Quick Answer
Being sanctioned means being subject to legal penalties or restrictions imposed by a government or international body. Sanctions can include asset freezes, travel bans, trade restrictions, and financial prohibitions. In the U.S., OFAC administers sanctions that prevent American persons from transacting with sanctioned individuals, companies, or countries.
What Does It Mean to Be Sanctioned?
The term sanctioned carries a specific and serious legal meaning in international and U.S. law. When a person, company, government, or entity is sanctioned, they become subject to legally enforceable restrictions that can include frozen bank accounts, blocked assets, travel bans, and prohibitions on conducting business with U.S. persons or within the U.S. financial system.
In the United States, the primary authority for economic sanctions is the Office of Foreign Assets Control (OFAC), a division of the U.S. Department of the Treasury. OFAC maintains and enforces sanctions programs targeting foreign countries, regimes, terrorists, proliferators of weapons of mass destruction, narcotics traffickers, and other threats to U.S. national security and foreign policy.
The sanctioned meaning differs depending on the context — legal proceedings, international diplomacy, or financial compliance — but the core concept remains the same: a sanctioned party faces significant legal restrictions and consequences for non-compliance.
Types of Sanctions: A Complete Overview
Understanding the different types of sanctions is essential for anyone navigating sanctions compliance. The U.S. government, the European Union, the United Nations, and the United Kingdom all impose different categories of sanctions with varying scope and impact.
| Type of Sanction | Description | Who Imposes It | Examples |
|---|---|---|---|
| Financial/Asset Freeze Sanctions | Freezing of bank accounts, property, and other assets held in sanctioned jurisdictions | OFAC (U.S.), EU, OFSI (UK) | SDN-listed individuals, Russian oligarchs, Iranian banks |
| Trade Sanctions | Restrictions or outright bans on importing or exporting goods, services, and technology | U.S. Commerce Dept., EU | North Korea arms embargo, Cuba trade embargo |
| Travel Bans | Prohibition on entering specific countries or denial of visas to sanctioned persons | U.S. State Dept., EU, UN | SDN designees, Belarusian officials |
| Arms Embargoes | Prohibition on the sale, transfer, or supply of weapons and military equipment | UN Security Council, EU, U.S. | Iran, North Korea, Myanmar arms embargoes |
| Sectoral Sanctions | Restrictions targeting specific sectors of an economy rather than individuals | OFAC, EU | Russia energy, defense, and financial sectors |
| Secondary Sanctions | Penalties for non-U.S. entities that facilitate transactions with primary sanctions targets | OFAC (U.S.) | Third-country companies dealing with Iran or Venezuela |
What Happens When You Are Sanctioned?
If OFAC designates you or your organization to the Specially Designated Nationals (SDN) List, all property and interests in property within U.S. jurisdiction are immediately blocked. U.S. persons are generally prohibited from engaging in any transactions with you. This includes:
- All bank accounts and financial instruments held at U.S. financial institutions are frozen
- Any property located in the United States or held by U.S. persons is blocked
- Business contracts with U.S. companies are terminated or suspended
- U.S. persons who transact with you face civil and criminal penalties
- Correspondent banking relationships with USD-clearing banks are severed
Being placed on a sanctions list does not require a criminal conviction or court process. OFAC can designate parties through an administrative process based on its own investigation and intelligence. This makes sanctions particularly powerful — and potentially devastating — for businesses and individuals who may not immediately understand why they were sanctioned.
Who Can Be Sanctioned?
Contrary to popular belief, sanctions do not only apply to foreign governments or terrorist organizations. OFAC and other sanctions authorities regularly sanction:
- Individuals — business executives, politicians, military officials, and their family members
- Companies and corporations — including subsidiaries and shell companies of sanctioned entities
- Banks and financial institutions — including those facilitating sanctions evasion
- Vessels and aircraft — ships and planes used to transport sanctioned goods
- Entire countries or specific sectors — comprehensive programs targeting states like Iran, North Korea, Cuba, and Syria
Under OFAC’s 50 Percent Rule, any entity that is owned 50% or more by a sanctioned person is automatically considered sanctioned, even if not explicitly listed. This rule significantly extends the reach of sanctions and is a major source of inadvertent violations for businesses conducting due diligence.
Real-World Examples of Sanctioned Entities and Consequences
| Entity | Sanctions Program | Consequences | Year |
|---|---|---|---|
| Rosneft (Russia) | Russia/Ukraine-related Sanctions | Sectoral restrictions; U.S. energy companies cut ties | 2014–present |
| Central Bank of Iran | Iran Sanctions | Full SDN designation; cut off from SWIFT and USD clearing | 2019 |
| North Korean Government | DPRK Sanctions | Comprehensive program; near-total trade and financial ban | Ongoing |
| Huawei (China) | Export Control / Entity List | U.S. tech export ban; limited access to U.S. software and chips | 2019–present |
| Roman Abramovich | Russia Oligarchs SDN | Asset freeze in UK/EU; assets including yachts and property seized | 2022 |
| Tornado Cash | Cyber-related OFAC Sanctions | Cryptocurrency mixer designated; use by U.S. persons prohibited | 2022 |
The Difference Between Being Sanctioned and Being Criminally Charged
Many people confuse sanctions with criminal charges, but they are fundamentally different legal mechanisms. Criminal charges require a court process, a jury or judge, and proof of guilt beyond a reasonable doubt. Sanctions are administrative — OFAC can designate a party based on an administrative finding that does not require a criminal standard of proof.
However, it is possible — and not uncommon — to face both. A company that violates OFAC regulations by transacting with a sanctioned party can face:
- Civil penalties up to the greater of $356,579 per violation or twice the value of the transaction
- Criminal penalties of up to $1 million per violation and up to 20 years in prison for willful violations
- Reputational damage from public enforcement actions
- Deferred Prosecution Agreements (DPAs) requiring compliance program overhauls
If you believe you have been wrongly sanctioned — or are at risk of violating sanctions regulations — early legal intervention is critical. For information on OFAC penalties in detail, see our guide on penalties for OFAC violations.
How to Get Off a Sanctions List (Delisting)
If you or your organization has been sanctioned, you have legal recourse. OFAC provides a formal process for challenging a designation:
- Request for Reconsideration — Submit a petition to OFAC’s Office of Global Targeting providing evidence that the designation is factually or legally incorrect
- Provide Documentary Evidence — Compile financial records, business documentation, and legal arguments demonstrating you no longer meet the designation criteria
- Engage a Sanctions Attorney — Work with experienced OFAC counsel to build the strongest possible case for removal
- Appeal to Federal Courts — If OFAC denies the petition, you may challenge the designation in U.S. federal court under the Administrative Procedure Act
- Apply for an OFAC License — While delisting is pursued, an OFAC-specific license can authorize limited transactions otherwise prohibited by sanctions
For companies with OFAC blocked assets, there are also specific legal mechanisms to release frozen funds while the delisting process is underway. Timelines for delisting vary widely — from several months to several years — making experienced legal counsel essential from day one.
One of the most complex areas of US sanctions law involves secondary sanctions — measures that can apply to non-US persons who engage in significant transactions with sanctioned parties, even when no US person or dollar is directly involved. Understanding secondary sanctions exposure is essential for any company operating across borders with counterparties in high-risk jurisdictions.
Frequently Asked Questions About Sanctions
What is the difference between sanctions and embargoes?
An embargo is a specific type of sanction that broadly restricts trade with a country (e.g., the U.S. embargo against Cuba). Sanctions is the broader term covering all types of restrictions, including individual designations, asset freezes, and sectoral measures.
Can U.S. citizens be sanctioned?
Yes. While most OFAC sanctions target foreign persons and entities, U.S. persons can also be sanctioned — particularly under programs related to drug trafficking, cybercrime, or corruption. U.S. persons on the SDN list face the same restrictions as foreign designees.
Does being sanctioned mean you committed a crime?
Not necessarily. Sanctions are an administrative, not criminal, designation. However, violating sanctions restrictions is a criminal offense, and in some cases, the underlying conduct that led to a designation may also be criminally prosecuted.
Get Expert OFAC Legal Help
Our sanctions lawyers have handled 500+ OFAC cases. Whether you need to challenge a sanctions designation, release blocked assets, or ensure compliance, we provide strategic legal defense. Contact us for a free consultation.