What is OFAC?
OFAC (Office of Foreign Assets Control) is a US Treasury Department office that administers and enforces US economic sanctions programs against foreign countries, organizations, and individuals threatening US national security, foreign policy, or economic interests. OFAC sanctions are among the most consequential extraterritorial laws: they apply globally to any party transacting in USD or doing business with US persons.
Major OFAC programs (2025)
- Russia/Ukraine: Most comprehensive sanctions; sectoral (energy, finance, tech) + individual
- Iran: Long-standing comprehensive embargo + secondary sanctions
- North Korea: Near-total embargo
- Cuba: Limited embargo with carve-outs
- Syria, Venezuela, Belarus, Myanmar: Various levels
- Counter-narcotics: Mexican cartels, Colombian groups
- Counter-terrorism: SDGTs (Specially Designated Global Terrorists)
- Cybercrime: North Korean Lazarus, Russian ransomware groups
- Counter-corruption (Magnitsky Act): Foreign human rights abusers + corrupt officials
The SDN List
The Specially Designated Nationals (SDN) List is OFAC’s master register of sanctioned parties: currently ~13,000+ entries. US persons (and many non-US persons via secondary sanctions) are prohibited from transacting with SDNs. Property of SDNs in US jurisdiction is “blocked” (frozen).
Who must comply
- US persons: US citizens (anywhere), US permanent residents, entities incorporated in US, anyone physically in US
- USD transactions: Any USD-cleared transaction routes through US correspondent banks, falling within OFAC jurisdiction
- US-origin goods/technology: Re-exports controlled regardless of nationality
- Secondary sanctions: Non-US persons can be sanctioned for “significant transactions” with primary sanction targets (Iran, Russia)
Penalties
- Civil: up to $300k+ per violation (inflated annually)
- Criminal: up to $1M + 20 years imprisonment per willful violation
- Notable enforcements: BNP Paribas ($8.9B settlement 2014), Standard Chartered ($1.1B), Apple ($466k for sanctions on SDN-linked apps)
OFAC impact on Turkish business
Turkish companies have significant OFAC exposure:
- USD-denominated trade with Iran, Russia, Syria: Risk for Turkish banks (Halkbank case: 2018 prosecution)
- Crypto exchanges: Turkish CASPs must screen against SDN list (MASAK requires)
- Dual-use technology export: US-origin components in Turkish products
- Correspondent banking: Turkish banks USD-clearing through US correspondents
Compliance program elements
- SDN list screening at onboarding + ongoing (every 30-90 days)
- Geographic restriction screening (country of customer, beneficiary, IP address)
- Sectoral screening (does customer operate in sanctioned sector?)
- Transaction monitoring (large flows, structured patterns)
- Voluntary self-disclosure (VSD) protocol for suspected violations
OFAC General Licenses
OFAC issues General Licenses authorizing specific categories of otherwise-prohibited transactions (e.g., humanitarian transactions with Iran, certain Russia-related wind-down activities). Specific Licenses can be applied for case-by-case.
Practical implications for founders
For Turkish startups: (1) Sanctions screening tools (Refinitiv World-Check, Dow Jones Risk, ComplyAdvantage) integrated at customer onboarding; (2) USD-denominated revenue exposure assessment; (3) Counter-party banking due diligence; (4) Sanctions clause in customer agreements. For crypto/fintech: OFAC compliance is non-negotiable: see KYT. Vircon Legal advises Turkish exporters and fintech firms on OFAC compliance program design.
References
- Turkish Law No. 5549 on Prevention of Laundering of Proceeds of Crime (MASAK)
- MASAK (Turkish FIU)
- EU MiCA Regulation 2023/1114: EUR-Lex
- U.S. Securities and Exchange Commission (SEC)
- 17 CFR: SEC Regulations (eCFR)
Working on this? Vircon Legal advises on Blockchain & Crypto and CASP & Crypto Compliance. Talk to us →
If this is on your desk
Templates and checklists are free in the Founder Academy; for a specific situation, book a 30-minute intro call.
Founder AcademyBook an intro call