A trading company signs a supply agreement with a counterparty whose parent holds assets in a jurisdiction under US sanctions. The payment leg runs through a US correspondent bank. Hours before the transfer, the bank freezes the funds and requests documentation. Does the company have a route to proceed lawfully? The answer, in most cases, is a specific licence (a case-by-case authorisation from OFAC to conduct an otherwise prohibited transaction) – but the window to act is shorter than most compliance teams expect, and a poorly constructed application will lengthen the process considerably.
As of June 2026, OFAC issues specific licences under the authority of IEEPA and related presidential orders. The process requires a written application to OFAC setting out the transaction, the parties, the legal basis for relief, and supporting documentation. There is no statutory guarantee of approval, and the timeline varies by programme and complexity.
This guide walks through each stage of the specific-licence application process under OFAC, identifies the risk flags that cause applications to stall, and compares the OFAC route with the parallel tracks available under OFSI (UK) and the EU – because for most cross-border transactions, more than one regime is in play.
Step 1: Confirm that a specific licence is actually required
Before preparing any application, establish whether a general licence already covers the proposed activity – many applicants invest significant effort in a specific-licence application when a standing authorisation already permits the transaction. A general licence (a standing authorisation permitting a defined category of transactions without a separate application) should be the first reference point for every OFAC-affected deal.
The classification question runs as follows. First, identify the precise prohibition triggered: is the counterparty on the SDN List (OFAC's list of Specially Designated Nationals and blocked persons), or is it a non-listed entity that the 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked) captures? Second, check whether any programme-specific or cross-programme general licence authorises the relevant activity. Third, if no general licence applies and the activity is otherwise prohibited, a specific licence is the only lawful route.
This initial triage matters for speed. In our cross-border practice, we regularly advise clients who have spent weeks preparing a specific-licence application when the activity was covered by a general licence with conditions they had not reviewed closely. The saving in time and regulatory exposure can be substantial.
Step 2: Identify the applicable OFAC programme and the correct licensing policy
OFAC administers dozens of distinct sanctions programmes, each with its own licensing policy, priorities, and policy considerations. The programme determines the likely processing trajectory and the arguments most likely to succeed.
Some programmes carry a published statement of licensing policy – a signal about whether OFAC will generally consider applications favourably or unfavourably for defined categories of transaction. Humanitarian activities, for example, tend to attract more receptive consideration than commercial trade under programmes where trade is the primary target of the sanctions. Knowing the policy posture of the relevant programme before you draft is not optional; it shapes every element of the application, from the legal basis you cite to the supporting evidence you attach.
The applicable programme also determines whether OFAC is likely to issue an interim licence – a partial authorisation that permits preparatory steps while the full application is under review. Not every programme makes this available, and requesting it inappropriately can signal to OFAC that the applicant has not understood the programme's scope. We have acted for clients in multiple programme contexts and can confirm that the drafting approach differs materially between, for example, a financial-services application and a humanitarian-goods application.
What must a specific-licence application contain?
A complete OFAC specific-licence application sets out, in a single coherent submission, the identity of every party, the nature and value of the proposed transaction, the legal basis for relief, and all documentary support. Incomplete submissions are the single most common cause of processing delay.
The core components are:
- Applicant identification: full legal name, principal place of business, and contact details for the person submitting the application.
- Transaction description: a precise account of the goods, services, or funds at issue; the proposed dates; and the contractual basis.
- Parties: identification of every party, including intermediaries, beneficial owners, and any entity the 50 percent rule may capture. Ownership charts are expected for complex structures.
- Sanctions nexus: an explanation of exactly how the prohibition is triggered – which programme, which listed person or entity, and by which transactional step.
- Legal basis for relief: the argument that OFAC should grant the licence, tied to the programme's stated licensing policy or to a humanitarian, foreign-policy, or other recognised ground.
- Supporting documentation: contracts, invoices, ownership registrations, compliance certifications, end-use statements, and any prior OFAC correspondence.
OFAC expects precision. Vague descriptions of the transaction or generic statements about compliance are not substitutes for specifics. If the application is unclear about who owns what, OFAC will issue a request for additional information – and that request restarts the effective processing clock.
Step 3: Draft the application and manage the submission
Drafting a persuasive specific-licence application is a legal task, not an administrative one. The submission must anticipate OFAC's likely concerns, address them in the body of the application rather than waiting for a request for additional information, and frame the transaction within the licensing-policy language that OFAC uses internally.
What does a strong application do that a weak one does not? It maps the ownership and control structure in full, rather than describing only the direct counterparty. It pre-empts the end-use question by providing independent verification of how the goods or services will be used. It addresses any secondary-sanctions dimension – for example, where a non-US person in the transaction chain might attract OFAC attention even though they are not themselves the applicant. And it frames the public-policy case: why granting this licence is consistent with the goals of the sanctions programme rather than contradictory to them.
Submission is made through OFAC's online licensing portal. The submission date starts the processing period. Once submitted, the applicant cannot unilaterally withdraw and resubmit a corrected version without consequence; a withdrawal and fresh submission resets the queue position. This is why getting the initial submission right matters far more than speed of submission.
The position above covers the standard preparation pathway. Your facts – the counterparty, the goods, the route, the regime in play – change the analysis considerably. For a confidential review of your specific licence position, contact Calder & Vance at info@caldervance.com.
Step 4: Manage OFAC correspondence and respond to requests for additional information
After submission, OFAC may issue a request for additional information – this is a formal communication asking the applicant to clarify or expand specific parts of the application. It is not a denial and should not be treated as one. It is, however, a deadline event: OFAC sets a response window, and missing it can result in the application being administratively closed.
Responses to OFAC must be precise, complete, and consistent with the original application. Any inconsistency between the application and the response – even a minor descriptive difference – will prolong the review and may raise questions about the accuracy of the original submission. We have seen applications that were substantively approvable derailed at the response stage by careless drafting of the supplemental materials.
Where OFAC issues a follow-up after the initial response, the review has typically shifted to a policy-level consideration within the relevant country-programme team. At that stage, the applicant's counsel may engage informally with OFAC to understand the outstanding concerns – a dialogue that requires knowledge of OFAC's internal processes and a careful approach to what is said outside the formal written record.
If a transaction has already been flagged by a correspondent bank, or if a filing has been refused at an earlier stage, an early review by sanctions counsel can preserve options that narrow with time. For an assessment of your exposure under OFAC, contact us at info@caldervance.com.
How does OFAC's specific-licence process compare with OFSI and the EU?
For cross-border transactions touching the US, the UK, and the EU simultaneously, three separate licensing determinations may be required, and the three regimes differ in ways that directly affect strategy. A licence from OFAC does not authorise the same transaction under the UK or EU regimes, and the reverse is equally true.
Under OFSI (the UK's Office of Financial Sanctions Implementation), a specific licence operates on similar principles to the OFAC version but is governed by the relevant thematic regulations made under the Sanctions and Anti-Money Laundering Act ("SAMLA"). OFSI's published licensing grounds – which include prior legal obligation, basic needs, and extraordinary situations – are more explicitly codified than OFAC's policy-statement approach. OFSI also applies an ownership and control test (the UK and EU test for whether a non-listed entity is caught through a listed person) that considers both ownership and control, whereas OFAC's 50 percent rule focuses on ownership alone. That distinction can produce different answers on the same corporate structure.
Under the EU's Council regulations, the licensing authority sits with national competent authorities in each member state, not with a single central body equivalent to OFAC or OFSI. The result is that applicants with activity in multiple member states may need to engage with more than one authority. The EU's ownership and control test tracks a similar logic to OFSI's, and the substantive grounds for a licence are set out in the relevant Council regulation.
Where a transaction requires authorisations from two or more regimes, the sequencing of applications matters. In our experience, beginning with the regime most likely to raise substantive objections – and resolving that application first – gives the broadest view of what the transaction can look like before other applications are finalised. The cross-regime divergence on the ownership and control question is one of the most frequent sources of unexpected exposure in multi-jurisdictional deals.
Risk flags: when does an OFAC specific licence application fail or stall?
Most applications that fail do so for preventable reasons. Understanding the common failure modes in advance is the most reliable way to avoid them.
The most frequently observed risk flags are:
- Incomplete ownership disclosure: failing to identify entities captured by the 50 percent rule, or providing an ownership chart that stops at the direct-counterparty level rather than mapping the full beneficial-ownership chain.
- Misidentification of the relevant programme: applying under the wrong programme, or failing to recognise that the transaction engages two programmes simultaneously (for example, a transaction involving both a sectoral restriction and an SDN).
- Insufficient end-use evidence: for goods or technology applications, providing a buyer's written assurance without independent verification. OFAC expects corroborating documentation, not self-certification.
- Generic legal arguments: referencing humanitarian grounds or foreign-policy interests without tying the argument to the specific facts and the programme's stated licensing policy.
- Secondary-sanctions blind spots: failing to address whether non-US parties in the transaction chain could attract OFAC attention under a secondary-sanctions provision, even where the primary nexus is between non-US parties.
- Gaps in the compliance narrative: not explaining the applicant's internal controls or screening procedures, leaving OFAC uncertain about how the authorised transaction will be monitored after the licence is granted.
A poorly assembled application does not simply get rejected faster – it generates a request for additional information that extends the processing period and, in some cases, causes OFAC to look more closely at the applicant's broader compliance posture. The cost of getting it wrong is not just a delayed licence; it can be an expanded OFAC inquiry.
A common misconception: a licence application pauses OFAC's enforcement interest
A persistent myth among in-house teams is that filing a specific-licence application provides a form of protective cover – that OFAC will not take enforcement action while an application is pending. This is incorrect. A pending application does not suspend OFAC's enforcement authority, and it does not constitute a licence to proceed with the otherwise prohibited activity. Any steps taken to complete a prohibited transaction before OFAC issues a licence remain violations, regardless of whether an application is outstanding.
What a well-structured application does – combined with an effective internal compliance programme – is provide evidence relevant to the assessment of penalties if a violation has already occurred. OFAC treats the existence of a functioning compliance programme and a cooperative approach to disclosure as factors that can reduce the penalty outcome. That is very different from immunity.
We regularly advise clients who are managing both a specific-licence application and a potential prior violation simultaneously. The two processes interact: how the application is framed can affect the voluntary self-disclosure strategy, and the disclosure posture can affect the licensing review. Treating them as separate matters is one of the most costly errors a business can make at this stage.
Related practices
- Frozen account and asset management under BIS/EAR – managing blocked property and related licensing under US export controls
- OFSI specific licence applications: a practical guide – the UK equivalent process under OFSI and SAMLA
- OFSI licensing: extended analysis – deeper treatment of OFSI licensing grounds and practice