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Economic sanctions have become a central feature of commercial risk management, influencing how international business relationships are structured.
At the centre of this framework is the US Treasury Department’s Office of Foreign Assets Control (OFAC) and, in particular, the Specially Designated Nationals and Blocked Persons List (SDN List). Although formally a US sanctions mechanism, the practical reach of the SDN regime is global.
US sanctions administered by OFAC derive their extraterritorial force from the concept of US nexus – the connection between a transaction, entity or individual and the United States sufficient to engage US jurisdiction. That nexus is interpreted broadly. It encompasses the use of US dollars, transactions cleared through US correspondent banks, the involvement of US persons or entities, and access to US markets or technology. Because the global financial system remains deeply integrated with US dollar clearing infrastructure, US nexus arises with regularity in cross-border commerce even where neither party to a transaction is American.
This extraterritorial architecture means that an OFAC designation on the Specially Designated Nationals and Blocked Persons List (SDN List) carries consequences well beyond the borders of the United States. International counterparties – banks, insurers, logistics providers and trading partners – routinely terminate relationships with SDN-listed entities not because they are legally compelled to do so under their own national law, but because any transaction that touches a US dollar account, a US financial institution or a US person would expose them to OFAC enforcement. The result is practical exclusion from the global financial system, regardless of the designated party’s nationality or the jurisdiction in which it operates.
Against this backdrop, delisting assumes critical importance. Removal from the SDN List can restore access to banking channels, revive commercial operations and materially improve a company’s international standing.
For further insight on OFAC please refer to our earlier article on OFAC’s March 2026 sham transaction guidance.
Challenging a designation on the SDN List
OFAC regulations provide a mechanism through which the relevant parties may submit a petition to seek reconsideration of their designation. The relevant procedures are set out primarily in 31 CFR 501.807, which permits a SDN to submit arguments or evidence demonstrating why the designation should be removed.
A petition will usually need to demonstrate one or more of the following grounds:
- that there was insufficient legal or evidentiary basis for the original designation;
- that the circumstances giving rise to the designation no longer exist;
- that remedial steps have been taken, such as material changes to ownership, management or corporate structure; or that blocked property has been or will be divested.
OFAC then reviews the submitted information and provide a written decision on the request for reconsideration to the SDN. If a designated person disagrees with OFAC’s decision, they can file a lawsuit in U.S. federal district court to challenge the designation, arguing that it is arbitrary, capricious, or violates due process.
OFAC remains one of the most significant drivers of global sanctions-list growth, with an annual sanctions inflation of 21.3% as of March 2025. While delisting does occur, in practice, successful petitions often require extensive supporting documentation and are comparatively limited relative to the scale of global sanctions enforcement. In 2025 1,764 individuals and entities were added to the SDN List, whilst 556 individuals and entities were removed. This demonstrates OFAC adopts a cautious approach and even when the original basis for designation has materially changed, applicants frequently face prolonged review periods. Delisting proceedings can extend over many months and, in some cases, several years.
United Kingdom Sanctions List comparison
The UK Sanctions List operates under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). Following Brexit, the UK established an autonomous sanctions framework separate from the European Union, allowing the UK Government to impose and administer sanctions independently. As of January 2026, the UK Sanctions List replaced the previous Office of Financial Sanctions Implementation (OFSI) Consolidated List.
The practical global impact of the UK Sanctions List remains substantial as it not only applies to non-citizen nationals but can also affect international parties, particularly where transactions involve UK institutions, UK persons or sterling clearing systems, and given London’s role as a major international financial centre. However, the UK Sanctions List does not possess the same level of extraterritorial influence associated with the SDN List due to the global dominance of the US dollar, US secondary sanctions exposure and the scale of US enforcement capabilities.
Section 23 of SAMLA enables variation or revocation of the designation on the UK Sanctions List if an individual or entity no longer satisfies the criteria for designation, there has been a change in circumstances or there is incorrect information. The relevant party must complete and submit a Sanction Review Request Form to the Foreign, Commonwealth & Development Office (FCDO), which is then reviewed by the FCDO and the relevant party is informed of the decision. Should the party not agree with the decision, they can apply for a court review. However, there were only 6 delistings in 2025, whilst 203 were added to the OFSI Consolidated List in the same year.
EU Consolidated Financial Sanctions List comparison
The EU Consolidated Financial Sanctions List is maintained by the European Commission and serves as a practical compliance tool for sanctions screening. However, the EU sanctions framework makes clear that the legally authoritative sources are the underlying EU regulations and Council Decisions published in the Official Journal of the European Union. This distinction is significant. While the consolidated list streamlines compliance and due diligence processes, the binding legal obligations arise from the relevant legislative instruments themselves rather than from the consolidated database.
In contrast to the US, the EU generally limits the application of its sanctions regime to EU persons, entities and activities occurring within EU jurisdiction. Whereas the US exercises far broader powers through legislation and executive orders, enabling it to impose sanctions with substantial extraterritorial reach, including against persons and conduct with limited or no direct connection to the US. In response to the impact of such measures, the EU has adopted Blocking Regulations designed to shield EU individuals and businesses from the extraterritorial application of certain third country sanctions, most notably those imposed by the US.
To challenge a designation under Article 215 Treaty on the Functioning of the European Union (TFEU), a formal written request must be submitted directly to the Council of the EU. The Council reviews the evidence then provides their decision and reasoning. Alternatively, an action can be brought within two months of publication before the General Court of the European Union under Article 263(4) TFEU. In 2025, 125 entities were added to the list whilst 35 were removed.
Delisting from any of the above-mentioned Sanctions Lists is generally difficult, but the UK and EU processes are often seen as more transparent compared to the US. Delisting remains predominantly an administrative process shaped by executive authority and national security deference. In the United Kingdom, the process is grounded in statutory review mechanisms and moderated by public law principles. In the European Union, sanctions designations are subject to extensive supranational judicial oversight informed by constitutional principles and fundamental rights protections.
Sources
https://ofac.treasury.gov/sanctions-list-search-tool
https://www.ecfr.gov/current/title-31/subtitle-B/chapter-V/part-501/subpart-E/section-501.807
https://www.cnas.org/publications/reports/sanctions-by-the-numbers-2025-year-in-review
