What is OFAC,
and what is the SDN List?
OFAC is the US Treasury agency that decides who American companies and banks are not allowed to do business with. Its Specially Designated Nationals list is the single most-referenced watchlist in global trade compliance, and getting screening against it wrong carries some of the steepest penalties in the sanctions world. This guide covers what OFAC does, what its lists actually contain, and how effective screening works in practice.
7 min read · Sanctions screening basics
What OFAC actually is
The Office of Foreign Assets Control, OFAC, is a division of the US Department of the Treasury. Its job is to administer and enforce economic and trade sanctions in support of US national security and foreign policy goals. When people say a company or person is "sanctioned" in a US context, they usually mean OFAC has designated them.
OFAC's best-known publication is the Specially Designated Nationals and Blocked Persons List, almost always shortened to the SDN List. It names individuals, companies, vessels, and aircraft that US persons are generally prohibited from dealing with. Alongside it, OFAC maintains narrower lists: the Sectoral Sanctions Identifications List for entities subject to more limited, sector-specific restrictions, and a handful of smaller lists covering foreign sanctions evaders and other specific program categories. All of these are folded into a single Consolidated Sanctions List for reference.
OFAC's authority mostly comes from the International Emergency Economic Powers Act, which gives the President, and by extension the Treasury, broad power to block the property of designated persons and restrict transactions with them.
Why an SDN hit is not a minor problem
US sanctions law is applied on a strict liability basis. That means intent is not a defense. A company that unknowingly processes a payment for an SDN can still be found in violation, even if the match was buried three layers down in a corporate ownership chain.
| Situation | What it typically means |
|---|---|
| Direct SDN match | Transaction must generally be blocked or rejected; funds may need to be frozen and reported to OFAC. |
| Aggregate ownership by SDNs | The entity is treated as blocked even though its own name never appears on the list. |
| Violation found after the fact | Civil penalties can reach hundreds of thousands of dollars per violation, and criminal referral is possible for willful conduct. |
| Pattern of screening gaps | Can trigger a broader OFAC compliance review covering years of past transactions, not just one. |
| Correspondent banking exposure | Banks that clear USD transactions can cut off a company entirely rather than absorb the risk. |
Because so much of world trade eventually touches the US financial system, OFAC exposure is not limited to US companies. Any business that invoices in dollars or routes payments through a US correspondent bank has practical reasons to screen.
Who and what ends up on the list
SDN listings fall into two broad categories. Country-based programs cover jurisdictions where the US maintains comprehensive or near-comprehensive sanctions, historically including Iran, North Korea, Cuba, Syria, and Russia-related designations. List-based programs target specific conduct regardless of geography: narcotics trafficking, weapons proliferation, cyberattacks, human rights abuses, and terrorism among them.
- Individuals, identified with name, aliases, date and place of birth, and passport or ID numbers where known.
- Companies and organizations, including holding structures used to obscure ownership.
- Vessels and aircraft, listed by name and identifying number, which matters heavily for shipping and logistics screening.
- Entities that are not individually named but are automatically blocked because they are owned 50 percent or more in aggregate by one or more listed persons, a rule detailed further in a companion guide.
How OFAC screening actually works
Effective screening is not a one-time check at onboarding. OFAC updates the SDN List frequently, sometimes several times a month, so a counterparty that was clean last quarter is not guaranteed to be clean today. Ongoing, automated re-screening against the current list is the baseline most compliance programs work toward.
Matching also has to go beyond exact string comparison. Names get transliterated differently across languages, entities use aliases, and dates of birth or ID numbers are often the only reliable way to distinguish a true match from a common-name false positive. A workable program combines fuzzy name matching with secondary identifiers, and includes vessels and aircraft where shipping is involved.
Finally, screening a counterparty's name alone misses ownership-based blocking. Where a transaction is significant enough to warrant it, checking the underlying ownership structure against the 50 percent rule closes a gap that name screening alone cannot.
Common mistakes
Screening once at onboarding and never again
A counterparty can be added to the SDN List at any point after the relationship starts. Without ongoing re-screening, that change goes unnoticed.
Relying only on exact name matches
Aliases, transliteration differences, and partial name overlaps mean a rigid exact-match check will miss real hits and bury real matches under noise.
Ignoring the 50 percent rule
A clean name check on the entity itself says nothing about whether it is quietly majority-owned by someone who is listed.
Not screening vessels, ports, or shipping routes
For physical trade, OFAC risk shows up in logistics data as often as in counterparty names. Skipping this layer leaves a real gap.
Getting started
A few habits make OFAC screening far more reliable, regardless of what tooling sits behind it:
- Screen continuously, not just at onboarding, since the SDN List changes on its own schedule.
- Use fuzzy matching with secondary identifiers like date of birth or ID number to cut down false positives.
- Check aggregate ownership on higher-risk or higher-value counterparties, not just the entity's own name.
- Keep a record of every screening result and how a hit was cleared, so it can be explained later if questioned.
Most OFAC problems do not come from genuinely obscure sanctions evasion. They come from screening that only happens once, or that stops at the surface of a corporate structure.
See sanctions screening
run continuously against every list.
Enthron screens counterparties against OFAC, UN, EU, UK, and other major watchlists in real time, and re-checks them automatically as the lists change.