On July 17, 2026, the Office of Foreign Assets Control (OFAC) restructured its Hong Kong sanctions program following the expiration of Executive Order 13936. If you're a sanctions analyst, you have two immediate challenges: certain parties moved from the SDN List to the Non-SDN Menu-Based Sanctions (NS-MBS) List, and your screening logic might not be ready for this shift. This checklist guides you through the necessary operational changes.
What This Checklist Covers
This checklist addresses the July 2026 OFAC announcement that removed Hong Kong-related designees from the SDN List and, where applicable, added them to the NS-MBS List under the Hong Kong Autonomy Act (HKAA). You'll verify that your screening system reflects these changes, confirm your treatment of previously blocked assets, and update your alert procedures to align with the new sanctions framework.
Prerequisites
Before you start, ensure you have:
- Access to your sanctions screening platform's administrative console with permission to update list configurations and Transaction Monitoring Rules.
- A copy of OFAC's July 17, 2026 announcement identifying which parties were removed from the SDN List and which were added to the NS-MBS List.
- A list of any Hong Kong-related alerts generated in your system between July 14 and July 17, 2026 (the transition window when asset blocking obligations shifted).
- Your institution's documented policy on NS-MBS List treatment, including whether you screen against this list and what restrictions you apply to matches.
If your screening vendor hasn't yet updated the OFAC lists, escalate immediately. You're operating with outdated data.
Checklist Items
1. Verify your screening system ingested OFAC's July 17, 2026 list updates
Check your sanctions data feed logs to confirm your vendor delivered the SDN removals and NS-MBS additions. Don't assume the update happened automatically. Look for a time-stamped log entry showing list version changes on or shortly after July 17, with a record count decrease on the SDN List and a corresponding increase on the NS-MBS List for Hong Kong-related entries.
2. Confirm previously blocked assets remain blocked
OFAC stated that assets blocked prior to July 14, 2026 remain blocked despite the expiration of the national emergency. Review your blocked asset register for any Hong Kong-related entries and verify they're still flagged as blocked, even if the associated party moved to the NS-MBS List. Ensure no automatic unblocking occurred when the party's SDN designation was removed, and your asset freeze register shows continuity across the list transition.
3. Update alert disposition guidance for NS-MBS matches
The NS-MBS List imposes menu-based sanctions, not comprehensive blocking. If your team has been treating all OFAC list matches identically, you need new procedures. Document what actions are required for NS-MBS matches under the HKAA, such as prohibitions on correspondent or payable-through accounts for foreign financial institutions. Create a written alert handling matrix that differentiates SDN matches from NS-MBS matches, with specific regulatory citations (31 CFR part 585 for Hong Kong-related sanctions) and escalation thresholds for each.
4. Re-screen your customer base against the updated lists
Run a full customer rescreening to identify any existing customers who now appear on the NS-MBS List but weren't previously flagged as SDNs. This catches customers you may have onboarded before they were designated under the HKAA. Document the rescreening run with a date stamp, a count of new NS-MBS matches, and a plan to review each match within 48 hours.
5. Review pending transactions involving removed SDN parties
If you have any transactions on hold due to SDN matches for parties who were removed from the SDN List entirely (not moved to NS-MBS), determine whether those transactions can now proceed. Check whether the party remains sanctionable under the HKAA or was removed from all lists. Review your transaction queue to see which holds can be released and which must remain in place due to NS-MBS status or other sanctions authorities.
6. Update your customer communications templates
If you rejected account applications or blocked transactions citing SDN status for parties now on the NS-MBS List, your rejection language may be inaccurate. NS-MBS restrictions are narrower than SDN blocking. Revise template language to correctly describe the applicable sanctions framework (HKAA menu-based sanctions vs. comprehensive SDN blocking) and avoid overstating your legal obligations.
7. Confirm your screening vendor's NS-MBS coverage
Not all screening platforms treat the NS-MBS List as a default screening target. Verify your vendor includes this list in your screening profile and that matches generate alerts. If you're screening against a consolidated OFAC list that doesn't distinguish NS-MBS entries, you'll miss important context. Ensure your vendor configuration document shows NS-MBS as an active screening list with its own match category, allowing you to apply different handling procedures.
8. Document your transition actions for audit
Regulators will want to see that you responded promptly to this restructuring. Create a memo summarizing what you did, when you did it, and what issues you identified. This document should be dated and signed by your MLRO or sanctions officer, listing each checklist action, any system or process gaps you discovered, and remediation steps you took.
Common Mistakes
Assuming all removed SDN parties are no longer sanctioned. Many parties moved to the NS-MBS List under the HKAA. If you released blocks or approved transactions without checking NS-MBS status, you may have violated menu-based sanctions.
Treating NS-MBS matches like SDN matches. The NS-MBS List doesn't require comprehensive blocking. If you're rejecting all transactions involving NS-MBS parties, you're applying restrictions OFAC didn't impose, creating unnecessary friction and potential customer complaints.
Waiting for OFAC's amended regulations before acting. OFAC stated it will publish amendments to 31 CFR part 585 in a future Federal Register publication, but the list changes are effective now. Don't delay operational changes while waiting for regulatory text.
Forgetting to check the Hong Kong Human Rights and Democracy Act of 2019. OFAC noted this statute also remains valid. If you're only tracking HKAA designations, you may miss parties sanctioned under this separate authority.
Next Steps
After completing this checklist, monitor OFAC's website for updates to its Hong Kong-related frequently asked questions and guidance. The current FAQs may reference the expired EO 13936 and need revision. Until OFAC publishes updated guidance, document any ambiguous situations you encounter and escalate to legal counsel when menu-based sanctions applicability is unclear.
If you identified gaps in your NS-MBS screening coverage or alert handling procedures, schedule a vendor review meeting within the next two weeks. The NS-MBS List will continue to grow as OFAC uses menu-based sanctions more frequently, and your system needs to handle these designations as a distinct category, not as an afterthought to the SDN List.
