Specially Designated Nationals and OFAC Compliance

Specially Designated Nationals (SDN) And OFAC Compliance

Once the Office of Foreign Asset Control (OFAC) has labeled an individual or entity as a specially designated national (SDN), that individual’s or entity’s assets are “blocked,” which means that U.S. residents, citizens and businesses are prohibited from engaging in transactions involving those assets in any capacity.

Our SDN Lawyer Outlines The Potential OFAC Compliance Issues

The U.S. Office of Foreign Assets Control (OFAC) is the federal agency tasked with enforcing foreign nationals’ and domestic entities’ obligations with respect to SDN designations. It is also responsible for publishing and maintaining the current list of SDNs. Here are answers to some frequently asked questions (FAQs) about SDN designations and OFAC compliance:

How can I determine if a foreign national, my company or I have been designated as an SDN?

There is no formal notification procedure when a foreign national or business is designated as an SDN. Instead, the foreign national and domestic entities that are doing business with the foreign national typically learn of an SDN designation when they attempt to access funds or other assets belonging to the foreign national and are precluded from doing so.

What if an account or asset is only partially owned by an SDN?

When an account or other asset is only partially owned by an SDN, OFAC’s 50-percent rule applies. Under this rule, an asset that is partially owned by an SDN is blocked if the SDN owns a 50-percent or greater interest in the asset.

Does SDN designation impact foreign nationals’ assets in the United States and abroad?

Yes. Once a foreign individual or entity has been designated as an SDN, all of its assets are considered blocked by OFAC. This includes assets held in the U.S. and in all foreign countries.

How can a U.S. company do business with an SDN?

In order to do business with an SDN, a U.S. company must have a license from OFAC. There are two types of OFAC licenses: specific and general. In most cases, creditors and other businesses will need to apply for a specific license from OFAC. A specific license authorizes a particular transaction or course of dealing between a specific U.S. business and SDN. In contrast, general licenses authorize a particular course of dealing or type of trade for all U.S. businesses, meaning that all companies having a business that falls within the scope of the general license can utilize it.

What if my company has a transaction with an SDN rejected?

If your company attempts to do business with an SDN (knowingly or unknowingly) and the transaction is rejected, you have an obligation to report the rejected transaction to the OFAC within 10 days. U.S. businesses have various other reporting obligations related to transactions involving SDNs and blocked assets as well; and, in order to avoid noncompliance, companies are advised to seek representation from an experienced SDN lawyer.

Contact A South Florida SDN Lawyer At Saavedra-Goodwin

If you have questions about OFAC compliance in relation to transacting business with SDNs, we encourage you to get in touch. To speak with an SDN lawyer at Saavedra-Goodwin, call (954) 767-6333 or inquire online now.

Damaso Saavedra

Mr. Saavedra is the managing partner of the firm, which he established in 1988. Born in Havana, Cuba, Mr. Saavedra is fluent in English and Spanish. He received his B.A. in 1979 from the University of Connecticut and his J.D. in 1986 from the George Washington National Law Center. Mr. Saavedra has served as Secretary and Director for the Inter-American Businessmen Association and co-authored “An Introduction to the Settlement of Unresolved Property Claims against the Cuban Government.” Mr. Saavedra also served as Staff Assistant for Congressman William Lehman in Washington, D.C. [ ATTORNEY BIO ]