A trading company discovers that its parent entity has been placed on the SDN List (OFAC's list of Specially Designated Nationals and blocked persons) and simultaneously named under Canada's autonomous sanctions regime. Two designation decisions. Two separate legal systems. Two distinct routes to removal. The compliance team asks a deceptively simple question: can we run both petitions together, or does each demand a separate strategy?
The answer is that OFAC and Canada's Global Affairs Canada (GAC) operate under fundamentally different delisting architectures. OFAC's reconsideration process is administrative, evidence-driven, and conducted entirely within the executive branch. Canada's autonomous-sanctions regime is grounded in separate enabling legislation and administered through a distinct ministerial process, with different evidentiary standards, different timelines, and a different legal threshold for removal. Running both petitions demands a regime-specific strategy, not a single shared submission.
This analysis maps the key procedural and substantive divergences, identifies the risk flags that trap cross-border petitioners, and explains when to involve specialist counsel in each jurisdiction.
What authority governs each delisting process?
OFAC administers its designation and delisting process under authority derived from the International Emergency Economic Powers Act (IEEPA) and other statutes, with the Office of Foreign Assets Control sitting within the US Department of the Treasury. A designated person seeking removal submits a petition for administrative reconsideration directly to OFAC. There is no independent tribunal. The same agency that made the designation reviews the petition. That structural feature shapes everything about how evidence is framed and what arguments carry weight.
Canada's sanctions framework operates under the Special Economic Measures Act (SEMA) and, for certain UN-mandated measures, the United Nations Act. The Minister of Foreign Affairs holds the statutory power both to designate and to remove. Global Affairs Canada (GAC) is the administering department. Unlike OFAC, where the petitioner addresses the regulator directly, a Canadian petitioner is formally addressing a political principal – the Minister – with the civil service conducting the assessment. That distinction is not academic. It affects how a petition is drafted, what weight factual corrections carry versus humanitarian or policy arguments, and how quickly the process moves.
What does that mean in practice for a company facing parallel designations? It means that a single evidence package prepared for OFAC will rarely translate without significant adaptation into an effective Canadian submission. The tone, the legal threshold, and the evidentiary register differ materially.
How does the evidentiary standard differ?
OFAC reviews a delisting petition against the evidentiary basis for the original designation, asking whether the facts on the record still support the designation criteria under the applicable programme. The petitioner must engage the specific factual findings that grounded the listing – ownership links, transactions, relationships with designated persons – and present updated evidence that undermines, rebuts, or contextualises them. OFAC does not apply a judicial "balance of probabilities" standard. It applies an administrative standard of review. The agency has broad discretion, and petitioners cannot compel a decision or obtain discovery of the internal file.
Canada's SEMA regime requires the Governor in Council to be satisfied that the conditions for designation continue to exist. A petitioner arguing for removal must therefore show either that the designation criteria are no longer met or that circumstances have materially changed. In our experience, Canadian submissions that mirror OFAC petition structure – leading with legal argument about the criteria and appending supporting exhibits – can underperform. Canadian submissions benefit from a more direct engagement with the policy rationale for the measure and with any changed circumstances that make continued listing disproportionate or no longer necessary.
A further divergence: Canada does not publish a formal evidentiary record in the same way OFAC does through its Specially Designated Nationals list entries and, occasionally, its published settlement documents. The opacity of the Canadian designation record can make it harder to identify the precise factual basis the petitioner must rebut, requiring early engagement with GAC to understand the basis of the measure.
What are the procedural steps under OFAC?
An OFAC delisting petition begins with a formal written submission to OFAC's Office of Global Targeting, setting out the grounds for reconsideration and attaching supporting documentation. There is no prescribed form, but OFAC's published guidance identifies the categories of information it considers: the petitioner's identity and relationship to the designation, the factual basis for challenging the designation, and any supporting evidence. OFAC may request additional information; it may also consult with other US government agencies, including the State Department and the intelligence community.
OFAC does not operate under a statutory deadline for responding to petitions. In our cross-border practice, the processing period for administrative reconsiderations can extend well beyond a year in contested or complex cases, though straightforward matters – particularly where the designation was based on a correctable factual error – can resolve more quickly. The absence of a hard deadline is one of the most significant practical features of the OFAC process for a petitioner managing business disruption caused by the listing.
The petitioner may supplement the record at any time before a decision is issued. If OFAC denies the petition, the petitioner may seek judicial review in the US federal courts. However, the standard of judicial review is highly deferential to OFAC's discretionary judgment, and litigation is rarely the primary strategy. The more effective route, in our experience, is a well-constructed petition that addresses the designation criteria directly and presents material new evidence.
Is there a path to interim relief while the petition is pending? OFAC can issue specific licences to authorise otherwise-prohibited activity pending a delisting determination. That option is worth assessing in parallel with the petition, particularly where the petitioner needs to unblock assets or resume commercial relationships quickly.
What are the procedural steps under Canada's SEMA regime?
A person seeking removal from Canada's autonomous-sanctions lists under SEMA submits a request to Global Affairs Canada. The request is addressed to the department and, ultimately, to the Minister of Foreign Affairs. GAC will assess whether the statutory conditions for the measure continue to be met and will advise the Minister accordingly. If the Minister is satisfied that the conditions no longer exist, a recommendation goes to the Governor in Council for an Order in Council amending or repealing the relevant regulation.
That final step – the Order in Council – means that Canadian delisting involves a formal regulatory amendment. It is not a purely administrative act by a single agency. This introduces an additional procedural stage compared with the OFAC process and can extend the timeline. GAC does not publish indicative timelines for delisting decisions. In practice, the process can be lengthy, particularly where the underlying designation is linked to a broader sanctions programme that is still evolving at the policy level.
Judicial review of Canadian sanctions designations is available before the Federal Court of Canada, and courts have in some cases subjected SEMA designations to meaningful scrutiny on grounds of procedural fairness and the adequacy of the evidentiary record. That option is more developed in Canada than the equivalent judicial avenue in the United States, where executive deference is strong. Cross-border petitioners should treat Canadian judicial review as a genuine parallel track rather than a last resort.
One practical point that trips up parties unfamiliar with the Canadian process: GAC may decline to confirm or deny the specific intelligence-derived basis for a designation, which limits the petitioner's ability to tailor rebuttal evidence. Experienced counsel can use targeted correspondence with GAC to identify, within the limits of what the department will disclose, the factual concerns that are most live.
The position above covers the standard structure of each regime. Your specific facts – the designation programme, the evidentiary record, the nationality of the designated person, and the commercial urgency – change the analysis significantly. For a confidential review of a delisting matter under OFAC, SEMA, or both, contact Calder & Vance at info@caldervance.com.
Where do the ownership and control tests diverge?
OFAC applies the 50 percent rule (OFAC's rule treating entities owned 50 percent or more in the aggregate by one or more blocked persons as themselves blocked, regardless of whether they appear on the SDN List). This is a mechanical ownership test. A company owned 49 percent by a designated person is not itself blocked by the rule alone, though other theories of liability may apply. A company owned 50 percent or more is blocked automatically and without further agency action.
Canada's SEMA regime does not replicate the 50 percent rule in the same mechanical form. Designations in Canada target named persons and entities. Whether a non-listed entity is caught depends on whether it is itself designated or whether transactions with it are otherwise prohibited by the terms of the relevant regulations. There is no automatic aggregate-ownership trigger equivalent to OFAC's rule that operates across all Canadian sanctions programmes as a matter of published general policy. This means that a subsidiary of a Canadian-designated person may not be automatically treated as designated in Canada in the way it would be under OFAC, absent a specific designation of the subsidiary.
That divergence has direct consequences for delisting strategy. An entity seeking removal from the SDN List must address OFAC's ownership-based theory of exposure – demonstrating either that the ownership links are incorrectly identified or have genuinely changed. In Canada, the petitioner is focused on the designation of the named entity. If a parent is removed from a Canadian list, the subsidiary's status is directly affected only to the extent the subsidiary's own designation (if any) is removed.
In our practice, misalignment between the OFAC ownership theory and the Canadian designation structure creates genuine risk for compliance teams that apply a single screening standard across both regimes. Have you reviewed whether your ownership-chain mapping is calibrated to the specific test each regime applies?
What risk flags should cross-border petitioners identify early?
Parallel designations under OFAC and SEMA create several compounding risks that a petitioner who focuses on one regime alone will likely miss. The first is inconsistent characterisation of the underlying facts. A submission to OFAC that concedes a particular transaction occurred for legitimate reasons may create a record that Canada uses to sustain its own designation. Counsel managing both petitions must ensure that factual statements in each submission are consistent and that no admission made in one jurisdiction undermines the legal position in the other.
The second risk is asymmetric timing. If an OFAC delisting succeeds and the SDN designation is removed before the Canadian process concludes, the petitioner may assume the matter is resolved and withdraw attention from the Canadian dossier. That error can leave the company named on Canadian lists, creating residual barriers to access to the Canadian financial system and to contracts with Canadian counterparties, even after OFAC removal.
The third risk involves secondary-sanctions exposure. Even where a company focuses its delisting effort on Canada, it must assess whether OFAC's secondary-sanctions programmes could affect its counterparties – financial institutions, correspondents, and trade-finance banks – who may maintain their own OFAC-driven restrictions independently of the Canadian position. A Canadian delisting alone does not resolve the OFAC-driven reluctance of banks operating in the US dollar clearing system.
A fourth risk is the treatment of affiliated persons and entities. When one group entity is delisted, affiliated companies that were indirectly affected by the original designation – because of the 50 percent rule under OFAC, or because of associated-person concerns – should reassess their own status under each regime. Failing to obtain explicit confirmation from OFAC that the affiliates are no longer blocked is a common and costly oversight.
If a transaction has already been flagged or an application has been refused under either regime, an early review can preserve options that narrow with delay. Write to Calder & Vance at info@caldervance.com for an initial assessment.
A common misconception: one successful delisting resolves all exposure
A frequent misconception among businesses managing parallel designations is that removal from one list neutralises all downstream consequences. In our cross-border practice, we regularly advise clients who have achieved an OFAC delisting and are surprised to find that their Canadian-listed status continues to prevent transactions, that EU autonomous measures remain in place, or that correspondent banks have not updated their screening records to reflect the removal. Each regime operates on its own timetable and publishes its lists independently. A delisting under one regime has no formal effect on another unless the second regime expressly links its list to the first.
There is also the question of commercial databases and sanctions-screening tools. These services aggregate list data and apply their own update cycles. Even after a formal delisting, a company may continue to generate screening alerts in clients' and banks' internal systems until those databases are updated and until the company has actively communicated the removal to key counterparties. Managing the post-delisting reputational and operational rehabilitation is a distinct phase of the matter, not an automatic consequence of the legal outcome.
The practical implication is that delisting strategy must be designed from the outset to address all live designations in parallel – not sequentially, and not on the assumption that success under the primary regime will cascade.
How Calder & Vance approaches OFAC and Canada delisting matters
Our approach to parallel OFAC and Canadian delisting matters is to treat the two processes as interdependent from the first instruction. We assess eligibility, map the evidentiary record for each regime, and build submissions that are factually consistent across jurisdictions while being calibrated to the specific legal standard and evidentiary register of each.
Where OFAC licensing is available to unblock assets or resume commercial activity while the petition is pending, we assess eligibility and prepare and submit the specific licence (a case-by-case authorisation to conduct an otherwise-prohibited transaction) application concurrently. Where Canadian judicial review is a viable parallel track, we advise on the procedural options and co-ordinate with local counsel in the relevant jurisdiction.
In a recent matter, a financial-services group faced simultaneous designations under OFAC and a non-US autonomous regime with a comparable ministerial-decision structure. We prepared parallel submissions addressing the distinct evidentiary basis of each designation, managed regulator correspondence across both processes, and advised on an OFAC-specific licence to restore limited operations while the petitions proceeded. The matter underscored how divergent the practical demands of each submission are, even where the underlying facts are shared.
We also advise on the post-delisting phase: notifying counterparties, engaging screening-database providers, and managing residual commercial disruption. That phase deserves as much attention as the petition itself.
Related practices
- Delisting evidence packages for Australia's autonomous sanctions regime – preparing and submitting designation challenges under DFAT's autonomous measures.
- OFAC vs OFSI: delisting petition divergences – procedural and evidentiary comparison of the US and UK delisting processes.
- OFAC vs OFSI: delisting petition divergences (part 2) – extended analysis of ownership-chain and control-test differences affecting UK and US petition strategy.