What is the OFAC SDN List?
The Specially Designated Nationals and Blocked Persons (SDN) List is the consolidated list of individuals, entities, and vessels with whom US persons (and many non-US persons in transactions touching the US) are prohibited from dealing. Administered by the US Treasury’s Office of Foreign Assets Control (OFAC), the SDN list is a central pillar of US economic sanctions enforcement. SDN designations freeze all US-jurisdiction assets and create derivative-name screening obligations under the 50% rule (entities 50%+ owned by SDN persons are themselves blocked).
SDN designation categories
- Country-based: Iran (SDGT, IRGC, IFSR), Russia (RUSSIA-EO14024), North Korea, Cuba, Venezuela, Syria.
- Topic-based: CYBER2 (cyber actors), NARCOTICS, TERROR (CT), TCO (transnational crime), DRCONGO, GLOMAG (Magnitsky), HUMAN-RIGHTS-EO13818.
- Sectoral: SDN-listed entities in specific sectors (oil, financial, defence) of sanctioned countries.
Compliance mechanics
- Screening: automated checks against SDN list at customer onboarding, transaction processing, and periodic re-screening.
- 50% rule: aggregate ownership rule — entities owned ≥50% (directly or indirectly) by SDN parties are blocked even without separate designation.
- Reporting: blocked-property reports to OFAC within 10 business days; annual blocked-property reports.
- License applications: general licenses for certain transaction categories; specific licenses on application.
- Voluntary self-disclosure: mitigation factor for violations; substantial penalty reductions.
SDN screening in practice
OFAC’s SDN list binds far beyond US borders through the dollar and through secondary-sanctions risk, which is why Turkish banks and fintechs screen against it regardless of jurisdictional argument. The operational standard: screening at onboarding and continuously (lists change weekly), fuzzy-matching tuned to transliteration realities, the 50-percent rule applied to ownership chains (entities majority-owned by SDNs are blocked even if unlisted), and documented adjudication of hits. Contract architecture carries the rest — sanctions representations and termination rights in customer and partner agreements, and payment-flow design that avoids touching US correspondents where exposure exists. For crypto businesses, wallet-screening against SDN-listed addresses has become the expected MASAK-adjacent control.