A logistics company receives notice that its longstanding supplier has been added to the SDN List (OFAC's list of Specially Designated Nationals and blocked persons). Contracts freeze. Payments stop. Within hours, the compliance team is asking the same urgent question: on what grounds was the designation made, and is there any basis to challenge it?
Challenging the designation criteria under OFAC is a defined process, governed by IEEPA and the relevant thematic sanctions regulations, administered by the Office of Foreign Assets Control within the US Treasury. As of February 2026, OFAC accepts administrative reconsideration petitions from designated parties and from third parties materially affected by a designation. No timeline for a decision is guaranteed, and the standard of review is deferential to the executive branch – but a well-constructed petition, grounded in the specific criteria that triggered designation, remains the primary first step.
This guide sets out the designation criteria that matter most, how the reconsideration process works in practice, where the analysis diverges from the UK and EU equivalents, and what a cross-border business should do before it files anything.
Step 1: Understand what designation criteria actually mean under OFAC
Every OFAC designation rests on a legal basis – the criteria set by the relevant executive order or thematic sanctions programme that the designated person is said to meet. Understanding those criteria precisely is the starting point for any challenge, because a petition that fails to engage with the operative legal test will not succeed.
OFAC operates numerous sanctions programmes, each authorised under IEEPA, the Trading With the Enemy Act, or specific congressional mandates. Each programme defines its own designation criteria: some turn on status (being a government official of a specified government), others on conduct (providing material support to a designated entity), and others on a combination. The criteria are not uniform across programmes.
For a designation challenge to succeed, counsel must first identify which programme applies, what the specific designation criteria are under that programme, and which of those criteria OFAC relies upon. That last point is often the hardest. OFAC's published designation notices are typically brief. The agency's administrative record – the underlying evidence – is not routinely disclosed unless formal proceedings or a US court challenge forces production.
In our experience, petitioners who treat the reconsideration process as a general appeal against the designation miss the point. The petition must engage with the specific criteria, not with the fairness of the outcome in general terms. Identifying the operative basis requires careful analysis of the programme regulations, the designation notice, and any public statements or press releases that may hint at the conduct or status OFAC relied upon.
Step 2: Map the evidentiary record before you file anything
The single most important preparation step is assembling the evidentiary record before drafting the petition, because a petition that is filed without a full picture of what OFAC knows – and what the petitioner can credibly contradict – risks confirming the agency's view rather than displacing it.
What does this mean operationally? It means reviewing every public source that may have informed the designation: regulatory filings, corporate registry records, media reports, litigation records in jurisdictions where those are accessible, and any prior dealings with OFAC. Where the designation relates to alleged ownership or control of a listed entity, ownership and control (the test for whether a non-listed entity is caught through a listed person) records – shareholder registers, notarised ownership certificates, board resolutions, constitutional documents – must all be gathered and verified.
In a recent matter, a mid-market trading business had been designated partly on the basis of alleged connections to a blocked person's corporate group. The ownership structure had already changed before the designation date, but the public records had not been updated in time to reflect that change. We assembled the notarised and apostilled documentation trail showing the pre-designation transfer of shares, and submitted it with a chronological narrative demonstrating that the alleged connection no longer existed at the time OFAC acted. The matter resolved at the administrative stage.
Pace matters too. OFAC does not impose a strict filing deadline for reconsideration petitions, but the practical cost of remaining on the SDN List accumulates daily. Every day on the list is another day of frozen assets, suspended contracts, and reputational harm. Have you considered the full daily cost of delay before deciding when to file?
Step 3: Structure the reconsideration petition to engage with the specific criteria
The reconsideration petition is a formal submission to OFAC's Office of Global Targeting, and its structure and content determine whether the agency undertakes a genuine review or simply reaffirms the designation by reference to the original administrative record.
A well-structured petition does four things. First, it identifies the designation basis precisely – the programme, the operative criteria, and the specific factual allegation or legal conclusion that underlies the designation. Second, it presents the counter-evidence directly responsive to that basis, organised by criterion rather than by chronology or narrative. Third, it addresses any aggravating factors that might lead OFAC to deny reconsideration even if the primary basis is weakened – related-party connections, prior apparent violations, industry risk profile. Fourth, it frames the relief sought: whether removal from the list, modification of the designation, or (in some circumstances) a specific licence as an interim measure while the petition is reviewed.
The written petition itself should be accompanied by a document package: primary source evidence for each factual assertion, legal analysis of the applicable criteria, and – where relevant – a compliance narrative showing steps taken since the designation to address any conduct concerns. OFAC has published guidance on the reconsideration process, and submissions that follow the expected format move more efficiently through the review queue.
Do not include unsupported assertions. OFAC's reviewers are experienced; statements not backed by primary documentation simply do not move the needle. We regularly advise clients that the length of the petition matters far less than the quality of the evidence it references.
Step 4: Assess the parallel US court route and when it becomes necessary
Administrative reconsideration is not the only route. Where OFAC's review is delayed, substantively inadequate, or where the designation rests on a legal error in the application of the criteria (rather than a factual dispute), a petition for judicial review in the US federal courts becomes the alternative – or parallel – path.
US courts review OFAC designations under the administrative law standard set out in the relevant statute. The standard is deferential: courts do not substitute their judgment for OFAC's on national-security questions. But they do review whether the agency acted within its legal authority, applied the correct criteria, and followed the required administrative procedure. Designations that rest on legally insufficient criteria – for instance, where the programme's own definition of the covered conduct does not reach the alleged facts – are vulnerable to judicial challenge on that specific ground.
The practical threshold for litigation is high. US federal court proceedings are slow and expensive. They involve constitutional and administrative law questions that require specialist US litigation counsel working alongside the sanctions specialist. They may also require production of the classified administrative record, which courts have procedures for handling but which adds complexity and cost.
In our cross-border practice, the judicial route most often becomes viable when the designated party is a legal entity or individual whose assets in the United States are material and where the administrative process has stalled. For non-US persons with no US-sited assets, the practical effect of the designation may fall primarily through the secondary-sanctions and correspondent-banking channels rather than through direct US jurisdiction, which changes the calculus on litigation.
How does the OFAC challenge process differ from OFSI and EU routes?
The OFAC administrative reconsideration process is structurally different from the routes available under the UK's Office of Financial Sanctions Implementation and the EU Council procedures, and understanding those differences is essential for any business facing designation across more than one regime simultaneously.
Under OFSI and the UK regime, a designated person may request a review of their designation by the Secretary of State. If that review fails, the route is judicial review before the High Court. The High Court applies a more searching standard of review than US federal courts apply to OFAC decisions – particularly on questions of proportionality under the UK's human-rights-compatible interpretation of SAMLA. A challenge before the High Court can succeed on grounds that would not move an OFAC reviewer: that the designation, while technically within the criteria, is disproportionate to the conduct alleged. That test simply does not exist in the same form in US administrative law.
The EU route operates differently again. A designated party may write to the Council presenting new evidence and requesting a review. If that fails, the primary legal route is an annulment action before the EU General Court. The General Court reviews both the procedural regularity of the designation and its substantive basis against the criteria in the applicable Council Regulation. EU courts have annulled designations on grounds including insufficient evidence, error in the assessment of ownership, and inadequate statement of reasons – and there is a body of established General Court jurisprudence on what constitutes adequate reasoning for a designation. The EU General Court has, in a number of cases, applied a close reading of the designation notice's reasoning and found it wanting.
For a business facing designation under both OFAC and an EU or UK programme – which is common in cross-cutting enforcement cycles – the strategies are not interchangeable. Arguments that succeed in Geneva or Luxembourg may not resonate in Washington, and vice versa. We regularly advise clients managing parallel challenges across two or three regimes simultaneously, co-ordinating the submissions to avoid inconsistency while exploiting the specific review standards that each forum applies.
The OFAC process also differs from the Swiss regime administered by SECO, which provides its own review procedure with somewhat different procedural protections and timelines. For a guide on the SECO route, see our designation challenge guide for the SECO regime.
Risk flags: when the challenge is harder than it looks
Not every designation is equally challengeable on the criteria. Practitioners advising on OFAC matters note that certain fact patterns significantly reduce the prospects for administrative reconsideration – and knowing these in advance shapes the strategy.
The first risk flag is a designation tied to a primary-designation anchor that is itself unlikely to be removed. Where the petitioner is designated on the basis of a relationship to a core SDN whose own designation rests on conduct the US government treats as a national-security priority, the derivative designation is extremely difficult to dislodge without first addressing the underlying relationship. The criteria may be technically satisfied even if the petitioner has severed ties since designation.
The second risk flag is a sanctions programme with a narrow reconsideration track. Some programmes operate under executive orders that provide very limited criteria, making it structurally harder to argue that the criteria are not met. Where the criteria turn on status rather than conduct – for example, membership of a government body – the factual inquiry is often very short, and the question becomes legal rather than evidentiary.
The third risk flag is an apparent violation of OFAC sanctions in the period before or after designation. If a petitioner or a related party has engaged in transactions that may themselves constitute violations, OFAC may treat the reconsideration process as an opportunity to require a VSD (voluntary self-disclosure to a regulator) or to condition delisting on a comprehensive compliance undertaking. These requirements can delay and complicate a petition that would otherwise be straightforward on the merits.
The fourth risk flag is beneficial ownership opacity. If the petitioner cannot clearly document its ownership and control structure – or if that structure involves jurisdictions where notarial or registry records are difficult to obtain – the evidentiary burden on the petition is significantly higher. OFAC will not fill the gap with favourable inferences.
A common myth: that challenging the designation criteria is a long shot
Many compliance teams assume that OFAC designations are, in effect, final – that the reconsideration process exists only as a procedural formality and rarely produces removals. That belief leads businesses to abandon the challenge route prematurely, or to accept the designation and attempt to manage around it through specific licence (a case-by-case authorisation to conduct an otherwise prohibited transaction) applications – which are the wrong tool if the designation itself is legally unsound.
The reality is more nuanced. OFAC does remove parties from the SDN List following reconsideration, and it does so with some regularity, particularly where the factual basis has changed, where the petitioner has provided evidence that was not available at the time of designation, or where the relationship that underpinned the designation has genuinely ended. Reconsideration is not a rubber stamp, but it is a genuine process – and one that requires the right preparation, not just submission of a formal letter.
Equally, the myth that only the designated party can challenge a designation is incorrect. Third parties whose contracts, assets, or business relationships are materially affected by a designation may petition OFAC for review in their own right, or for a specific licence to permit transactions despite the designation. Understanding which route applies to which actor in a transaction is part of the initial legal analysis that counsel should perform before any filing.
Related practices
- Delisting evidence package – Australia – preparing the structured evidence submission for the Australian autonomous-sanctions delisting route
- Challenging the designation criteria under OFSI – the UK route, High Court proportionality review, and comparison with the OFAC process