A corporate treasury team receives payment instructions from a counterparty in a third market. The transaction touches funds or accounts subject to OFAC jurisdiction. The legal team asks: is there a general licence that covers this? If not, does the company have a route to proceed lawfully? The answer, more often than compliance officers expect, is a specific licence application – a formal, case-by-case request to the Office of Foreign Assets Control for authorisation to conduct an otherwise prohibited transaction.
As of June 2026, specific licence applications under OFAC remain the primary route for businesses and individuals who cannot rely on a general licence (a standing authorisation that permits a defined category of transactions without a separate application) to seek permission for a transaction that would otherwise violate a sanctions programme administered under IEEPA, TWEA, or related statutory authority. OFAC grants licences on a case-by-case basis, applying a national-interest standard; there is no automatic right to one.
This briefing covers who administers the process, what OFAC prohibits, how the procedure works in practice, how the US approach compares with its UK and EU counterparts, where applications fail, and when to bring in specialist sanctions counsel.
Who administers specific licence applications under OFAC?
OFAC – the Office of Foreign Assets Control, a bureau of the US Department of the Treasury – is the sole administrator of specific licence applications under US economic sanctions law. It operates under delegated authority from the Secretary of the Treasury, drawing its principal statutory bases from IEEPA and TWEA. No other US federal agency issues OFAC-specific licences; a Department of Commerce export licence from BIS addresses export-control requirements under the EAR but does not authorise a transaction blocked under an OFAC programme.
OFAC administers more than thirty distinct sanctions programmes. Each programme covers a different set of targets, prohibitions, and licensing policies. A specific licence application must be directed to the correct programme, framed around the precise prohibition it seeks to lift, and supported by documentation that matches that programme's licensing policy. A generic request for "permission to proceed" is almost always returned for additional information, adding weeks or months to the timeline.
Within OFAC, licence applications are reviewed by the Licensing Division. The division applies the published licensing policy for the relevant programme – where one exists – and exercises discretionary judgment where the policy is silent. For complex or high-value matters, the division may refer the application internally or to other US government agencies before deciding. In our experience, referrals extend the review materially and are more likely when the proposed transaction touches strategic goods, financial infrastructure, or counterparties with government links in the target jurisdiction.
The position above covers the standard case. Your facts – the specific programme, the counterparty, the goods or services, the payment route, and whether secondary-sanctions exposure is in play – change the analysis considerably.
To discuss your licensing position with a US sanctions lawyer, contact Calder & Vance at info@caldervance.com.
What does OFAC prohibit, and why does a specific licence become necessary?
OFAC sanctions prohibitions fall into two broad categories: asset freezes (blocking) and transactional prohibitions. An asset freeze requires that US persons and, in certain programmes, non-US persons, freeze any property or property interests of a designated person – a name on the SDN List (OFAC's list of Specially Designated Nationals and blocked persons) or any entity caught by the 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked). A transactional prohibition bars dealings with a country, territory, or sector, regardless of whether a specific listed person is involved.
Both categories generate the need for specific licences. A firm may need to unwind a pre-existing contract with a counterparty that has just been designated. A bank may need to process a payment from a blocked account to cover the account-holder's legal fees. An exporter may need to deliver goods already in transit when a programme expands. A company undergoing a merger may need to transfer assets that have been caught by a freeze mid-transaction. None of these situations is exotic; all require an authorisation that no general licence covers.
OFAC's prohibitions are also unusually broad in their jurisdictional reach. US persons – meaning US citizens, lawful permanent residents, US-incorporated entities, and persons physically in the United States – are directly bound. Non-US entities face exposure through US-nexus transactions: any transaction clearing in US dollars, processed through a US correspondent bank, involving US-origin goods or technology, or touching a US-owned or US-controlled entity. Where that nexus exists, a specific licence may be required even by a business with no US establishment. That extraterritorial dimension is one reason we regularly advise European and Asian businesses on OFAC licensing alongside their home-regime obligations.
How does the specific licence application procedure work?
The specific licence procedure begins with a formal written application submitted through OFAC's online licensing portal. The application must identify the applicant, all parties to the proposed transaction, the sanctions programme and the precise prohibition at issue, and the factual and legal basis on which OFAC should exercise its discretion to grant authorisation. OFAC does not publish a universal checklist; each programme has its own expected documentation, and the Licensing Division's published guidance sets out the information requirements for the most common request types.
What does a strong application look like in practice? It states the prohibition clearly, presents the facts without advocacy, addresses the national-interest consideration on its face, and attaches supporting documentation – corporate structure charts, ownership records, contracts, financial statements, and any relevant correspondence – that allows the reviewing officer to verify the facts without making supplementary enquiries. Applications that omit key information, or that describe the transaction in general terms, attract a Request for Additional Information from OFAC, which resets the clock.
OFAC does not publish fixed processing times for specific licences. In our experience, straightforward applications for the most active programmes are processed within a few months; applications touching less-common programmes, or involving complex ownership structures or multi-party transactions, can take considerably longer. Applications that trigger interagency review – particularly those involving strategic or dual-use goods – add further time. Applicants should not structure irreversible commercial commitments on the assumption that a licence will arrive within a particular window. Building a contingency into the transaction timeline is sound practice.
Once a licence is granted, it is subject to conditions. Conditions typically specify the parties, the transaction, the amount or quantity, and the time window within which the authorised activity must occur. Acting outside those conditions – processing a payment in excess of the authorised amount, using the licence for a different counterparty, or acting after the expiry date – is itself a potential violation. Record-keeping obligations attach: all records relating to a licensed transaction must be maintained and available for production to OFAC on demand.
If a transaction has already been flagged, or a filing has been refused, an early review of your position can preserve options that narrow with time.
To discuss a specific licence application or a blocked-property situation, write to info@caldervance.com.
How do OFSI and EU licensing compare with the OFAC process?
The OFAC specific licence process operates in a legal environment where its UK and EU equivalents impose materially different standards, timelines, and tests. Understanding those differences matters for any cross-border business that must satisfy more than one regime simultaneously.
Under OFSI – the UK Office of Financial Sanctions Implementation – a specific licence (a case-by-case authorisation to conduct an otherwise prohibited transaction) is issued under SAMLA, the Sanctions and Anti-Money Laundering Act. OFSI applies a grounds-based licensing regime: an applicant must show that the proposed activity falls within a published licensing ground, such as enabling legal proceedings, meeting basic needs, or facilitating the winding-down of a pre-existing contract. OFSI does not apply a national-interest standard in the same way OFAC does. An application that cannot be brought within a licensing ground is likely to fail regardless of its commercial merit. The ownership and control test for determining whether a non-listed entity is caught by UK sanctions also differs from OFAC's mechanical 50 percent ownership rule: OFSI applies an ownership and control test (the UK and EU test for whether a non-listed entity is caught through a listed person) that extends to effective control as well as formal ownership, broadening the universe of potentially blocked entities.
At the EU level, licensing is decentralised. Member-State competent authorities issue licences under the relevant Council Regulation, and their practices – including the speed of processing and the breadth of grounds considered – vary materially between jurisdictions. A company seeking to conduct a transaction that touches counterparties across multiple EU Member States may need parallel licence applications in several jurisdictions, each managed by a different competent authority. The EU Blocking Regulation adds a further layer for EU operators: it limits the ability of EU persons to comply with certain third-country extraterritorial sanctions measures, including aspects of US secondary-sanctions programmes. Where OFAC exposure and EU Blocking Regulation obligations intersect, a business faces a genuine legal conflict that requires specialist advice rather than a compliance-only response.
The practical implication is that a multi-regime licensing strategy – coordinating applications across OFAC, OFSI, and one or more EU competent authorities for the same underlying transaction – is substantially more demanding than a single-regime filing. Where the underlying facts differ between regimes in their characterisation of the counterparty's status (for example, OFAC treats the entity as unblocked but OFSI treats it as controlled by a listed person), the licensing analysis must address each regime on its own terms.
What are the common reasons specific licence applications fail?
Applications fail most often for reasons that counsel could have addressed before submission. The most frequent causes are: insufficient factual detail about the ownership chain and the counterparty's sanctions nexus; failure to identify the precise prohibition being waived and the correct licensing ground or policy basis; contradictions between the application narrative and the attached documentation; omission of required certifications; and failure to address known adverse facts proactively.
A specific application that describes a counterparty as "unrelated to any sanctioned person" without supporting ownership records will attract immediate scrutiny. OFAC has access to a significant body of intelligence and financial data. Applications that appear to minimise the sanctions exposure, rather than address it directly, tend to generate follow-up requests or denials. In our cross-border practice, we consistently see that applications drafted by commercial teams without specialist sanctions input understate the jurisdictional complexity and overstep OFAC's licensing policies for the programme in question.
There is also a strategic dimension that purely procedural preparation misses. Is a general licence available that the applicant has not identified? Does the transaction require a BIS export licence in addition to an OFAC specific licence? Are there secondary-sanctions risks that, if not disclosed, could expose the applicant to enforcement scrutiny even if the licence is granted? These questions affect both the content of the application and the decision about whether to proceed at all.
When should a business seek sanctions counsel before filing?
Counsel should be involved before an application is filed, not after a denial or a Request for Additional Information. The reasons are practical. OFAC's licensing record – the application and all correspondence – becomes a document of record that can be reviewed in any subsequent enforcement context. An application that acknowledges facts inconsistently, or that takes a legal position on the scope of the prohibition that OFAC disagrees with, creates a paper trail that is difficult to walk back.
Specific triggers that indicate counsel should be engaged immediately include: a pending transaction where a counterparty has been newly designated; a blocked account or frozen property that requires management; a VSD – voluntary self-disclosure (a disclosure to OFAC of a potential violation) – that overlaps with a licensing need; a multi-jurisdiction transaction requiring simultaneous OFAC and OFSI or EU licensing; any situation where the ownership chain is complex or the 50 percent rule's application is unclear; and any matter where the goods or services involved have dual-use characteristics that bring BIS licensing into play alongside OFAC.
Businesses sometimes proceed on the assumption that OFAC applications are straightforward administrative forms. Some are. Many are not. The licensing policy for a given programme may be less permissive than a plain reading of the general licences suggests, and OFAC's published statements of licensing policy are not guarantees of outcome. We have acted for clients who received a denial on a matter they considered straightforward, and who then faced a more difficult path because the application on file was not drafted with a potential denial in mind.
Related practices
- Frozen account management under BIS/EAR – assessing blocked-property situations and licensing routes under BIS export-control rules
- Specific licence applications under OFAC: further guidance – detailed procedural considerations and cross-regime interaction
- Specific licence applications under the UN regime – Security Council committee procedures and the Consolidated List