Office of Foreign Assets Control (OFAC)

The United States has commercial and financial sanctions programs against activities such as terrorism, narcotics traffickers, racism, some diplomatic and economic problems that threaten national security and interests. OFAC is one of these functional financial sanctions organizations in the United States.


What Is OFAC?

OFAC is the most functional financial sanctions organization in the United States based on Treasury administer. It develops programs to protect U.S. foreign policy and national interests by connecting with U.S. domestic and foreign intelligence agencies. Moreover, OFAC is liable for the management of economic sanctions and the determination of administrative fines. OFAC economic sanctions programs regulate the United States person. To identify U.S. person;

  • U.S. person that wherever located
  • Citizens of other countries with permanent (legal) residence permits in the United States,
  • U.S. Companies
  • All persons and entities located in the U.S.
  • Entities controlled by U.S. citizens.
  • Besides, if the transaction has a connection with the U.S., it may need to comply with OFAC sanctions.

Modern sanctions programs have been implemented based on the International Emergency Economic Powers Act(IEEPA) since 1977. It aims to take measures against any usual and extraordinary external threats to the United States' national security and economy. IEEPA provides economic sanctions to the president.


What Are The Types of OFAC Sanction Programs?

U.S. financial sanctions programs began as country-based sanctions that banned all activities and transactions involving a country, also known as traditional economic sanctions. Afterward, a new kind of sanction known as list-based sanctions has been created that target specific people, institutions, and organizations. On the one hand, Secondary Sanction is another type of sanction implemented by the United States. It is a type of sanction that affects third-country actors who do business with individuals, institutions, and organizations that the United States sanctions. In this context, OFAC Sanctions programs are categorized under four main topics as;

  • country-based sanctions,
  • list-based sanctions,
  • secondary sanctions,
  • and sectoral sanctions.


Country-based Sanctions: Sanctions imposed within the country, depending on certain defined transactions and government regime of interest. Country-based sanctions generally prohibit trade in services, trade in goods, financial transactions, technology transfers.

List-based Sanctions: List-based sanctions have contributed significantly to U.S. foreign policy, national security, and the economy, distinctly identifying people and institutions threatening for the U.S. government. Also, of course, list-based sanctions are the most frequently implemented by OFAC. OFAC has a Specially Designed Nationals and Blocked Person List (SDN). Narcotic trafficking, terrorism, cybercrimes, and human rights abuses are some of the SDN list provisions.

Secondary Sanctions: Secondary Sanctions are a new kind of sanction—these types of sanctions concern non-US persons or third-country actors who do a business relationship with the U.S.

Sectoral Sanctions: Sectoral sanctions are a new kind of sanctions that the United States has begun to implement as Russia annexes Ukraine parts. U.S. Government prohibits funding for specific firms in Russia's financial and energy sectors.



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