Which sanctions programs require an OFAC license?

If your business is engaged in international transactions, the supply of goods, financial operations, or services, you must comply with OFAC requirements. Many sanctions programs prohibit or restrict interaction with certain countries, companies, and individuals. However, in some cases, you can obtain a special license that allows you to legally carry out a transaction.
Our lawyers will help determine whether your operation falls under sanctions restrictions, prepare and submit an OFAC license application with a complete set of documents, handle negotiations and correspondence with regulators, minimize the risk of fines and criminal liability, and develop an internal compliance system to prevent further violations.

What is an OFAC license and when is it needed?

The Office of Foreign Assets Control (OFAC) is a division of the U.S. Department of the Treasury responsible for developing, implementing, and enforcing sanctions programs. Its primary mission is to protect the national security and foreign policy interests of the United States by restricting or prohibiting economic activity with certain countries, organizations, and individuals. OFAC operates under presidential executive orders and federal laws, and its decisions are binding on all U.S. citizens and companies, and in some cases, foreign entities.

An OFAC license is an official authorization that allows transactions that would otherwise be prohibited under sanctions programs. This may include:

• The supply of humanitarian aid to a sanctioned jurisdiction;
  
• Payment for legal services to a sanctioned person;
  
• Financial transactions related to medical equipment and essential goods;
  
• Payment of compensation or remuneration under contracts concluded before the imposition of sanctions.
  

A license is mandatory if any part of the transaction (participants, territory, goods, or services) is connected to individuals or countries on sanctions lists or subject to restrictions under specific programs. Violating this rule may result in fines of tens of millions of dollars and asset freezes.

Difference between a General and a Specific License

A General License is an authorization that applies to predetermined categories of persons, transactions, and types of activities. It is published on the official OFAC website and does not require an individual application. Features:

• Applies automatically to anyone who meets its conditions;
  
• Sets clear parameters (type of goods, list of recipients);
  
• Requires strict compliance with the conditions, otherwise the transaction may be considered a sanctions violation.
  

A Specific License is an individual authorization issued to a particular applicant based on their request. To obtain it, a detailed application must be submitted to OFAC describing the nature of the transaction, the parties involved, amounts, documents, and the justification for its necessity. Features:

• Issued only after reviewing a specific case;
  
• May contain unique conditions and restrictions;
  
• Requires processing time (from several weeks to months).
  

Both licenses serve the same purpose — to legalize transactions that, under sanctions, would otherwise be prohibited. They allow you to:

• Avoid fines and criminal liability for violating sanctions rules;
  
• Maintain access to international settlements and banking operations;
  
• Carry out activities that meet humanitarian, business, and legal purposes.
  

The summary table presents the key differences between the types of licenses:

Sanctions Programs Requiring OFAC Licensing

A sanctions program is a set of restrictive measures imposed by the U.S. government against certain countries, organizations, and individuals. The purpose of such measures is to protect national security, foreign policy interests, and human rights. Sanctions may include asset freezes, bans on financial transactions, restrictions on trade, and limits on the transfer of technology. To carry out any transaction that falls under sanctions, an OFAC license may be required.

Sanctions Against Cuba

The sanctions program against Cuba is one of the longest-running in OFAC’s history. It was introduced in the 1960s in response to the nationalization of U.S. property and Havana’s alignment with the USSR. Today, the restrictions include a complete ban on trade, investment, and financial transactions with Cuban state entities. U.S. persons are prohibited from providing services or financing, except in cases provided for under a General License (humanitarian aid, certain educational travel). Any other transactions, export of goods, or provision of commercial services require a Specific License.

Sanctions Against Iran

 Sanctions against Iran were introduced in the late 1970s after the U.S. Embassy hostage crisis and were intensified due to the nuclear program, support for terrorism, and human rights violations. The program provides for a complete ban on the export of goods and technology to Iran, the import of Iranian goods (including oil), and banking transactions with Iranian entities. Only narrow exceptions are allowed, such as the supply of medicines and food under a General License.

Sanctions Against North Korea

 Sanctions against the DPRK are among the strictest in the world, introduced in 2008 and expanded due to nuclear tests, cyberattacks, and human rights violations. All financial transactions, investments, and the supply of goods and technologies are prohibited, including humanitarian items if they can be used for military purposes. OFAC requires a Specific License even for non-commercial operations, such as projects in healthcare or education. Any transactions involving North Korean individuals or entities are subject to strict control.

Sanctions Against Russia and Belarus

Sanctions against Russia and Belarus were introduced in response to the events in Ukraine in 2014 and were significantly strengthened in 2022 due to armed aggression. Restrictions include asset freezes for a number of banks, companies, and individuals, bans on the export of high-tech products, oil and gas extraction equipment, and financial services. Particular attention is given to secondary sanctions — penalties for third countries that help circumvent prohibitions.

Sanctions Against Syria

Sanctions against Syria were introduced in 2004 and have been repeatedly expanded due to support for terrorism, human rights violations, and military actions against civilians. The export and import of goods, investments, and transactions with Syrian state entities and banks are prohibited. Exceptions under a General License are allowed for the supply of food, medical goods, and certain telecommunications services. Any activity outside these exceptions requires a Specific License, including payment for professional services, participation in reconstruction projects, and the transfer of technology.

Individual Sanctions (SDN, SSI, etc.)

Individual sanctions are targeted measures against specific persons, companies, and organizations. They aim to freeze assets, ban financial transactions, and restrict access to international markets. Unlike sanctions programs that apply to entire countries or economic sectors, individual sanctions target specific persons involved in violations of international law, corruption, terrorism, cybercrime, or other threats to U.S. national security.

• SDN List — the list of individuals and entities whose assets within U.S. jurisdiction are blocked, and U.S. persons are prohibited from conducting any transactions with them. Being added to this list effectively excludes one from the international financial system, as most major banks and companies outside the U.S. also comply with these restrictions.
  
• SSI List — the list of companies subject to sectoral sanctions. These measures restrict access to certain types of financing, technology, and services but do not impose a complete ban on all transactions like the SDN List. Example: restrictions on debt financing or the supply of oil and gas extraction equipment. SSI is often applied to organizations in strategically important sectors such as energy, finance, and defense.
  

In addition to the SDN and SSI Lists, OFAC maintains other lists:

• FSE List (Foreign Sanctions Evaders) — persons and companies that violate U.S. sanctions regimes;
  
• NS-PLC List (Non-SDN Palestinian Legislative Council) — sanctions against certain members of the Palestinian Legislative Council;
  
• CAPTA List — foreign banks subject to restrictions on correspondent accounts;
  
• Non-SDN Menu-Based Sanctions (NS-MBS) List — sanctions imposed under specific laws without inclusion in the SDN List.
  

OFAC maintains and regularly updates the official list of all active sanctions regimes, including the SDN and SSI Lists. Current information can be found on the official website.

Types of Activities Requiring Licensing

In many countries, activities in certain sectors require obtaining a government license. Licensing is aimed at controlling operations that may have economic, political, and legal consequences, as well as pose risks to national security. This applies to both commercial organizations and individuals working on international projects.

Activities that may require licensing include:

• Conducting international financial transactions;
  
• Export and import of goods;
  
• Provision of legal and consulting services;
  
• Transfer of technology and software;
  
• Work with intellectual property in sanctioned jurisdictions;
  
• Activities related to the circulation of strategic resources and equipment.
  

Financial Transactions

Financial operations, especially those involving international settlements or falling under sanctions regimes, in many countries require a license from the relevant regulators.

When a license is required:

• Transfers of funds to countries or individuals under sanctions;
  
• Payment for goods and services subject to export controls;
  
• Transactions carried out on behalf of a client on a restricted list;
  
• Work with offshore accounts in jurisdictions with restrictive regimes.
  

Licenses allow the state to control capital flows, prevent money laundering, terrorism financing, and violations of sanctions regimes.

Trade and Export

 Trade and export of goods, technologies, and services may be restricted for reasons of national security, foreign policy, and domestic market protection.

When a license is required:

• Export of strategic goods, dual-use equipment, and technologies;
  
• Supply of products to countries under a trade embargo;
  
• Sale of software with encryption or cybersecurity features;
  
• Transfer of technologies as part of international cooperation.
  

Purpose of licensing: to ensure control over the distribution of goods and technologies that may be used for military and sanctions purposes, as well as to comply with the country’s international obligations.

Legal and Consulting Services

In some cases, even providing consultations or legal support may require a license, especially when dealing with clients from sanctioned jurisdictions or projects under international legal regulation.

When a license is required:

• Representation of a client on a sanctions list;
  
• Consulting on transactions subject to export controls or sanctions;
  
• Preparation and signing of documents related to frozen assets;
  
• Participation in negotiations or arbitrations involving prohibited counterparties.
  

Purpose of licensing: to prevent the provision of legal and organizational support to individuals and companies whose activities violate sanctions regimes and international norms.

How to Obtain an OFAC License Under Sanctions

Before submitting an application, it is important to understand whether the planned activity falls under OFAC requirements. To do this, you must check whether any parties involved in the transaction are included on the SDN List or other sanctions lists. Review the sanctions program applicable to the specific country, sector, or activity. Determine whether the transaction is completely prohibited or can be conducted with a license. If the required operation is not covered by a General License, an application for a Specific License must be submitted.

When applying for a Specific License, OFAC typically requires:

• A detailed description of the planned transaction or operation;
  
• Information on all participants in the transaction (names, addresses, registration data, connection to sanctioned jurisdictions);
  
• A justification for why the transaction should be permitted, including references to applicable laws and sanctions programs;
  
• Contracts, invoices, accounts, correspondence, and other supporting documents;
  
• Information on measures to ensure compliance with sanctions laws.
  

The application is submitted via the OFAC License Application Portal or by email to the dedicated OFAC Licensing Division address. Important points:

• The description must be accurate and complete;
  
• Do not withhold information — incomplete data may result in denial;
  
• For urgent transactions, you may request priority review.
  

Processing times depend on the complexity of the request, ranging from several weeks to several months. OFAC may request additional documents and clarifications. If approved, the license will include terms and conditions that must be strictly followed.

Comply with all conditions specified in the license, and keep detailed records of all transactions conducted under it. Upon expiration, if necessary, submit an application for renewal.

Liability for Violating the Sanctions Regime

1. Administrative Liability
Administrative measures are applied when a sanctions violation is not intentional or has not resulted in significant consequences. Possible penalties:

• Fines: the amount may vary depending on the country. For example, in the United States, civil fines for violations of OFAC-administered sanctions can exceed $300,000 per violation or be twice the amount of the transaction;
  
• Orders to remedy violations: a requirement to cease illegal activities and take corrective measures;
  
• Inclusion in sanctions lists: a company or individual may be added to the SDN list, which effectively blocks any operations with them at the international level.
  

2. Criminal Liability
When a sanctions violation is intentional, the consequences are significantly more severe. Possible penalties:

• Large fines: criminal fines can reach $1 million per violation;
  
• Imprisonment: up to 20 years for individuals involved in illegal transactions;
  
• Asset confiscation: seizure of goods, funds, or property connected with the sanctions violation;
  
• Business shutdown: revocation of licenses, prohibition on conducting certain types of business.
  

3. Civil Consequences
A sanctions violation may serve as grounds for private lawsuits, especially if a company’s actions have caused harm to partners and investors. Possible risks:

• Contract termination and penalty sanctions from counterparties;
  
• Reputational damage affecting access to financing and partnerships;
  
• Lawsuits for compensation of damages.
  

4. Increased Control and International Cooperation
Many countries coordinate their sanctions control measures and actively exchange information about violators. Therefore, a sanctions violation in one country can lead to consequences in several jurisdictions at once.

Conclusion: When exactly should you apply for a license?

Working with counterparties from countries under sanctions or with individuals from sanctions lists is always associated with heightened legal risks. Even when a transaction appears safe, there is a possibility of violating the sanctions regime, which may result in multimillion-dollar fines, criminal liability, and asset freezes.

Obtaining an OFAC license or a license from another sanctions authority is not just a formality, but a key tool that allows you to legally conduct transactions that would otherwise be prohibited. A license is required if you:

• Plan to make financial transfers and settlements with sanctioned jurisdictions;
  
• Participate in the export or import of goods, technologies, or services to countries under sanctions;
  
• Provide legal, consulting, or other professional services to individuals on sanctions lists.
  

An accurate assessment of the situation and timely license issuance is the best way to protect your business from unpredictable consequences. Our lawyers will help determine whether you need a license, prepare the required documentation, handle communication with regulators, and ensure your activities fully comply with international requirements.