OFAC

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.

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.

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.