A trading group with entities in the United States and Canada receives simultaneous OFAC and Canadian sanctions designations. Its counsel in both jurisdictions need to build parallel delisting petitions. The evidence required differs in structure, in emphasis, and in the institutional culture of the authority reviewing it. Getting one package wrong does not merely lose that petition – it can prejudice the parallel application and close off options that existed at the start of the matter.
Building the delisting evidence package under OFAC and under Canada's sanctions regime requires different approaches to the same underlying task: persuading a designating authority that the basis for listing no longer holds, or never did. Under OFAC, the process is an administrative reconsideration governed by IEEPA and the relevant programme regulations, assessed by an internal OFAC team. Under Canada's regime, the process operates through Global Affairs Canada (GAC), with distinct procedural rules and grounds. The regimes share a high evidentiary threshold but diverge on what evidence is dispositive and how it is presented.
This analysis maps those divergences criterion by criterion – governing authority, legal basis, grounds for reconsideration, evidence structure, submission format, cross-border complications, and risk flags – and closes with practical steps for counsel building a dual-jurisdiction package.
How does the OFAC reconsideration process work?
An OFAC reconsideration petition is a formal request that OFAC review whether a designation on the SDN List (OFAC's list of Specially Designated Nationals and blocked persons) should be revoked or modified. The legal basis sits in IEEPA and the programme-specific regulations; the administrative process is governed by OFAC's own procedures. OFAC is the gatekeeper, the reviewer, and the decision-maker – there is no external adjudicator at first instance, and no statutory deadline for a response.
The petition is addressed to OFAC's Licensing Division – which handles reconsiderations alongside specific-licence applications – and is assessed on the underlying designation criteria. OFAC may revoke a designation because the evidentiary basis was insufficient, because the designated person no longer meets the designation criteria, or because revocation is in the national interest of the United States. In our experience, the third ground is rarely relied on alone; the strongest petitions address the first two.
OFAC does not hold oral hearings. The petition is assessed on the papers, supplemented by any meetings that counsel can secure with OFAC staff. Those meetings are not guaranteed, but they are valuable when available. The absence of a mandatory hearing makes the written package the primary – often the only – vehicle for the designated person's case.
What the process does not offer is a defined timeline. Petitions can take many months. Urgency arguments – blocked assets causing material harm, third-party dependencies – may assist in prioritising a matter internally, but they do not create a legal obligation to decide within any particular window. This time uncertainty makes parallel strategy essential where Canadian designations run alongside.
What is the legal basis and governing authority under Canada's regime?
Canada's autonomous sanctions regime operates under the Special Economic Measures Act (SEMA) and associated regulations, administered by Global Affairs Canada. The Justice for Victims of Corrupt Foreign Officials Act also provides a designating mechanism in specific circumstances. Unlike OFAC, where administrative reconsideration is the primary route, the Canadian regime provides for a ministerial review process – the responsible minister can revoke a designation where the grounds are no longer met or were not properly established.
GAC assesses incoming requests for review. The assessment involves the foreign-policy considerations that informed the original designation, which means the evidence package must engage those considerations directly, not merely argue the legal insufficiency of the original listing. This is a meaningful structural difference from OFAC, where the evidentiary record before the agency at listing is the central reference point.
Canada also participates in United Nations Security Council designation regimes. Where a Canadian designation tracks a UN Security Council listing, revocation at the national level does not remove the UN listing; a separate petition to the relevant Security Council committee – or, for ISIL/Al-Qaida designees, to the Ombudsperson – is required. In our cross-border practice, overlooking this layering creates a situation where a national listing is revoked while the UN listing continues to bind third-country counterparties.
The position above covers the standard case. Your facts – the programme under which the designation was made, the evidence that supported it, and the counterparties affected – change the analysis. For an assessment of your exposure under OFAC or Canada's regime, contact Calder & Vance at info@caldervance.com.
Where do the grounds for delisting diverge between OFAC and Canada?
The available grounds for reconsideration define the shape of the evidence package, and here the regimes diverge most sharply. Under OFAC, the three recognised grounds are: the designation criteria were never met; they are no longer met; or revocation serves the national interest. The first two are adversarial in the legal sense – they require the petitioner to rebut the evidentiary basis of the original designation. The third is discretionary and policy-weighted.
Under Canada's SEMA regime, the grounds for ministerial review are closer to an ongoing policy assessment. The minister reviews whether the conditions warranting the designation still exist. This means the package must address the current state of affairs, not merely attack the original decision. Evidence that the designated person's conduct, associations, or activities have changed – or that the original characterisation was wrong – is often more effective than a pure legal challenge to process.
This difference in orientation has practical consequences:
- An OFAC petition benefits from a forensic reconstruction of the designating record, identifying every factual assertion and producing documentary rebuttal.
- A Canadian submission benefits from a forward-looking narrative – who the person is now, what remedial steps have been taken, and why the foreign-policy objective underlying the designation no longer requires the listing to remain in place.
- A dual-jurisdiction package must satisfy both orientations without contradiction. Statements made to one authority may be disclosed or otherwise become available; internal inconsistency across the two submissions is a serious risk.
Have you reviewed whether the factual narrative in both submissions is mutually consistent? In a recent matter, a manufacturing-group entity under dual OFAC and Canadian designation found that remedial steps it had taken – restructuring beneficial ownership and exiting certain markets – were characterised differently in its two submissions. We aligned the narrative before filing, which required a delay but removed a vulnerability that could have been exploited in either review.
How should the evidence package itself be structured?
A well-built delisting evidence package under either regime has the same functional architecture: identify the designation criteria; map each criterion to the evidence; address contrary evidence proactively; and frame the whole around the applicable legal standard. The execution differs by regime.
For OFAC, the package typically leads with a clear statement of the grounds for reconsideration, followed by a factual narrative supported by exhibits. The exhibits should correspond directly to the factual assertions in OFAC's designation record, where that record is known or can be inferred. Legal argument on the sufficiency of the designating evidence is appropriate and expected. Character or reputational evidence is less decisive; OFAC assesses conduct and criteria, not character.
For Canada, the package benefits from a different sequencing. A brief on the current state of affairs, supported by evidence of changed circumstances, tends to be more effective than a purely legalistic challenge. Engagement with the foreign-policy purpose of the applicable SEMA regulation – without crossing into political advocacy – signals that the submission understands the ministerial review context.
In both regimes, certain evidence types carry particular weight:
- Ownership and control diagrams, certified by a responsible officer, addressing the 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked) and the equivalent Canadian ownership tests.
- Bank records, corporate registry extracts, and audited accounts – contemporaneous documents, not retrospective summaries.
- Declarations from third parties with direct knowledge, prepared to a standard that would withstand scrutiny if disclosed.
- Evidence of compliance remediation: new governance structures, compliance-programme records, exit from relationships that formed part of the designating basis.
One common error is over-reliance on self-serving narrative without contemporaneous documentary support. Reviewers at both OFAC and GAC are experienced in separating the two. The package should be built to survive sceptical review, not merely to tell a compelling story.
What cross-border complications arise in a dual OFAC and Canada filing?
The cross-border dimension of a dual filing produces complications that a single-regime petition does not encounter. Three are particularly significant in practice.
The first is the interaction of two blocked-property regimes. Under OFAC, any property in which a designated person has an interest is blocked from the moment of designation. Under SEMA, Canadian-nexus assets are subject to a similar freeze. Unlocking assets in both jurisdictions may require parallel specific-licence applications running alongside the reconsideration – a distinction from the Canadian process, where the licence mechanism and the review process follow different procedures. Co-ordinating those parallel tracks without prejudicing either is an exercise in sequencing, not just drafting.
The second complication is secondary-sanctions risk for third-country parties. OFAC's extraterritorial reach means that third-country persons who engage with an OFAC-designated party risk US sanctions exposure themselves. A petition that causes a third-country entity to take steps – providing declarations, producing documents, attending meetings – must be assessed for whether that involvement itself creates exposure under OFAC. This is a live question in every matter involving non-US supporting witnesses.
The third complication is disclosure risk. Evidence produced to one authority may become relevant to the other's review process. In a dual US-Canada matter, materials produced to GAC could in theory be obtained through channels available to the US government. The reverse is also possible. We regularly advise clients on structuring the evidence-gathering process in a way that minimises unintended disclosure, without – critically – creating any impression of withholding relevant material from either authority.
If a transaction has already been flagged, or a filing has been refused, an early review can preserve options that narrow with time. For a confidential review of a potential breach or a stalled delisting petition, contact us at info@caldervance.com.
What are the risk flags that counsel should address before filing?
Several risk flags are consistent predictors of difficulty in delisting petitions, across both regimes. Identifying them early shapes the evidence strategy.
Incomplete ownership mapping is the most frequent problem. The 50 percent rule captures indirect holdings; OFAC has made clear through its guidance that the aggregation of holdings by multiple blocked persons counts toward the threshold. A petition that fails to address all layers of the ownership chain – including nominee arrangements and voting trusts – leaves an obvious gap. Under the Canadian regime, control-based analysis adds another dimension: a person or entity may be caught even without majority ownership if control is exercisable through other means.
Contradictory prior statements create vulnerability. If the designated person or their associates made public statements, filed regulatory documents, or entered into contracts that are inconsistent with the evidence now advanced in the petition, those inconsistencies must be addressed, not ignored. Reviewers at OFAC are systematic in cross-referencing public records.
Ongoing relationships with listed parties are disqualifying unless a specific licence or other authorisation covers them. Submitting a petition while a relationship that formed part of the designating basis continues is rarely viable. Remediation must be complete and documented before filing, not promised in the petition itself.
Under-documented compliance remediation undermines the "no longer meets criteria" ground. Asserting that new governance structures or new beneficial-ownership arrangements are in place carries little weight without corporate registry filings, board resolutions, audited accounts, and third-party confirmation. The standard is documentary proof, not assertion.
A common myth is that a strong legal argument on the sufficiency of the original designating evidence is enough to secure revocation. In our experience before OFAC, it is rarely enough alone. OFAC has broad discretion, and petitions that succeed generally combine a strong legal challenge with demonstrable remediation and a clean forward-looking picture. The legal argument opens the door; the factual package has to walk through it.
Related practices
- Delisting evidence packages – Australia – building and submitting petitions under DFAT's autonomous sanctions regime
- OFAC vs OFSI delisting evidence packages – comparing US and UK evidentiary standards and procedural routes
- OFSI vs EU delisting evidence packages – divergences between UK and EU reconsideration processes and annulment action routes
What should a cross-border business do when facing dual designation?
A cross-border business facing simultaneous OFAC and Canadian designations should treat the two proceedings as related but separate, requiring co-ordination without conflation. The immediate priorities are distinct from the medium-term ones.
In the immediate term – within the first days after designation:
- Identify all assets that are frozen in each jurisdiction and notify relevant counterparties of the legal position, to avoid inadvertent unlicensed dealings.
- Engage sanctions counsel in both jurisdictions before making any public statement. Public statements made without legal review can damage the reconsideration case.
- Preserve all records relevant to the designation – financial records, ownership documents, communications – subject to applicable legal-hold obligations.
- Assess whether any specific-licence application for continued operations is needed while the reconsideration is pending.
In the medium term – building the petition:
- Commission a full ownership-and-control mapping exercise across the entity group in both jurisdictions, addressing OFAC's aggregation rules and Canada's control-based tests.
- Identify the designating factual basis as far as it can be determined from the designation notice and public record.
- Assess remediation steps required and implement them before filing, not as forward commitments.
- Draft and review both submissions in parallel, checking for narrative consistency before either is filed.
- Consider whether supporting declarations from third parties are necessary and assess the secondary-sanctions exposure of any non-US declarant.
The decision matrix for a dual filing typically runs as follows. Where the designation basis in both regimes is the same factual record, a unified evidence strategy – common exhibits, aligned narrative, jurisdiction-specific formatting – is usually more efficient and safer than parallel strategies developed in silos. Where the designation bases differ – one programme, one set of criteria for OFAC; a different programme for Canada – the submissions may need to be substantively different, which requires tighter co-ordination, not less.