What is OFAC?
The Office of Foreign Assets Control (OFAC) is the arm of the US Treasury that administers and enforces US economic and trade sanctions. It publishes the Specially Designated Nationals (SDN) list, and dealings with listed parties are prohibited for those subject to US jurisdiction.
At a glance
What it is used for
Sanctions screening against OFAC lists is a standard step before onboarding a counterparty, opening a payment instrument or fixing a vessel. Banks screen every transaction, so a sanctions hit stops a trade regardless of the commercial merits.
Key points
- The SDN list covers individuals, companies and vessels; property of listed parties subject to US jurisdiction is blocked.
- Under the 50 percent rule, an entity owned 50% or more by one or more blocked persons is itself blocked, even if not listed by name.
- US-dollar clearing brings many transactions within US jurisdiction even between non-US parties.
- OFAC is not the only regime: EU, UK OFSI and UN lists must be screened as well, and they do not match.
What to watch for
- Screening a company name alone is insufficient — screen owners, directors, banks, vessels and ports involved.
- Sectoral sanctions can restrict specific activities such as financing or particular commodities without an outright ban.
- Lists change constantly. Screen at onboarding and again before each shipment and payment.
Frequently asked questions
Does OFAC apply to non-US companies?
It can. US-dollar payments, US-origin goods, US persons in the chain, or US-based systems can all bring a transaction within scope.
What is the OFAC 50 percent rule?
An entity owned 50% or more, directly or indirectly, by blocked persons is treated as blocked even if it does not appear on the SDN list itself.
How do I screen a counterparty against OFAC?
Search the official SDN and consolidated lists, screen owners and directors as well as the entity, and re-screen before each transaction because designations change.
Related terms
Lodfy verifies every company on the platform — registration, ownership and sanctions screening — before they can trade.