OFAC: Office of Foreign Assets Control

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Supporters

The Office of Foreign Assets Control (OFAC) is an agency within the United States Department of the Treasury, operating under the Office of Terrorism and Financial Intelligence (TFI). It administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy objectives. OFAC traces its institutional lineage to the Office of Foreign Funds Control established in 1940 to block Nazi-era assets, and was formally created in 1950 during the Korean War when President Truman froze Chinese and North Korean assets. Its statutory authorities derive principally from the Trading with the Enemy Act of 1917 (TWEA), the International Emergency Economic Powers Act of 1977 (IEEPA), and the National Emergencies Act of 1976, supplemented by program-specific statutes such as the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 and the Countering America's Adversaries Through Sanctions Act (CAATSA) of 2017.

Opponents

Named instances illustrate its potency: BNP Paribas paid US$8.9 billion in 2014 for processing transactions tied to Sudan, Iran, and Cuba; OFAC sanctioned the Iranian Revolutionary Guard Corps and reimposed sweeping measures after the 2018 U.S. withdrawal from the JCPOA; and following Russia's 2022 invasion of Ukraine it blocked the Central Bank of the Russian Federation, major Russian banks, and oligarchs, coordinating with the EU and the G7 price-cap mechanism. As of 2026, OFAC continues to administer active programs against Russia, Iran, North Korea, Venezuela, and numerous designated terrorist and cyber actors, with growing attention to cryptocurrency mixers such as the 2022 Tornado Cash designation.

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In 2014, OFAC and U.S. authorities penalized France's BNP Paribas US$8.9 billion for clearing dollar transactions linked to Sudan, Iran, and Cuba in violation of U.S. sanctions programs.

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Positions at a glance

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Research it like a delegate

The Office of Foreign Assets Control (OFAC) is an agency within the United States Department of the Treasury, operating under the Office of Terrorism and Financial Intelligence (TFI). It administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy objectives. OFAC traces its institutional lineage to the Office of Foreign Funds Control established in 1940 to block Nazi-era assets, and was formally created in 1950 during the Korean War when President Truman froze Chinese and North Korean assets. Its statutory authorities derive principally from the Trading with the Enemy Act of 1917 (TWEA), the International Emergency Economic Powers Act of 1977 (IEEPA), and the National Emergencies Act of 1976, supplemented by program-specific statutes such as the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 and the Countering America's Adversaries Through Sanctions Act (CAATSA) of 2017.

OFAC operates by designating targets and publishing them on the Specially Designated Nationals and Blocked Persons List (SDN List). U.S. persons—citizens, permanent residents, entities, and anyone within U.S. jurisdiction—are prohibited from transacting with listed parties, and any assets within U.S. reach are "blocked" (frozen). A central enforcement principle is the 50 Percent Rule: any entity owned 50% or more, directly or indirectly, by one or more SDNs is itself treated as blocked even if not separately named. OFAC sanctions fall into comprehensive country programs (e.g., Cuba, Iran, North Korea, Syria) and "smart" or targeted list-based programs (counter-terrorism, counter-narcotics, cyber, human rights via the Global Magnitsky framework). Because the U.S. dollar dominates global clearing, OFAC's reach is effectively extraterritorial through secondary sanctions, which threaten non-U.S. firms with loss of access to the U.S. financial system.

For the FSOT (U.S. Foreign Policy) and global-economy papers, OFAC is tested as the operational instrument of American economic statecraft—candidates should connect it to the IEEPA/TWEA legal base, the SDN List mechanism, secondary sanctions and dollar hegemony, and debates over sanctions efficacy and "weaponization of finance." For UPSC, CSS, and BCS aspirants, the typical angle is comparative: how unilateral U.S. sanctions interact with UN Security Council sanctions, the drive toward de-dollarization, and implications for third countries trading with sanctioned states such as Iran. Expect questions linking OFAC to CAATSA waivers and the strategic dilemmas they pose for non-aligned states.

Frequently asked questions

What is the SDN List and the 50 Percent Rule?

The Specially Designated Nationals and Blocked Persons List names individuals and entities whose assets are frozen and with whom U.S. persons may not transact. The 50 Percent Rule extends blocking to any entity owned 50% or more by listed parties, even if unnamed.

How do OFAC secondary sanctions affect non-U.S. countries?

Secondary sanctions threaten foreign firms with exclusion from the U.S. financial system if they deal with sanctioned parties. Because most international trade clears in U.S. dollars, this gives OFAC effectively extraterritorial reach, pressuring third countries like India when trading with Iran or Russia.

How do OFAC sanctions differ from UN Security Council sanctions?

OFAC sanctions are unilateral U.S. measures enforced through American jurisdiction and dollar dominance, whereas UNSC sanctions under Chapter VII are multilateral and binding on all member states. Conflicts arise when U.S. unilateral programs exceed or contradict the multilateral consensus.

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Positions at a glance

Supporters

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Research it like a delegate

Ask a follow-up about OFAC

Go deeper than the definition

Take OFAC beyond the glossary

Research OFAC like a delegate

Positions at a glance

Supporters

Opponents

Research it like a delegate

Ask a follow-up about OFAC

Frequently asked questions

What is the SDN List and the 50 Percent Rule?

How do OFAC secondary sanctions affect non-U.S. countries?

How do OFAC sanctions differ from UN Security Council sanctions?

Go deeper than the definition

Take OFAC beyond the glossary

Frequently asked questions

What is the SDN List and the 50 Percent Rule?

How do OFAC secondary sanctions affect non-U.S. countries?

How do OFAC sanctions differ from UN Security Council sanctions?