services, healthcare, trade, and technology sectors expect compliance as a baseline standard.
Key steps for OFAC compliance include:
- Management commitment — Senior leadership must own and champion the compliance program. OFAC specifically cites lack of management support as an aggravating factor in enforcement.
- Risk assessment — Identify your sanctions exposure: which customers, counterparties, and jurisdictions pose risk? What products or services could be diverted to sanctioned parties?
- Written compliance policies and procedures — Document your screening protocols, escalation procedures, blocked-asset handling, and license application processes.
- SDN and sanctions list screening — Screen all customers, vendors, counterparties, and transactions against OFAC’s SDN List and other relevant lists. Update screening as lists change (often daily).
- Employee training — Train all relevant staff on sanctions obligations, how to identify red flags, and what to do when a potential match is identified.
- Ongoing monitoring and auditing — Periodically test and audit the compliance program. Conduct enhanced due diligence on higher-risk relationships.
- Voluntary Self-Disclosure — If a violation is discovered, consult counsel immediately. Voluntary self-disclosure can reduce penalties by up to 50% and demonstrates good faith.
Download our OFAC compliance checklist or consult with our OFAC compliance team for businesses of all sizes, including compliance program design, risk assessments, training, and voluntary self-disclosure assistance.
OFAC vs. Other Global Sanctions Authorities
OFAC is the most far-reaching sanctions authority in the world — but it is not alone. Global businesses must often navigate overlapping sanctions regimes:
| Authority | Jurisdiction | Primary Lists | Scope |
|---|---|---|---|
| OFAC (U.S. Treasury) | United States | SDN List, SSI List, CAPTA List | Broadest extraterritorial reach; secondary sanctions |
| OFSI (UK) | United Kingdom | UK Financial Sanctions List | Post-Brexit independent; often mirrors OFAC/EU |
| EU Sanctions | European Union | EU Consolidated List | All EU member states; significant Russia focus |
| UN Security Council | Global | UN Consolidated List | Binding on all UN members; narrower than OFAC |
| OSFI (Canada) | Canada | Consolidated Canadian Autonomous Sanctions List | Increasingly active post-Ukraine invasion |
For companies operating internationally, compliance with OFAC alone is often insufficient. Our sanctions attorneys advise on coordinated multi-jurisdictional compliance strategies.
When You Need an OFAC Lawyer
OFAC sanctions law is among the most complex areas of U.S. regulatory practice. The consequences of getting it wrong — blocked assets, multi-million dollar penalties, criminal prosecution, or reputational destruction — are severe. You should consult an experienced OFAC sanctions lawyer when:
- You or your company has received an OFAC subpoena, administrative inquiry, or enforcement notice
- Your assets have been blocked or frozen by a U.S. financial institution due to a sanctions match
- You or your company appears on the SDN List or another OFAC sanctions list
- You need to apply for an OFAC specific license to conduct a transaction with a sanctioned party or country
- You have discovered a potential OFAC violation and need to evaluate voluntary self-disclosure
- You are acquiring or merging with a company that may have sanctions exposure
- You are a professional (lawyer, accountant, banker) advising clients with sanctions-adjacent activities
- Your business operates in high-risk jurisdictions or sectors (energy, shipping, finance, technology)
Need Help With an OFAC Matter?
Whether you are dealing with a blocked account, an SDN listing, an enforcement inquiry, or a license application — our experienced OFAC sanctions lawyers provide strategic, results-focused representation. We offer a free initial consultation to assess your situation and your options.
Frequently Asked Questions About OFAC
What does OFAC stand for?
OFAC stands for the Office of Foreign Assets Control. It is a financial enforcement agency within the U.S. Department of the Treasury, responsible for administering and enforcing U.S. economic and trade sanctions.
OFAC is a division of which department?
OFAC is a division of the U.S. Department of the Treasury, specifically within the Office of Terrorism and Financial Intelligence (TFI). It reports to the Under Secretary of the Treasury for Terrorism and Financial Intelligence.
What is the OFAC SDN List?
The SDN List (Specially Designated Nationals and Blocked Persons List) is OFAC’s primary sanctions list. It contains thousands of names of individuals, companies, vessels, and aircraft whose assets within U.S. jurisdiction must be blocked, and with whom U.S. persons are generally prohibited from transacting. Being on the SDN List effectively cuts a party off from the global dollar-based financial system.
What happens if you violate OFAC sanctions?
OFAC violations can result in severe civil and criminal penalties. Civil penalties reach up to $1.3 million per violation (or twice the transaction value). Criminal penalties under IEEPA can reach $1 million per violation plus 20 years in prison. Voluntary self-disclosure and a robust compliance program can substantially reduce civil penalties. Always consult an OFAC attorney before disclosing a potential violation.
How do I check if someone is on the OFAC SDN List?
OFAC provides a free searchable database at sanctions.ofac.treas.gov. You can search by name, address, or other identifiers. Businesses with significant sanctions exposure typically use automated screening tools that integrate OFAC’s lists and update in real time. If you receive a potential “hit” on an SDN search, do not proceed with the transaction — consult an OFAC compliance attorney immediately.
Can you be removed from the OFAC SDN List?
Yes. OFAC has an administrative reconsideration process through which designated individuals and entities can petition for removal from the SDN List. The process is complex and requires submitting detailed evidence to OFAC demonstrating that the basis for the designation no longer exists or was factually incorrect. Our attorneys have successfully assisted clients with SDN List removal petitions.
Does OFAC apply to non-U.S. companies?
Yes, in many cases. OFAC’s jurisdiction extends to any transaction that touches the U.S. financial system (including U.S. dollar clearing), to foreign subsidiaries of U.S. companies in certain programs, and through secondary sanctions — which can target non-U.S. companies that deal with sanctioned parties even if the U.S. financial system is not involved. Non-U.S. banks and companies routinely comply with OFAC to maintain access to the U.S. dollar financial system.
Summary: Key OFAC Facts to Know
- OFAC stands for: Office of Foreign Assets Control
- OFAC is a division of: The U.S. Department of the Treasury (Office of Terrorism and Financial Intelligence)
- Founded: 1950, succeeding WWII-era wartime controls
- What OFAC does: Administers and enforces U.S. economic sanctions against countries, entities, and individuals threatening national security and foreign policy
- Primary tool: The SDN List — with thousands of designated names
- Programs: 30+ active sanctions programs as of 2026
- Civil penalties: Up to $1.3 million per violation or 2× the transaction value
- Criminal penalties: Up to $1 million fine + 20 years imprisonment
- 2025 enforcement: $266 million across 14 actions; 1,300+ new designations
- 2026 focus: Russia SSI updates, Venezuela/Iran policy shifts, gatekeeper enforcement, cartel-linked fraud networks
For individuals and businesses that have been designated or had assets blocked, understanding how to get off the OFAC list is essential. The administrative reconsideration process requires carefully constructed legal submissions and a clear demonstration that the designation criteria are no longer met — our attorneys have successfully guided clients through this process across multiple OFAC sanctions programmes.
If your business or personal situation involves OFAC — whether through a blocked account, an SDN listing, a compliance question, or a license need — do not navigate it alone. Contact our OFAC sanctions lawyers for a free consultation today.