Why keeping up with OFAC sanctions lists matters

The importance of export compliance was made explicit in a 2024 joint advisory statement from the US Departments of Justice, Commerce and Treasury. In it, assistant attorney general for national security Matthew Olsen stated: "Any person or company participating in the global marketplace has an obligation to comply with our sanctions and export control laws, regardless of where they are located."

"It doesn't matter where in the world you're located - if you're dealing in items subject to the EAR [Export Administration Regulations], you must comply with US export controls," added Matthew Axelrod, assistant secretary of commerce for export enforcement. "Failure to do so may risk you being the subject of an administrative or criminal enforcement action."

Breaches of these rules are considered strict liability offenses - meaning a lack of awareness that a party is sanctioned is no excuse. Therefore, a full understanding of the OFAC sanctions list and full engagement with the agency's regulations is essential for any international exporter. Here's what to know.

OFAC sanctions lists cover several databases of denied persons and organizations that the US government prohibits companies from doing business with. The most important of these are:

• Specially Designated Nationals (SDN) List: This contains the names of individuals, entities and groups designated as blocked by OFAC, as well as listing maritime vessels and aircraft that are subject to sanctions.
• Consolidated Non-SDN Sanctions List: This includes non-SDN entities that face other restrictions, such as sector-specific sanctions. Its entries may not face the same blanket restrictions as those on the SDN list, but are still subject to targeted sanctions like limits on certain types of transactions, export prohibitions or financing and investment restrictions.

Both of these lists are maintained by OFAC and are frequently updated in response to changing global political and economic conditions. As such, it is important not to treat these lists as static, but rather documents that must be frequently referred to in order to remain compliant.

It's also important to note that under the 50 percent rule, any entity that is 50 percent or more owned by individuals or entities on the SDN list - directly or indirectly - is also blocked, even if that specific entity is not named. Therefore, it is vital to check against individuals, not just company names.

The constantly-evolving nature of sanctions lists is one of the biggest challenges facing traders around the world. Checking potential partners, suppliers and customers against these lists can be time-consuming, especially for large organizations. The need to keep up with changing lists makes this even more difficult. However, it is an essential activity if firms are to minimize their legal, financial and reputational risk.

Getting this wrong can have a wide range of consequences for businesses, in terms of financial, legal and reputational damage. Key consequences of failing to comply with OFAC sanctions lists include:

• Financial penalties: As of 2026, civil fines for violations under the International Emergency Economic Powers Act now exceed $388,000 per violation, or twice the transaction value, while criminal fines can reach $1 million per count.
• Operational disruption: Violations often trigger immediate asset freezes and the suspension of credit lines, effectively preventing a firm from moving goods or processing payments.
• Secondary sanctions: Non-US entities risk being cut off from US financial systems, losing access to dollar-clearing and relationships with banks.
• Loss of licenses: Regulators may permanently revoke export privileges, barring companies from high-value markets and preventing the legal movement of any items subject to the EAR.