Legal Definitions - Specially Designated Nationals and Blocked Persons List

The Specially Designated Nationals and Blocked Persons List (often referred to as the "SDN List") is a public roster maintained by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC).

This list identifies individuals, groups, and entities, such as terrorists, drug traffickers, those involved in the proliferation of weapons of mass destruction, and those acting on behalf of sanctioned countries or regimes, with whom U.S. persons and companies are generally prohibited from doing business.

When an individual or entity is placed on the SDN List, their assets under U.S. jurisdiction are "blocked," meaning they cannot be accessed or transferred. Furthermore, U.S. citizens, residents, and companies are forbidden from engaging in any transactions or dealings with them, whether directly or indirectly. The purpose of this list is to enforce U.S. foreign policy and national security objectives by preventing sanctioned parties from accessing the U.S. financial system and economy.

• Example 1: International Banking Transaction

  A major U.S. bank receives an instruction from one of its corporate clients to wire funds to a supplier located overseas. Before processing the payment, the bank's compliance department runs the supplier's name, as well as the names of its principal owners, through the SDN List. If the supplier or any of its owners appear on the list, the bank must immediately block the transaction, freeze the funds, and report the attempted transaction to OFAC. This illustrates how financial institutions use the SDN List to prevent funds from reaching sanctioned individuals or entities involved in illicit activities.

• Example 2: Export of Goods

  A U.S. manufacturer of specialized industrial machinery receives a large order from a new customer in a foreign country. Before fulfilling the order and shipping the equipment, the U.S. manufacturer's export compliance team screens the foreign customer, including its corporate name, address, and key executives, against the SDN List. If the customer or any associated individuals are identified on the list, the U.S. company is legally prohibited from completing the sale and shipping the machinery, as doing so would constitute a prohibited transaction with a blocked party. This demonstrates how U.S. businesses must vet their international partners to avoid inadvertently supporting sanctioned regimes or individuals.

• Example 3: Professional Services Engagement

  A U.S.-based consulting firm is considering hiring an independent contractor from another country to assist with a project abroad. As part of their standard due diligence process, the consulting firm's legal team screens the potential contractor's name and background against the SDN List. If the contractor's name matches an entry on the list, the U.S. firm cannot enter into a contract with them or pay for their services, even if the work itself seems legitimate. This highlights how the SDN List impacts professional engagements and employment, ensuring U.S. entities do not provide economic resources to blocked individuals.