A trading company receives a letter from the US Treasury's Office of Foreign Assets Control. It has been designated. Accounts are frozen. Correspondent banks have already severed relationships. The board asks the obvious question: can we challenge this? The answer depends entirely on which side of the Atlantic the legal battle must be fought – and the differences between OFAC and OFSI review routes are far greater than most compliance teams appreciate.
Judicial review of a designation under OFAC and OFSI operates through fundamentally different constitutional architectures. In the United States, a designated party challenges an OFAC designation through the federal courts under a deferential administrative-law standard. In the United Kingdom, an OFSI-designated party may apply to the High Court for judicial review, with a separate statutory review mechanism also available. The routes differ on evidence disclosure, the standard of review, and the practical timeline – and those differences decide strategy from day one.
As of February 2026, both regimes have sharpened their enforcement postures. This analysis sets out how each route works, where they diverge, what the EU comparator adds, and the specific risk flags that cause businesses to lose challenges they should win.
How does the OFAC administrative and judicial challenge process work?
The first step in any OFAC designation challenge is an administrative petition – a request for reconsideration addressed directly to OFAC before any federal court becomes involved. This is not optional pre-litigation. It is the primary avenue that OFAC expects a designee to exhaust, and courts have treated it as such. The petition gives the designee an opportunity to present exculpatory evidence, correct factual error, and argue that the designation no longer serves the programme's purpose.
OFAC's reconsideration process is internal and non-adversarial. The designee submits a written request. OFAC reviews it at its discretion. There is no statutory deadline imposed on the agency for a response, and in our experience the waiting period can extend substantially – a reality that compounds the commercial damage a designation causes. The agency may remove a name from the SDN List (OFAC's list of Specially Designated Nationals and blocked persons), issue a specific licence (a case-by-case authorisation to conduct an otherwise prohibited transaction) to manage particular relationships, or decline to act.
If the petition fails or the agency does not respond within a reasonable period, the designated party may seek judicial review in federal court. The court will apply a standard of review derived from the Administrative Procedure Act: it will ask whether OFAC's determination was arbitrary, capricious, an abuse of discretion, or contrary to law. That standard is meaningfully deferential to the executive. Courts have consistently declined to second-guess intelligence assessments or the weight OFAC assigns to classified evidence. A legal challenge that does not engage the evidentiary record at the administrative stage is rarely strengthened by the time it reaches federal court.
What businesses consistently miss is the evidence-building window. The administrative petition is where the substantive case is made. Courts reviewing OFAC decisions largely work from the administrative record. If exculpatory material was not presented to OFAC, persuading a federal judge to consider it later is an uphill argument. Counsel needs to be involved before the petition is filed – not after the court proceedings have begun.
What is the OFSI judicial-review route – and how does it differ?
In the United Kingdom, a designated person may challenge an OFSI designation through two distinct mechanisms: a statutory review under the Sanctions and Anti-Money Laundering Act ("SAMLA") and a judicial-review claim in the High Court under general public-law principles. Both routes exist, and the choice between them – or the decision to pursue both – is itself a strategic question.
The statutory review under SAMLA requires the Secretary of State to conduct a review of the designation. The standard applied is whether there are reasonable grounds to suspect that the designated person meets the designation criteria for the relevant thematic sanctions regulations. That test differs from the OFAC "arbitrary and capricious" standard in a material respect: it is structured as a forward-looking sufficiency-of-grounds inquiry. The government must satisfy itself, on the current evidence, that the grounds remain sufficient.
The High Court judicial-review route follows ordinary public-law principles: illegality, irrationality, and procedural impropriety. The court will examine whether the decision-maker acted within the legal power granted by SAMLA and the relevant thematic regulations, whether the decision was rational, and whether the procedure was fair. Critically, unlike the position in US federal courts, the High Court has been willing to scrutinise the procedural adequacy of the process that led to the designation – including whether the designee was given any meaningful opportunity to respond prior to listing.
Disclosure is the issue that most distinguishes the OFSI route from the OFAC route. In UK judicial-review proceedings, the court has procedural tools – including closed material procedures in national-security-sensitive cases – that can compel a degree of disclosure of the grounds for designation, even where the underlying evidence is sensitive. In OFAC proceedings before US federal courts, classified evidence can sustain a designation without the designee seeing it. That asymmetry has real consequences: a UK-listed entity may be able to test the factual basis of the designation in a way that a US-listed entity cannot.
Where do the regimes diverge on judicial review of a designation?
The most consequential divergence is the standard of review – not the label applied to it, but its practical effect. OFAC decisions benefit from a high degree of executive deference under US administrative law. Courts are reluctant to override a national-security determination made by the executive branch. The result is that the designated party's legal team must work hardest at the administrative stage, because that is where the case can actually be won. In contrast, the High Court's public-law review, while also deferential on national-security grounds, operates within a constitutional tradition that places greater emphasis on procedural fairness and reasoned decision-making.
A second divergence concerns timing. An OFAC administrative petition has no guaranteed response timeline – the process can remain open for an extended period. SAMLA introduced a statutory mechanism under which the Secretary of State must complete a requested review. In our cross-border practice, this timing divergence matters significantly for businesses that are simultaneously designated by both OFAC and OFSI, because a successful UK review does not automatically produce a US delisting, and vice versa.
A third point of divergence is the role of the designation criteria. OFAC programmes each have their own designation criteria, set by the relevant executive orders issued under IEEPA or TWEA. OFSI designations under SAMLA and the relevant thematic regulations must meet a "reasonable grounds to suspect" threshold. The EU standard under the relevant Council regulations adds a further variation: it requires a substantive evidential basis reviewed by the EU General Court under an annulment procedure. Businesses operating across all three jurisdictions face a patchwork: a win before the EU General Court does not flow through to OFAC or OFSI, and a successful OFAC reconsideration does not remove EU or UK listings. Each jurisdiction requires independent engagement.
The position above covers the standard case. Your facts – the counterparty, the designation basis, the jurisdictions in which assets are held, and the regimes that have listed you – change the analysis materially.
For a confidential review of your designation position under OFAC, OFSI, or both, contact Calder & Vance at info@caldervance.com.
How does the EU General Court comparator change the picture?
The EU route – an annulment action before the EU General Court under the Treaty on the Functioning of the European Union – operates as a full judicial review on the merits, not simply a procedural or rationality check. The applicant can challenge the adequacy of the evidence that underpins the designation. The Court can examine whether the Council's stated grounds are supported by the underlying documents. It can, and regularly does, annul designations where the evidentiary foundation is found to be insufficient.
That is a materially different posture from either the OFAC or OFSI review. In our practice advising clients with exposure across multiple regimes, the EU General Court route has in several matters produced a delisting that then served as persuasive – though not binding – material in parallel OFSI and OFAC reconsideration proceedings. The reverse is also true: a failed EU challenge rarely helps the administrative petition to OFAC.
The EU route also differs on access to evidence. The Court applies disclosure rules under its own rules of procedure. The Council must produce the evidence it relied on when designating the applicant. Where the Council relied on information provided by a member state, that member state may be permitted to assert confidentiality – but the Court has developed its own practice for managing that tension. The result is a more transparent evidentiary contest than is typically available in the OFAC judicial-review context.
For businesses listed in both the EU and the UK – which share a significant proportion of designees given the alignment that existed before the UK's departure from the EU, and the continuing parallel trajectory of many designations – the sequencing question is real. Which forum moves first? Which decision, if favourable, carries more weight in the others? These are judgment calls that need to be made at the outset, not after proceedings have already been filed in one jurisdiction.
What are the risk flags that cause designation challenges to fail?
The single most common reason a designation challenge fails before it reaches a court is that the evidence package was assembled without understanding what the reviewing authority actually needs. This is not a documentation problem. It is a substantive analytical failure.
Under OFAC, the administrative petition must engage with the specific designation criteria in the operative executive order. A petition that disputes the moral justice of the designation, or that simply asserts the petitioner did not intend to violate sanctions, does not engage the legal test. OFAC's question is whether the factual basis for the criteria is met. The petition must address each criterion, with evidence, and must do so without relying on generalities.
Under OFSI, a statutory review that does not address the "reasonable grounds to suspect" threshold with precision risks the same outcome. The reviewing decision-maker needs a path to a different conclusion. That path requires evidence – corporate structure documents, transaction records, audited accounts, third-party attestations, correspondence – assembled in a way that maps directly to the grounds for designation.
A second common failure is delay. Both OFAC and OFSI accept reconsideration requests at any time. But commercial damage accelerates from the moment of designation. Correspondent banking relationships terminate quickly. Trade counterparties invoke force majeure or termination clauses. The longer the designated party waits before filing, the wider the commercial harm and – in some cases – the thinner the evidentiary record, as documents are lost or witnesses become unavailable.
A third risk flag, particularly for multi-regime situations, is uncoordinated legal strategy. Filing an administrative petition to OFAC without first considering whether the EU or OFSI proceedings will move sooner – or produce a more useful outcome – can foreclose options. A concession in one set of proceedings can be used against the designee in another. We regularly advise clients to treat the multi-regime challenge as a single coordinated matter, even where local counsel in each jurisdiction handles the procedural filings.
Have you mapped every jurisdiction in which you are currently listed – or in which your assets are held – before deciding where to file first? That mapping is the foundation of any credible challenge strategy.
What a cross-border business should do about judicial review of a designation
The practical steps depend on the designation's jurisdictional scope, but a consistent sequence applies across OFAC, OFSI, and EU cases. First, identify every jurisdiction in which you are listed and every jurisdiction in which your assets, accounts, or counterparties are based. Designations rarely respect commercial geography, and secondary effects can arise in jurisdictions where you have no formal listing.
Second, obtain and review the statement of reasons for each listing. Under OFSI and the EU rules, designated parties are entitled to notification and, in most cases, a statement of grounds. Under OFAC, the statement of reasons may be brief and may refer to classified material. Understanding what is stated – and what is not – determines the available grounds of challenge.
Third, consider specific licence applications in parallel with the challenge. A pending reconsideration petition does not freeze commercial life. In the US, an OFAC specific licence can permit specific transactions during the period the petition is under review. In the UK, OFSI can grant licences for defined categories of activity notwithstanding the designation. Licensing and challenge are not mutually exclusive; in many matters they are run simultaneously.
Fourth, implement a documentation protocol immediately. All communications with regulators, all transaction records relevant to the designation grounds, and all evidence of compliance behaviour should be preserved and indexed from day one. Evidence that is not preserved in the first weeks after designation is often unavailable when it matters most.
If a transaction has already been flagged, or a challenge filing has been refused, an early review can preserve options that narrow with time. Contact Calder & Vance at info@caldervance.com for a confidential assessment of your designation position.
A common misconception: "winning in one jurisdiction unblocks the others"
The most persistent myth we encounter from compliance teams managing a multi-regime designation is the belief that a successful challenge in one jurisdiction automatically lifts the designation elsewhere. It does not. OFAC, OFSI, and the EU Council each maintain their own lists and apply their own criteria. A delisting from one list has no formal legal effect on the others.
That does not mean cross-jurisdictional outcomes are irrelevant to each other. A reasoned judgment from the EU General Court annulling a designation on evidential grounds – with full reasons published – provides powerful persuasive material for a parallel OFAC reconsideration petition. A High Court judgment finding that the OFSI statutory review process was procedurally flawed is relevant to how the OFSI review should be structured in the next round. Outcomes in one forum inform the strategy in others. But they do not substitute for independent proceedings in each.
A related misconception is that de-risking (a financial institution exiting a relationship to avoid sanctions exposure) will reverse once the designation is removed. In practice, financial institutions that have exited a relationship following a designation may not automatically restore it after a successful challenge. Separate engagement with those institutions – demonstrating the outcome of the challenge and the current compliance position – is often required. A delisting is the beginning of reputation and relationship reconstruction, not the end of the matter.
In a recent matter, a manufacturing business with operations in two jurisdictions was designated under both OFAC and the relevant EU regime following the designation of a minority shareholder. We mapped the ownership chain, assessed the designation criteria in each jurisdiction, and coordinated parallel challenge and licensing strategies. The matter remained live across multiple regulatory windows before reaching resolution. No outcome is guaranteed; each case turns on its specific facts and evidence.
Related practices
- Delisting evidence package (Australia) – building the evidentiary record for designation challenges under the Australian autonomous sanctions regime
- OFSI vs EU designation judicial review analysis – comparing the UK and EU routes for challenging a designation, including the EU General Court procedure
- OFSI vs EU designation analysis: further issues – examining disclosure, evidence access, and procedural fairness across the OFSI and EU review mechanisms