OFAC Lawyer
Specialist OFAC defence lawyers. SDN list removal petitions, OFAC specific licence applications, secondary sanctions advice, and blocked funds release.
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The US Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions programmes targeting foreign governments, terrorist organisations, narcotics traffickers, and other threats to US national security and foreign policy. An OFAC designation — particularly listing on the Specially Designated Nationals and Blocked Persons (SDN) list — can have devastating consequences for individuals and businesses worldwide, even those with no direct US presence or activity.
An OFAC designation — especially SDN listing — can devastate individuals and businesses worldwide, even with no direct US presence, because of the US dollar’s central role.
- OFAC jurisdiction centres on “US persons” but reaches far wider via secondary sanctions and US-dollar clearing.
- Violations carry civil penalties (up to USD 1m per violation or twice the transaction value) and criminal penalties (up to 20 years under IEEPA).
- Under the OFAC 50% rule, a company 50%+ owned by a designated person is automatically treated as an SDN.
- Formal filings (petitions, licences, self-disclosures) need US-qualified counsel; our Cyprus team bridges the Cyprus and US dimensions.
- Delisting only removes the US designation — parallel EU/UK/UN designations must be challenged separately.
US Persons, Non-US Persons, and OFAC Jurisdiction
OFAC’s jurisdiction is primarily based on the concept of “US persons” — a category that includes US citizens and permanent residents wherever they are located, all persons physically present in the United States, and US-incorporated entities and their overseas branches. Primary sanctions prohibitions apply directly to US persons. However, OFAC’s reach extends significantly beyond US persons through secondary sanctions (which apply to non-US persons for specified conduct with sanctioned parties) and through the practical consequence that any transaction using the US dollar clearing system, processed through a US correspondent bank, falls within OFAC’s practical enforcement reach regardless of the parties’ nationality.
For Cyprus-based individuals and companies with US connections — whether through US dollar banking, US business relationships, US investors, or US-listed securities — the practical reach of OFAC sanctions is extensive. Understanding the specific limits of OFAC’s jurisdiction in the context of each transaction or relationship is the starting point for sound OFAC compliance advice.
OFAC Enforcement — Civil and Criminal Penalties
OFAC sanctions violations can result in both civil monetary penalties and criminal prosecution. Civil penalties are imposed administratively by OFAC and can reach USD 1 million per violation (in some programs) or twice the transaction value, whichever is greater. Criminal penalties — for knowing and wilful violations — can include imprisonment of up to 20 years per count under IEEPA and substantial fines. For financial institutions and corporate entities, civil penalties can reach billions of dollars for systematic violations — as demonstrated by several major global bank enforcement actions.
For individual executives and beneficial owners of Cyprus-connected business structures, the most significant risk is being named individually in an OFAC enforcement action or SDN designation based on conduct attributed to their company. OFAC pierces corporate structures readily where the individual is the ultimate decision-maker for the sanctioned conduct. Our advice addresses both the corporate compliance structure and the individual executive’s personal exposure.
| Penalty type | Exposure |
|---|---|
| Civil (administrative) | Up to USD 1 million per violation (some programmes), or twice the transaction value, whichever is greater |
| Criminal (knowing & wilful) | Up to 20 years’ imprisonment per count under IEEPA, plus substantial fines |
| Institutional | Civil penalties into the billions for systematic violations |
OFAC Risk Assessment for Cyprus-Connected Business
The most effective OFAC compliance strategy for a Cyprus-connected business involves a systematic risk assessment covering: the beneficial ownership structure and any connections of beneficial owners to OFAC-designated persons or high-risk jurisdictions; the geographic scope of business activities and whether any operations involve OFAC-sanctioned countries or sectors; the financial flows — particularly US dollar transactions — and the OFAC exposure of each correspondent banking relationship; and the contractual and business partner relationships, including any counterparties who may themselves have OFAC exposure. We conduct comprehensive OFAC risk assessments for Cyprus businesses as a foundation for compliance program development. For further reading, see our guide on full list of OFAC-sanctioned countries.
OFAC Risk Assessment — What We Review
- Beneficial-ownership structure and any links to designated persons or high-risk jurisdictions
- Geographic scope — whether operations touch OFAC-sanctioned countries or sectors
- Financial flows, especially US-dollar transactions and each correspondent-banking relationship
- Contractual and business-partner relationships with potential OFAC exposure
Frequently Asked Questions
OFAC designations are made under specific statutory or executive order authorities, each with defined designation criteria. The most relevant factors are: whether the person meets the specific criteria of the applicable designation authority (for example, involvement in specified sectors, conduct, or relationships); the strength of the evidentiary basis for the designation; whether the designation serves US foreign policy objectives; and whether less restrictive measures would achieve the same objective. OFAC is not required to provide advance notice of a designation and does not hold an adversarial pre-designation hearing.
OFAC violations are typically identified through: bank Suspicious Activity Reports (SARs) filed with FinCEN; voluntary self-disclosures by banks or companies; referrals from other US law enforcement or intelligence agencies; international information sharing through Egmont Group and bilateral channels; OFAC’s own transaction monitoring; and whistleblower complaints. Once identified, OFAC conducts an administrative investigation — requesting records, interviewing witnesses through subpoena if necessary, and coordinating with DOJ for potential criminal referral. Early legal representation in an OFAC investigation significantly affects the outcome.
Cyprus lawyers with specialised OFAC knowledge advise on the Cyprus-side of OFAC compliance — including the practical impact of OFAC sanctions on Cyprus banking, company structures, and transactions. For formal OFAC filings (petitions, licence applications, voluntary self-disclosures) and US court proceedings, US-qualified counsel is required. We work in close coordination with OFAC-specialist US firms in Washington D.C. to provide integrated advice that covers both the Cyprus and US dimensions of OFAC exposure. This “bridge” approach is particularly valuable for Cyprus-based clients who need both jurisdictions covered.
The OFAC 50% rule provides that any entity owned 50% or more (individually or in aggregate) by a designated person is automatically treated as designated — even if the entity itself is not named on any OFAC list. This rule applies to Cyprus-registered companies: if a beneficial owner who is or becomes OFAC-designated holds 50% or more of a Cyprus company, that company is automatically subject to SDN-list restrictions without any further designation action. We advise on ownership structures to identify and mitigate 50% rule risk.
OFAC delisting removes the designation from US sanctions systems. However, if the same individual was simultaneously designated by the EU, UK, or UN, those parallel designations remain in force and must be challenged separately through the applicable regime’s delisting procedure. Simultaneous multi-regime delisting campaigns — coordinated across OFAC administrative petition, EU CJEU annulment proceedings, and UK OFSI review — provide the most comprehensive resolution and are the approach we recommend for clients with multiple concurrent designations.
