Responding to an OFAC Designation

Responding to OFAC Sanctions and Seeking Removal from the SDN List

Devin Burstein

Warren & Burstein

Key takeaways

• The listing is only the starting point. Which program, which criterion, and which agency made the designation determine what follows, including the path to removal.

  
  

• Much of the damage outside the United States is not legally required. U.S. sanctions bind U.S. persons. Foreign banks and platforms often go further than U.S. law demands.

  
  

• Delisting is often achievable, but the first submission matters more than ever. OFAC’s new Reconsideration Portal front-loads the record, and early mistakes can be difficult to undo.

  
  

Introduction: “OFAC-listed” is not a complete explanation

OFAC sanctions generally come without warning.  Individuals and companies sanctioned by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) will likely first learn of the designation not from a court, regulator, or formal notice, but from a bank or news report.

This is a general guide to understanding the reality of an OFAC designation and how to respond. 

Key terms in the process:

·      Designation / listing. The U.S. government’s decision to add a person, entity, vessel, or aircraft to an OFAC sanctions list.

·      SDN List. OFAC’s Specially Designated Nationals and Blocked Persons List, the principal U.S. list. Persons on it are subject to full blocking.

·      Blocking. The U.S. equivalent of an asset freeze: property within U.S. jurisdiction is frozen, and U.S. persons may not deal with the listed person unless exempt or authorized.

·      U.S. person. Generally, U.S. citizens and permanent residents wherever located, entities organized under U.S. law (including their foreign branches), and anyone physically in the United States.

·      General / specific license. Authorizations that permit otherwise prohibited dealings.

·      Delisting petition. A petition for administrative reconsideration asking OFAC to remove a person from a list.

OFAC acts first

An OFAC designation may seem to come out of nowhere, but it typically results from a lengthy internal process.  OFAC, in coordination with other government agencies, can decide to impose sanctions for many reasons, often related to narcotics activity, terrorism, or corruption.  Those sanctions can extend broadly not only to individuals and companies directly involved in allegedly unlawful conduct, but also to those who do business with those individuals and companies.

OFAC does not operate under the rules of evidence or a beyond-a-reasonable-doubt standard that would apply in a judicial proceeding.  Instead, it can rely on classified information, confidential sources, foreign-government reporting, financial intelligence, open-source material including news articles, and hearsay. OFAC’s press release may also state its conclusion without supplying supporting dates, transactions, or documents.

In most cases, only after a sanction is imposed can the designated individual or company request reconsideration and removal through the established administrative process.

This structure makes the first response especially important. A hurried denial, an improvised submission, an unexplained restructuring, or an inconsistent account given to a bank may later become part of the record. Speed matters, but a disciplined and well-reasoned response matters more.

Not all OFAC designations are the same

OFAC administers dozens of programs created through statutes, executive orders, and regulations. Some are geographic, such as the Iran, Russia, or Venezuela programs. Others are conduct-based and global, targeting terrorism, narcotics trafficking, corruption, human-rights abuse, cyber activity, and transnational criminal organizations.

OFAC is also not the only agency with designation authority. Under some programs, the Department of State makes the designation. The particular agency matters at the delisting stage. OFAC’s reconsideration process applies to sanctions imposed by OFAC; persons listed by State must use State’s separate process.

Program tags are legal signposts

Entries on OFAC’s lists carry program tags, such as [ILLICIT-DRUGS-EO14059] for narcotics designations under Executive Order 14059, [SDGT] for Specially Designated Global Terrorists, or [GLOMAG] for Global Magnitsky corruption and human-rights designations.

Public descriptions often compress legally distinct theories into a single accusation. A press release may call someone a “facilitator” or “front person,” while the formal designation rests on a specific ownership, control, support, or leadership provision. A person alleged to be a major trafficker is not situated identically to a person alleged to have held property or facilitated a transaction for someone else.

Narcotics and terrorism now overlap

In February 2025, the Department of State designated several Latin American criminal organizations, including the Sinaloa Cartel and the Cártel de Jalisco Nueva Generación (CJNG), as Foreign Terrorist Organizations and Specially Designated Global Terrorists. Since then, OFAC actions against cartel-linked networks have frequently carried counterterrorism tags alongside narcotics tags.

This change has practical consequences. Each tag is an independent basis for listing, and answering a narcotics theory will not produce delisting if a terrorism basis remains. Terrorism-related listings also expose foreign banks to the risk of U.S. secondary sanctions, which helps explain why those banks often react more severely than required. And where a sanctioned individual is alleged to be connected to a designated terrorist organization, U.S. criminal material-support law becomes a relevant consideration.

Designation is not a criminal conviction

OFAC is part of the Treasury Department, not the Department of Justice. A designation is an administrative action, not a criminal charge or conviction. It may accompany a criminal investigation, but it does not require one, and many designated individuals are never charged with any crime.

This distinction is more than semantic. Banks, counterparties, and journalists often treat a designation as evidence or even proof of criminality. But a designation establishes only that the responsible U.S. agency concluded that the person met the criteria of a particular program. It is not a judicial finding of wrongdoing.

Who is legally bound, and why foreign institutions react anyway

An SDN designation blocks property within U.S. jurisdiction and prohibits U.S. persons from dealing with the listed person, unless exempt or authorized. Under OFAC’s 50 Percent Rule, entities owned 50 percent or more by blocked persons are blocked as well, even if they are not named.

These prohibitions bind U.S. persons. A foreign bank, insurer, landlord, or platform acting entirely outside the United States is generally not required by U.S. law to freeze assets because of a U.S.-only listing (one not also imposed by the EU, UK, or another government). In practice, however, foreign institutions often act as if they were bound. They do so for reasons of their own: dependence on U.S.-dollar clearing, U.S. branches and affiliates, contractual sanctions clauses, internal risk policy, and, for some programs, the risk of U.S. secondary sanctions. Payment processors, insurers, suppliers, and professional firms may withdraw, and banks in the sanctioned individual’s home country may close accounts.

Digital exclusion

Designated individuals also frequently lose email, social-media, and messaging accounts. These cutoffs often go further than U.S. law requires: the statute underlying most sanctions programs expressly protects personal communications that do not involve a transfer of anything of value. Nevertheless, in practice, many providers suspend or cancel designated individuals’ accounts out of an abundance of caution based on a misperception of risk.

The first 30 days

The first month following a designation should be treated as both crisis management and preparation of the record. A disciplined response should include the following.

• Confirm the listing. Locate the exact list entry, program tags, Federal Register notice, press release, and governing authority. Identify which agency made each designation.

  
  

• Check for parallel listings. Search other national sanctions lists. A listing by another government carries its own legal obligations and remedies.

  
  

• Preserve evidence. Preserve relevant records, including emails, messaging-application data, accounting, ownership, banking, and corporate records.

  
  

• Map ownership and control. Identify the entities affected under the 50 Percent Rule.

  
  

• Identify parallel exposure. Determine whether criminal, tax, immigration, forfeiture, or regulatory proceedings exist or are foreseeable, in the United States and at home.

  
  

• Control communications. Coordinate what is said to banks, counterparties, employees, the press, and authorities. Inconsistent explanations from different advisers are among the most damaging early mistakes.

  
  

• Avoid restructuring without U.S. advice. A post-designation sale or transfer can look like evasion and can undermine a later delisting petition.

  
  

• Engage U.S. sanctions counsel before any substantive contact with OFAC. The initial submission can shape the record for years. It should not be improvised.

  
  

The new Reconsideration Portal raises the stakes of the first submission

On June 29, 2026, OFAC launched an online Reconsideration Portal for delisting requests. According to OFAC, the portal is intended to streamline the process by guiding submitters to provide necessary information upfront, “rather than through a series of questionnaire/answer exchanges that can delay efficient adjudication.” OFAC has said it will transition away from email submissions.

The practical effect is significant. Under the prior practice, a petition could be submitted via email.  OFAC would open a file, and the record could be built over time through responses to OFAC’s subsequent questionnaires. The portal asks for much of that information at the outset: identity documents, sources of income, bank accounts, ownership structures, and more. The first submission is now effectively the foundation of the case.

That makes the opening filing more consequential.  Inconsistencies with earlier statements, bank records, or foreign filings can damage credibility for the life of the case. And because OFAC weighs a petitioner’s candor and completeness, the way the record is assembled and shared with OFAC can matter as much as what it contains.

Delisting requires participation, but not necessarily testimony against others

The word “cooperation” creates confusion in sanctions matters.

Individuals may assume delisting is possible only if they become a government informant or testify against a trafficker, corrupt official, or other sanctioned actor. That is not a formal requirement. Nothing in OFAC’s regulations or published guidance makes prosecutorial cooperation a condition of delisting.

But the opposite statement, “cooperation is not required,” is also incomplete and potentially misleading. A petitioner cannot remain passive, submit a conclusory denial, refuse to provide relevant information, and expect OFAC to reverse its decision. A serious delisting effort requires active, transparent, and sustained participation: producing records, explaining relationships, answering questions, and demonstrating remedial measures.  Each of those steps can be critical to showing changed circumstances, often the most effective basis for delisting.

In some matters, OFAC consults other U.S. agencies, including law-enforcement agencies, and a meeting with those officials may be necessary. These meetings are serious matters that require careful preparation and should never be attended without experienced counsel.

Strategy matters

OFAC’s regulations allow a petitioner to argue that there was an insufficient basis for the designation, that circumstances have changed, or both. On paper, these are equal alternatives. In practice, they are not.

A petition framed principally as “OFAC was wrong” asks the agency to disavow its own investigation, often one built with information from other agencies. In our experience, that approach rarely produces a prompt or constructive response, even when the public record appears weak. The more effective path is usually to give the government a valid basis to conclude that continued designation is no longer warranted, without conceding that it was ever correct.

Building that path depends on the program, the facts, and the agencies involved. It is where experience makes the greatest difference.

The timeline is measured in months or years, not weeks

Sanctioned individuals may assume that a compelling petition will produce a quick decision. That expectation is usually unrealistic.

OFAC does not publish a deadline for deciding delisting petitions. It aims to complete an initial completeness review of portal submissions within seven to ten business days and typically to send a first questionnaire within around 90 days. Those are early administrative milestones, not a decision schedule. The process that follows may include multiple rounds of questions, document production, meetings, and interagency consultation.

In our experience, even unusually straightforward, successful delistings have taken a year or more. More complicated matters often take considerably longer.

That delay has consequences. Banks and counterparties may not wait, and businesses may lose personnel, contracts, and market access while a petition is pending. The delisting strategy must therefore be paired with a strategy for keeping the individual’s lawful affairs functioning during the process.

Working with U.S. sanctions counsel

Published regulations describe what a petitioner may submit. They do not convey how a delisting matter actually develops: the investigation needed to understand the government’s theory, the need to reconcile records across countries, the importance of answering candidly without creating unnecessary exposure, and the commercial damage that accumulates while a petition is pending.

Warren & Burstein regularly works as U.S. sanctions counsel in designation and delisting matters, and the firm has obtained multiple publicly reported OFAC delistings.

Conclusion

An OFAC designation is among the most consequential administrative actions the United States can take against a foreign person or company. Its effects can be immediate, global, and commercially devastating. But it need not be permanent. With a careful strategy, a well-built record, and sustained engagement with OFAC, delisting is often achievable.

About the author

Devin Burstein is a partner at Warren & Burstein in San Diego. His practice includes federal appellate litigation and the representation of foreign individuals and businesses in OFAC designation, delisting, and related blocked-assets matters. He can be reached at db@wabulaw.com.

This article provides general information, not legal advice. Prior results do not guarantee a similar outcome.