Your freight forwarder calls with bad news. A shipment has been blocked at the correspondent bank. The transaction was flagged because the corporate name on the wire matches – almost exactly – the name of a designated entity on the SDN List (OFAC's list of Specially Designated Nationals and blocked persons). Your company is not that entity. Different country of incorporation, different ownership, different address. But the payment is frozen and the clock is running.
Mistaken-identity removals under OFAC address exactly this situation: a non-designated person or company has been incorrectly identified as matching a listed target, causing a financial institution to block funds, reject a transaction, or freeze an account. OFAC operates a formal administrative process to correct the record, centred on the submission of identifying documentation. Resolution is possible, but the path is procedural and the evidentiary standard is strict.
This guide walks through each stage of the OFAC mistaken-identity removal process, explains where other major sanctions regimes diverge, and sets out the risk flags that tell you when outside counsel is necessary.
What is a mistaken-identity blocking, and who does it affect?
A mistaken-identity blocking occurs when a financial institution or other obligated party treats a non-designated person as if they appear on the SDN List, because the name, address, date of birth, or nationality of that person partially matches a listed target's identifying information. OFAC does not itself issue a blocking notice; the block is applied by the private intermediary – typically a correspondent bank, payment processor, or broker – acting on its own screening logic.
The error is common. Screening software uses fuzzy-matching algorithms that flag near-identical strings. A business trading under a common surname, a company name that abbreviates to the same acronym as a designated entity, or a natural person sharing a name with a listed national can all trigger a false positive. The problem is especially acute for businesses operating across multiple currencies and payment corridors, where several layers of correspondent banks each run their own screens.
As of early 2026, the SDN List contains thousands of entries covering individuals, entities, vessels, and aircraft across multiple programmes. Any one of those entries can generate false positives against innocent counterparties. The mistaken-identity path is structurally different from a formal designation challenge, which contests OFAC's substantive decision to list a party. Here, the claim is simply: the listed person is not me.
Step 1 – Confirm the nature of the error before contacting OFAC
The first step is to establish precisely what type of mismatch has occurred, because the corrective route depends on it. Not every blocking is a mistaken-identity case. There are three distinct categories.
First, a true mistaken-identity blocking: the person or entity is entirely distinct from the SDN entry, but shares identifying characteristics that caused the match. Second, an erroneous designation: OFAC itself made an error in listing the party. Third, a changed-circumstances case: the person was once correctly identified as a match – for example, a common-name confusion that was never formally resolved – but the underlying facts have shifted. Each of these calls for a different filing strategy.
Before drafting any submission, map the following:
- The exact SDN entry that caused the block (name, aliases, identifying information).
- The precise matching fields the screening system flagged.
- Every piece of identifying information your client can produce that distinguishes them from the listed person.
- The financial institution's internal escalation status – whether they have already submitted a report to OFAC or are awaiting your submission first.
In our experience, clients arrive believing they have a simple mistaken-identity case and discover on closer review that one of their former shareholders appears on a related entry. Doing this analysis before you contact OFAC prevents a premature submission that locks in an unhelpful framing.
Step 2 – Engage the blocking institution and request the statutory reporting window
OFAC's rules require financial institutions that block property to report the blocking to OFAC within 10 business days of the action. Once a block is applied, the clock is already running for the institution. Your client's parallel task is to move quickly.
Contact the blocking institution's sanctions compliance desk directly. Request confirmation of the specific SDN entry that triggered the match. Ask whether the institution has already filed its blocking report. If it has not yet done so, a well-prepared letter from outside counsel – submitted before the institution's report – can shape the way the block is characterised when it reaches OFAC. That early framing matters.
Ask the institution whether it is prepared to transmit your identifying documentation alongside its own report. Some institutions do so; others treat their regulatory filing as entirely separate. Either outcome is workable, but knowing the institution's position determines whether you file directly with OFAC or through the institution.
Do not assume the blocking institution has any obligation to advocate for your client with OFAC. The institution's concern is its own compliance. Yours is getting the block lifted.
The position above covers the standard case. Your facts – the counterparty structure, the jurisdictions of the payment corridor, and the nature of the matching flags – change the analysis materially. For an early assessment of your blocking situation, contact Calder & Vance at info@caldervance.com.
Step 3 – Prepare and submit the OFAC identifying information package
The core of a mistaken-identity removal is the identifying-information submission to OFAC, made through OFAC's official communications channel. OFAC has the authority under IEEPA to correct administrative errors in the SDN List and to release blocked property once the mismatch is confirmed. The submission must be precise, complete, and clearly structured.
A well-prepared package covers the following elements:
- Cover letter: a concise explanation of the nature of the mismatch, identifying the specific SDN entry, and stating the relief requested.
- Entity or individual identification: certificate of incorporation and commercial registry extracts (for companies); passport or national identity document (for individuals); certified translations where the originals are not in English.
- Distinguishing markers: address, place of business, tax identification, date of incorporation, directors, shareholders – any data field that positively distinguishes your client from the SDN entry.
- Transaction documentation: the specific payment instruction or contract that was blocked, demonstrating the commercial relationship and the legitimate purpose.
- Correspondence from the blocking institution: any written notice from the bank or processor confirming the block and the SDN entry it cited.
OFAC reviews submissions against its internal case records. If the distinguishing information is clear and unambiguous, OFAC can issue a letter confirming that the submitting party is not the listed person. That confirmation letter – sometimes called a "comfort letter" – can be presented to the blocking institution as the basis for releasing the funds. OFAC can also, where it identifies its own data error, update or annotate the SDN entry with an "ADDITIONAL SANCTIONS INFORMATION" note to reduce future false positives.
We regularly advise on the preparation of these packages. The difference between a submission that resolves in weeks and one that stalls for months often comes down to the completeness of the initial filing and the accuracy of the mismatch analysis at Step 1.
How does OFAC mistaken-identity removal compare with OFSI and the EU process?
The OFAC administrative route is faster and more informal than its EU or UK equivalents for genuine mistaken-identity cases, though it carries less formal legal weight as a standalone mechanism. Understanding the differences matters for any business operating across jurisdictions simultaneously.
Under OFSI – the UK Office of Financial Sanctions Implementation – the equivalent process involves a formal written request to OFSI's licensing and designations team. OFSI operates under the Sanctions and Anti-Money Laundering Act ("SAMLA") and the relevant thematic regulations. OFSI's process is also administrative, but OFSI tends to require a higher threshold of documentary evidence and the statutory window for the institution's reporting obligation differs from the OFAC position.
For EU designations under the relevant Council regulations, the picture is more layered. The implementing member state's competent authority handles the administrative route for mistaken-identity queries. An annulment action before the EU General Court remains available where an error rises to the level of a contested listing, but the General Court route is properly described as a formal legal challenge, not a mistaken-identity removal. In practice, for true false-positive screening errors, the competent-authority administrative route is far more practical and faster.
A cross-regime mismatch – where OFAC confirms the party is not its listed person but the EU competent authority has not yet resolved a parallel query – can leave the same transaction blocked under a separate regime. That residual block can persist for months. This is why mapping the regime-by-regime exposure at Step 1 is not optional.
For a detailed comparison of the OFSI process for mistaken-identity situations, see our guide at Mistaken-identity removals under OFSI: a practical guide. If your situation involves a parallel Australian listing query, our service description at Building a delisting evidence package under the Australian regime sets out the relevant process.
What are the most common risk flags and errors in mistaken-identity removals?
Mistaken-identity removals fail – or stall – for a predictable set of reasons. Identifying these before you file is the most effective quality-control step available.
Incomplete distinguishing evidence is the single most common cause of delay. A submission that produces a passport and little else, when the SDN entry carries nationality, date of birth, and multiple aliases, gives OFAC insufficient material to confirm a mismatch with confidence. Match each field in the SDN entry against a corresponding document from your client.
Submitting before confirming the precise SDN entry is a serious tactical error. OFAC does not run the mismatch analysis for you. If you cite the wrong entry – because the blocking institution gave you an imprecise reference – your submission addresses the wrong record.
Overlooking secondary designations is another failure mode. Your client may not match the primary SDN entry but may be connected to a different listed person through ownership or a business relationship. That connection does not necessarily block the mistaken-identity route, but it must be addressed in the submission.
Finally, delay. The longer blocked funds sit under a blocking report without a corresponding mismatch submission, the more likely it is that OFAC treats the matter as a confirmed blocking requiring a full licence for release, rather than an administrative error correctable by confirmation letter. Speed matters at Steps 2 and 3.
If a transaction has already been flagged or funds have been frozen for more than a short period, an early review of the filing strategy can preserve options that narrow with time. For a confidential assessment, contact Calder & Vance at info@caldervance.com.
When does a mistaken-identity case become a formal designation challenge or a licence matter?
Not every case that begins as a mistaken-identity removal stays in that category. Three situations require a reassessment of strategy.
First, OFAC declines to confirm the mismatch. This can happen where the distinguishing evidence is genuinely ambiguous, or where OFAC identifies a connection between your client and a listed person that your initial analysis missed. Where OFAC declines to issue a comfort letter, the option of a specific licence (a case-by-case authorisation to conduct an otherwise prohibited transaction) to unblock the specific property may be the faster route to releasing the funds, even though it implicitly treats the party as within the programme's reach.
Second, OFAC's review reveals an error in the original designation rather than a screening false positive. In that case, the appropriate mechanism is a formal petition for administrative reconsideration of the listing, which has different procedural requirements and evidentiary standards from a mistaken-identity submission.
Third, the blocking institution identifies obligations under another regime – for example, a parallel EU or UK designation – that OFAC's confirmation does not resolve. In that case, the matter bifurcates into a US administrative track and a parallel EU or UK track, which may require representation before two competent authorities simultaneously.
Our practice handles all three tracks. We assess eligibility, prepare and submit the documentation, and manage the regulator's queries from first contact through to resolution.
A common myth: once OFAC confirms the mismatch, the bank must release the funds immediately
A widespread misconception is that an OFAC comfort letter automatically and immediately unlocks blocked funds at the bank. In our cross-border practice, we see this assumption cause serious problems for clients who have managed the OFAC stage well but then face a protracted institutional process.
The OFAC letter confirms, as a regulatory matter, that the submitting party is not the listed person. It does not itself constitute a legal order directed at the financial institution. The institution must satisfy its own compliance requirements, which may include an internal legal review, a credit-risk committee decision, and – in some cases – sign-off from a correspondent bank that applied the original block. Where the payment was delayed rather than fully blocked, the institution may also require an amended payment instruction before it will process the transaction.
Allow time for this institutional stage. In our experience the gap between receiving OFAC's confirmation and receiving cleared funds ranges from a matter of days to several weeks, depending on the institution, the currency, and the correspondent-bank structure. Prepare the client for that gap before the OFAC submission is even filed.
Related practices
- Delisting evidence package – Australia – building the documentary record for a listing challenge under the Australian autonomous-sanctions regime.
- Mistaken-identity removals under OFSI – the UK administrative route for false-positive screening hits and OFSI engagement.
- OFSI mistaken-identity removals: advanced considerations – cross-regime exposure and parallel competent-authority filings.