To (Try And) Delist Or Not Delist: That Is The Question!

What is the Office of Foreign Assets Control?

The Office of Foreign Assets Control (“OFAC”) is a division within the Department of Treasury’s Office of Terrorism and Financial Intelligence. Through the Department of Treasury, OFAC is responsible for administering and enforcing economic sanction programs against individuals, including groups of individuals such as terrorists or narcotics traffickers, companies, vessels, and/or foreign countries. Sanctions can be comprehensive or selective and are implemented by blocking assets and enforcing trade restrictions.

What is the Specially Designated Nationals List?

The Specially Designated Nationals and Blocked Persons List is a list OFAC publishes regarding individuals, companies, and/or vessels that are owned, controlled, or acting on behalf of targeted countries, terrorists, or narcotics traffickers. The individuals and companies on this list, collectively called the Specially Designated Nationals or “SDNs”, have had their assets blocked and, unless one has the proper general and/or special license, United States citizens are prohibited from working with and/or engaging in business practices with them. Those who unlawfully engage in business with individuals and companies on the SDN list could be held civilly liable and assessed civil penalties. They could also face criminal prosecution for violating federal laws, including the International Emergency Economic Powers Act, Global Magnitsky Human Rights Accountability Act, and the Foreign Narcotics Kingpin Designation Act, to name a few.

How are individuals, companies, or vessels that are owned, or acting under the control of targeted countries added to the SDN List?

Generally speaking, individuals, companies, and vessels that are owned, or acting under the control of targeted countries, are added to the SDN List when they have engaged in activities that are contrary to or violate U.S. national security and foreign policies, such as human rights abuse and terrorism. However, there are times when individuals and entities are added to the SDN List for totally innocuous reasons. For example, some individuals are included because of mistaken identity, unknowingly engaging in business activities with a sanctioned individual or company, or having a name that is similar to those who are on the SDN List.

Can an individual, group, company, or vessel be removed or “delisted” from the SDN List?

The short answer is yes! According to the Department of Treasury, “[e]ach year OFAC removes numerous individuals and entities from the SDN List.” To do so, however, the prohibited party must establish that delisting is appropriate pursuant to the regulations set forth at 31 C.F.R. §501.807, which requires the submission of a petition. The petitioner should include arguments or evidence that demonstrate that an “insufficient basis exists for the sanction or that the circumstances resulting in the sanction no longer apply.”

In addition, the sanctioned person or entity may propose remedial steps, such as corporate reorganization, resignation of persons from positions in a blocked entity, or similar steps, which arguably would negate the basis for the sanction. If OFAC denies a delisting petition, the regulations provide for a two-step administrative appeal process and, if that is unsuccessful, a legal challenge in federal court. While the procedures are available to anyone seeking to be removed from the SDN List, the approach should be thoughtful, strategic, and well supported.

Individuals, companies, and/or individuals who own an interest in a vessel who desire to be removed from the SDN list should consider: (i) are there adequate grounds for removal; and (ii) are they willing to engage in a collaborative process when completing the application, participate in discovery, interact with OFAC, and appear at any OFAC hearings, if necessary.

What about financial institutions “debanking” individuals, companies, or their clients who have been removed from SDN list?

While financial institutions, nonbank financial infrastructure platforms, and payroll processors are prohibited from conducting business with individuals and companies on the SDN list, once those entities are removed, so should any additional restrictions. In the past, financial institutions closed, or “debanked” depositors from bank services not only for valid reasons but for other reasons such as political or religious affiliations. For example, customers in certain industries like oil and gas exploration, firearms, firearm accessories, or ammunition manufacturing or distribution, payday and payroll lending, consumer debt collection and repossession agencies, political action committees and political parties, and digital assets, to name a few, have been subjected to restricted access of their accounts. Government policies have now clarified that this should no longer occur.

In August 2025, President Trump signed an Executive Order titled “Guaranteeing Fair Banking for All Americans,” which was intended to prohibit “politicized or unlawful debanking and direct[ed] federal agencies to ensure that financial institutions base account-level decisions on objective, individualized risk assessments rather than on a customer’s profile or association with perceived controversial activities.” In September 2025, the Office of Comptroller of the Currency (“OCC”), which supervises financial institutions, and the Federal Deposit Insurance Corporation (“FDIC”) issued a joint notice of proposed rulemaking “which would prohibit the agencies from criticizing, formally or informally, or taking adverse action against an institution or any employee of an institution on the basis of reputational risk."

Since that proposal, the OCC has issued preliminary findings that nine national banks restricted banking services to customers “primarily on how it might appear to the public if the bank provided access to financial services to these sectors rather than for reasons related to the banks or the would-be customer’s ability to comply with applicable law or. . . ability for the bank to extend financial services in a safe and sound manner.” Further, agencies such as the Federal Tade Commission (“FTC”) have issued warning letters to payment card networks and processors indicating that companies that deny customers access to financial products and services may violate Section 5 of the FTC Act “if it causes or is likely to cause substantial injury to consumers that cannot be reasonably avoided and that injury is not outweighed by countervailing benefits to consumers or competition.” Finally, on April 7, 2026, the OCC and FDIC issued a final rule to remove reputational risk from their supervisory and examination frameworks. According to the OCC/FDIC, the final rule “limit[s] their ability to influence banks’ customer relationships based on political or ideological grounds."

Should I hire an attorney?

There is no requirement that petitioners hire an attorney to get delisted from the SDN List. However, the process can be lengthy, time consuming, and complex; as noted above, it can involve discovery, hearings, and legal challenges in court, and the assistance of experienced legal counsel can be very helpful. Common mistakes could lead to delays, a much lengthier process, and denial of the petition.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.