The OFAC SDN List: What It Is, Who's On It, and How Screening Works

What the SDN List Actually Is

The Office of Foreign Assets Control (OFAC), a bureau of the US Department of the Treasury, administers and enforces economic and trade sanctions based on US foreign policy and national security goals. Its primary enforcement tool is the Specially Designated Nationals and Blocked Persons List — universally shortened to the SDN list. It names individuals, companies, vessels, aircraft, and other entities whose property and interests in property are blocked, and with whom US persons are prohibited from dealing.

The list is enormous and growing. It spans dozens of overlapping sanctions programmes — Iran, Russia, North Korea, Cuba, narcotics trafficking, terrorism, cyber activity, human rights abuses — and a single entry can carry multiple programme designations at once. OFAC updates the list continuously, sometimes multiple times per week, through Federal Register notices and press releases tied to specific geopolitical events.

OFAC vs BIS: Two Different Legal Frameworks

Compliance teams often lump OFAC and BIS together as "the screening lists," but they operate under entirely different statutory authority and produce entirely different legal consequences.

• OFAC (Treasury) — sanctions law: Acts primarily under the International Emergency Economic Powers Act (IEEPA) and programme-specific statutes. Designation blocks all property and interests in property of the sanctioned party that are in the US or come within the possession or control of a US person. It bars US persons from virtually any transaction with the blocked party — not just goods, but services, financing, and facilitation.
• BIS (Commerce) — export control law: Administers the Export Administration Regulations (EAR), a licensing regime. Listing on a BIS list (Entity List, Denied Persons List, Unverified List, Military End User List) attaches a licence requirement or prohibition specifically to items subject to the EAR. It generally does not reach services or pure financial transactions the way OFAC does.

A counterparty can appear on both frameworks simultaneously, and the two obligations stack — clearing a BIS check does not clear an OFAC obligation, and vice versa. Our BIS Entity List guide covers the Commerce-side lists in depth.

Blocking and the US-Person Prohibition

Once a party is designated as an SDN, two things happen simultaneously. First, any property or interest in property belonging to that party that is in the United States, or in the possession or control of a US person anywhere in the world, is blocked — frozen in place, reported to OFAC, and not permitted to move without a specific licence.

Second, US persons — a term that covers US citizens and permanent residents anywhere in the world, entities organised under US law, and anyone physically located in the United States — are prohibited from engaging in any transaction or dealing with the SDN. That prohibition is broad by design. It covers exporting goods, but also providing services, extending credit, processing payments, and facilitating a transaction on behalf of a non-US person. A US bank that unknowingly processes a wire transfer for an SDN is exposed to the same liability as a company that ships goods to one.

The 50% Rule

The single most consequential — and most frequently missed — piece of SDN screening is OFAC's 50% rule. Under OFAC's Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked, any entity that is owned 50% or more, in the aggregate, by one or more blocked persons is itself blocked by operation of law. This is true even if the entity has never been individually designated and does not appear on the SDN list by name.

The aggregation matters: ownership from multiple separately-designated SDNs is added together. Three SDNs each holding a 20% stake in the same holding company combine to a blocking 60% stake, even though no single owner crosses the 50% threshold alone. This means name-matching against the published SDN list is not sufficient due diligence — a compliance programme has to trace ownership structures, which is exactly what Embargo's two-hop ownership screening is built to automate, since manually tracing corporate ownership through public filings does not scale past a handful of counterparties.

Programme Codes and What They Signal

Every SDN entry carries one or more programme codes indicating which sanctions authority triggered the designation. Understanding the code matters because it determines which general licences might apply and how a designation might eventually be resolved. Common codes include:

• SDGT — Specially Designated Global Terrorist, under counter-terrorism authorities.
• SDNTK — Specially Designated Narcotics Trafficking Kingpin, under the Kingpin Act.
• SDNT — Specially Designated Narcotics Trafficker.
• IRGC — tied to Iran's Islamic Revolutionary Guard Corps and its affiliates.
• RUSSIA-EO14024 — designated under the 2021 executive order covering harmful foreign activities by the Russian government.
• CUBA and DPRK3 — country-specific programme designations for the Cuba and North Korea sanctions regimes respectively.

A single entity can carry several codes at once if multiple sanctions programmes independently justify designation, which is common for state-linked entities implicated in more than one geopolitical dispute.

Secondary Sanctions: Exposure Without a US Nexus

OFAC's authority does not stop at US persons. Secondary sanctions provisions — used extensively in the Iran, Russia, and North Korea programmes — let OFAC take action against non-US persons for engaging in "significant transactions" with SDNs, even where there is no US touchpoint in the transaction at all.

The consequence for a non-US company is not a fine under US law directly enforceable in its home jurisdiction — it is exclusion. OFAC can add the non-US company itself to the SDN list, or bar it from the US financial system, which in practice cuts it off from dollar-denominated trade and most global banking relationships. For companies with any exposure to the US financial system — which in practice means nearly every company doing meaningful cross-border trade — secondary sanctions risk is not theoretical. It is one of the primary reasons non-US companies screen against the SDN list even when they have no US operations.

The Delisting Process

Designation is not permanent by default, but removal is neither fast nor guaranteed. A listed party can submit a request for administrative reconsideration directly to OFAC, laying out evidence that the conduct or ownership structure justifying the original designation no longer applies. OFAC reviews the submission, may request additional information, and issues a determination — but it is not required to disclose its full reasoning if it denies the request.

Delisting also happens through negotiated settlements, where a party agrees to specific remedial conditions in exchange for removal, and occasionally through broader programme changes when a sanctions regime is wound down entirely, as happened with several Sudan-related designations after that programme was substantially lifted. For a counterparty that was once designated and has since been removed, screening history matters — a stale internal list that was never refreshed after a delisting can cause a compliance team to decline legitimate business for years after the legal basis disappeared.