A logistics company in Singapore discovers that its US parent's compliance team has blocked an outgoing payment to a trading partner. The reason: the trading partner's majority shareholder appears on OFAC's SDN List (OFAC's list of Specially Designated Nationals and blocked persons). The trading partner disputes the designation. It has never operated in a sanctioned sector and believes the listing rests on a factual error. What can it do? And what can the US parent do in the meantime?
OFAC reconsideration requests are the formal mechanism by which a designated person – or an affected third party – asks the US Treasury's Office of Foreign Assets Control to review a sanctions designation with a view to amending or removing it. As of early 2026, OFAC administers this process under the administrative reconsideration rules contained in its regulations promulgated under IEEPA and related statutory authority. The process is procedurally demanding, and a poorly structured submission can close options rather than open them.
This briefing explains how the reconsideration process works, how it compares with analogous mechanisms in the UK and EU, where businesses and designated persons most commonly go wrong, and when to involve specialist sanctions counsel.
What is the legal basis for OFAC reconsideration, and who administers it?
OFAC administers its reconsideration process under authority derived from IEEPA and the Treasury's own procedural regulations – not from a single codified statute, but from a combination of executive-order authority, agency guidance, and the applicable thematic sanctions regulations. The Office of Global Targeting within OFAC is responsible for the initial designation decision. Reconsideration requests are directed to OFAC's Office of the General Counsel and reviewed by the same agency that imposed the designation.
That last point matters. Unlike the EU General Court route – where annulment actions go before an independent judicial body – OFAC reconsideration is an internal administrative review. The agency is both the original decision-maker and the reviewer of its own decision. This structural feature shapes everything about how a reconsideration submission should be framed.
Any person listed on the SDN List, the Non-SDN lists (including the Non-SDN Menu-Based Sanctions List), or any other OFAC-maintained designation list may submit a reconsideration request. Third parties – businesses whose operations are blocked as a consequence of another person's designation – may also submit requests for administrative relief, though the procedural posture of such requests differs from a designated party's direct challenge.
There is no filing fee for a reconsideration request. However, the process is not a simple form submission. It requires a substantive written submission that addresses, on the facts, the legal basis on which OFAC designated the party. In our experience, submissions that treat the process as a letter of complaint rather than an evidentiary dossier rarely succeed.
What does a complete reconsideration submission contain?
A complete OFAC reconsideration submission addresses the specific grounds on which OFAC designated the party and presents evidence directly responsive to each stated ground. The submission typically includes a cover letter, a structured factual narrative, supporting documentary evidence, and – where relevant – legal argument on the scope of the designation authority.
The factual narrative must be precise. OFAC's designation notices are frequently brief, identifying the statutory and executive-order basis but not the full evidentiary basis. A well-constructed submission therefore works from what is publicly known, anticipates the likely evidentiary basis behind the designation, and addresses each element that could have supported it.
Documentary evidence commonly includes corporate ownership records, financial statements, contractual documents, correspondence, and – in cases involving alleged connections to listed persons – evidence demonstrating the absence or termination of those connections. The standard of evidence is not a formal legal standard of proof; it is more analogous to a persuasive brief directed at a government decision-maker who has the power to act but is not compelled to do so.
OFAC can request additional information after receiving a reconsideration submission. Responding promptly and fully to such requests is essential. A failure to respond, or a partial response, can be treated as an absence of evidence in support of the reconsideration. We regularly advise clients on how to structure responses to OFAC information requests in a way that advances the reconsideration without inadvertently creating new disclosure risks.
The submission must also address any changes in circumstance since the designation. If a designated party has divested a stake in a sanctioned entity, terminated a business relationship, or restructured its ownership, those changes – fully documented – are directly relevant. OFAC may take into account post-designation conduct in evaluating whether the original basis for the designation continues to apply.
Related practices
- Delisting evidence package – Australia – building the documentary record for a listing challenge in the Australian autonomous sanctions regime
- OFAC reconsideration requests: further guidance – additional analysis on the administrative review procedure and post-submission steps
The position above covers the standard case. Your facts – the counterparty, the ownership structure, the regime in play, the evidentiary record available – change the analysis materially.
For a preliminary assessment of a reconsideration submission, contact Calder & Vance at info@caldervance.com.
How does OFAC reconsideration compare with the UK and EU delisting routes?
OFAC reconsideration, UK delisting under OFSI, and EU annulment actions before the General Court are structurally distinct – and a business or individual facing concurrent designations across two or more regimes must manage each process separately, under its own rules, on its own timeline.
Under the UK regime administered by the Office of Financial Sanctions Implementation (OFSI), a designated person may apply to the Treasury for a review of their designation under SAMLA, the Sanctions and Anti-Money Laundering Act. If the Treasury review does not result in removal, the designated party can challenge the designation by way of judicial review before the High Court. This route gives designated parties access to an independent court – a structural difference from OFAC's internal review. UK designations also require the Secretary of State to be satisfied that the designation criteria are met, and the High Court has reviewed the evidential basis of designations in a number of cases.
The EU route is more formal still. A person designated under an EU Council Regulation can request the Council to review the designation through a written submission to the competent working group. If that review does not result in removal, the designated person can bring an annulment action before the EU General Court under the relevant treaty provisions. The EU General Court has annulled designations on grounds ranging from insufficient evidence to breach of the right to be heard. In our cross-border practice, EU annulment proceedings are often the most procedurally rigorous of the three routes – and, in certain cases, the most likely to produce a binding outcome in the designated party's favour.
There are two practical differences that any cross-border adviser must flag. First, a successful OFAC reconsideration does not automatically lift EU or UK sanctions, and vice versa. Second, the evidentiary standards and procedural timelines differ. An OFAC reconsideration submission timed to coincide with an EU annulment action requires careful co-ordination to ensure that positions taken in one forum do not undermine the other. We have acted for clients navigating simultaneous processes in two or more regimes, and the sequencing and framing of submissions is one of the most consequential decisions in those matters.
The UN route also warrants mention for completeness. The UN Security Council Consolidated List covers individuals and entities designated under Security Council resolutions. The Focal Point mechanism allows petitions for de-listing, and – for the ISIL/Al-Qaida regime specifically – an independent Ombudsperson can receive and review such petitions. A UN de-listing does not bind OFAC, OFSI, or the EU Council, all of which maintain autonomous designation authority. However, a successful UN de-listing can be a material factor in parallel national proceedings.
What are the most common errors in OFAC reconsideration submissions?
The most common error in OFAC reconsideration submissions is addressing only the publicly stated grounds for the designation while ignoring the likely unreferenced basis for it. OFAC designations often rely on classified or sensitive intelligence that does not appear in the public designation notice. A submission that engages only with the public summary may leave the core evidentiary basis entirely unaddressed.
A second common error is framing the submission as a legal argument rather than an evidentiary one. OFAC is not a court. It does not rule on legal submissions in the same way a judge would. What moves an OFAC reconsideration is evidence – documents, financial records, ownership structures, correspondence – that directly contradicts the factual predicate of the designation.
A third error is timing. There is no formal deadline for submitting a reconsideration request after designation. However, OFAC's internal review is a rolling administrative process. Delay allows the designation to embed: financial institutions implement blocking, counterparties exit relationships, and the designated party's ability to gather evidence deteriorates. Early action preserves options.
A fourth error, and one we see in complex cross-border structures, is failing to map the ownership and control position before submission. If the reconsideration argues that the designated party has no relevant connection to a listed person, but the ownership chain – when fully traced – discloses a continuing indirect holding, the submission undermines itself. The 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked) operates mechanically on the aggregate ownership position. A submission that does not account for this will fail on its own terms.
A fifth error is submitting a reconsideration that implicitly or explicitly acknowledges facts that could support a different, unreferenced head of designation. OFAC can designate on multiple grounds. A submission that resolves one ground while exposing another has not advanced the designated party's position.
What is the timeline for OFAC reconsideration, and what outcome is possible?
OFAC does not publish a fixed statutory timeline for deciding reconsideration requests, and the process can take a considerable period from submission to outcome. In our experience of advising on OFAC matters, the administrative review process is not measured in weeks. Businesses and individuals should plan for a process that may extend over many months, and they must manage their affairs in the meantime under the assumption that the designation remains in effect.
OFAC can take one of several positions in response to a reconsideration submission. It may remove the designation entirely, which is the outcome most designated parties seek. It may amend the designation – for example, correcting identifying information or removing a specific ground – without full removal. It may take no action, leaving the designation in place. Or it may issue a specific licence (a case-by-case authorisation to conduct an otherwise prohibited transaction) as an interim measure, allowing defined transactions to proceed while the substantive reconsideration continues.
No outcome is guaranteed. A reconsideration submission does not stay the designation. During the review period, all prohibitions associated with the designation remain in force. Financial institutions and counterparties are not released from their blocking obligations while OFAC reviews the matter.
If OFAC does not grant the reconsideration, the designated party may consider judicial review in the US federal courts, challenging the designation on constitutional or administrative law grounds. This is a distinct and demanding route, and the evidentiary and procedural standards differ significantly from the administrative reconsideration process. The availability and merits of judicial review depend on the specific facts of the designation.
A voluntary self-disclosure (VSD) is a separate mechanism – relevant not to a designation challenge but to enforcement matters where a party believes it may have violated OFAC's prohibitions. A VSD is not a substitute for a reconsideration request and serves a different purpose. The two processes can run concurrently in certain fact patterns, but they must be managed as separate tracks.
How does the 50 percent rule affect businesses dealing with a designated counterparty?
A business that discovers a counterparty may be caught by OFAC's rules faces a distinct set of questions from the designated party itself. The business is not designated – but it may still be prohibited from transacting. This is where the 50 percent rule creates significant practical complexity for non-US and US businesses alike.
Any entity that blocked persons own 50 percent or more in the aggregate – directly or through intermediate layers – is itself treated as blocked, even if it does not appear on the SDN List. A business transacting with such an entity faces the same prohibitions as if it were dealing directly with a listed person. The rule applies regardless of where the business is incorporated, if the transaction involves a US nexus – USD clearing, US-person involvement, or US-origin goods.
What constitutes a "US nexus" broad enough to attract OFAC jurisdiction is one of the most important questions in cross-border transaction analysis. Secondary-sanctions risk – the risk that a non-US business faces US sanctions consequences for conduct entirely outside the United States – adds a further layer. Certain OFAC programmes carry explicit secondary-sanctions provisions; others do not. Identifying which programme is in play, and whether it carries secondary-sanctions exposure, is an essential first step in any cross-border sanctions analysis.
In a recent matter, a financial institution in a third country received payment instructions from a trading company it had screened and cleared. A subsequent review of the trading company's ownership chain disclosed an indirect holding by a blocked person that crossed the 50 percent threshold when aggregated with a second, overlooked position. The institution faced potential exposure for completing the transaction. We assisted with scoping the apparent violation, assessing the basis for a voluntary self-disclosure, and re-designing the screening programme to capture aggregated indirect ownership. The matter underscored that single-layer screening of a counterparty's direct shareholders does not satisfy the rule.
If a transaction has already been flagged, or a filing has been refused, an early review can preserve options that narrow with time. Contact Calder & Vance at info@caldervance.com.
Risk flags: when must a business or individual involve sanctions counsel?
Certain circumstances indicate that specialist sanctions counsel should be involved before – not after – a submission is made or a decision is taken. Acting without counsel in these situations materially increases the risk of an adverse outcome.
The first flag is receiving a blocking notice or an OFAC administrative subpoena. These communications impose immediate obligations. A blocking notice means that property has been frozen and must be reported to OFAC within a short statutory window. Failure to report is itself a violation. Counsel should be involved on the day the notice is received.
The second flag is discovering that a counterparty, investee, or subsidiary may be caught by the 50 percent rule. The analysis of whether the threshold is met requires a full ownership trace, an assessment of the applicable programme, and a judgment on whether a specific licence or a reconsideration request is appropriate. This is not a compliance-team determination; it is a legal question.
The third flag is any situation where a business has already transacted with a potentially designated or blocked person. The question of whether to file a VSD, and how to frame it, requires legal analysis. A VSD that is filed incorrectly – or that discloses more than is necessary – can expand rather than reduce exposure.
The fourth flag is a concurrent designation under multiple regimes. A party designated by OFAC, OFSI, and the EU Council simultaneously faces three separate administrative processes, each with its own evidentiary requirements, timelines, and procedural rules. Co-ordinating these processes without creating inconsistencies between submissions requires experienced cross-regime counsel.
Is your counterparty's ownership chain fully mapped? Have you confirmed whether the applicable OFAC programme carries secondary-sanctions risk? These are not rhetorical questions – they are the two most common gaps we identify in initial compliance reviews.
A common misconception – and one worth addressing directly – is that OFAC reconsideration is only available to the designated person, and that third parties affected by a designation have no recourse. This is incorrect. Businesses whose legitimate operations are blocked as a collateral consequence of another party's designation can submit requests for administrative relief and can apply for specific licences to authorise defined transactions. The procedural route and the evidentiary burden differ from a direct reconsideration by the designated party, but the option exists and is worth assessing early.
In our cross-border practice, we also see businesses assume that a successful reconsideration by the designated party automatically restores the business relationship. It does not. Financial institutions and counterparties that have implemented blocking must receive confirmation – typically in the form of the updated SDN List reflecting removal – before they can resume transactions. The practical steps required after a successful reconsideration are sometimes as demanding as the submission itself.
How Calder & Vance assists with OFAC reconsideration requests
Calder & Vance's delisting and designation-challenges practice covers the full range of OFAC reconsideration work, from initial assessment through submission, post-submission engagement with OFAC, and parallel proceedings in other regimes.
For a designated party, our work on a reconsideration matter typically involves: assessing the designation notice and publicly available information to identify the likely evidentiary basis; mapping the ownership and control structure to confirm whether the 50 percent rule applies to related entities; building the evidence package, preparing the petition, and managing OFAC's queries; and advising on the interaction between the OFAC process and any concurrent UK or EU proceedings.
For a business affected by another party's designation, our work involves: screening the counterparty and its full ownership chain, surfacing secondary-sanctions risk, and structuring the transaction or advising on the licence application that would permit it to proceed.
We offer a fixed-fee initial assessment for OFAC reconsideration matters. This assessment identifies the designation's likely evidentiary basis, maps the cross-regime position, and sets out the options – including the realistic prospects of reconsideration, the case for a specific licence, and the interaction with any concurrent proceedings. It gives businesses and individuals a clear view of where they stand before committing to a longer process.
Our practice works across the major regimes: OFAC and BIS in the United States, OFSI and ECJU in the United Kingdom, the EU Council and the EU General Court, and the national regimes of Switzerland, Canada, Australia, the UAE, Singapore, and Japan. For concurrent designations in two or more of these regimes, we co-ordinate the process from a single point of contact, with local counsel in the relevant jurisdiction where the procedural rules require it.
Related practices
- OFAC reconsideration: further analysis – detailed treatment of post-submission engagement and judicial review options
- OFAC reconsideration: regime interaction – managing concurrent OFAC, OFSI, and EU designation challenges