Category: Sanctions Programs
Blocked Persons
Also known as: Blocked Party, Blocked Person
Simply put
Blocked persons are individuals or organizations whose assets are frozen and with whom dealings are generally restricted under US sanctions administered by the Office of Foreign Assets Control (OFAC). This most commonly includes parties named on OFAC's Specially Designated Nationals (SDN) List, as well as certain entities they own. Being a blocked person is a legal designation under a sanctions program and is not, in itself, a finding of any specific criminal conduct.
Formal definition
In the US sanctions context, "blocked persons" refers to individuals and entities whose property and interests in property are blocked (frozen) pursuant to sanctions programs administered by OFAC, such that transactions and dealings involving them are generally prohibited for US persons unless authorized. Specially Designated Nationals (SDNs) are individuals and entities located throughout the world that are blocked under OFAC's various programs and appear on the SDN List; contractual and other definitions of "Blocked Person" may also reference parties subject to specific authorities, for example those listed in or subject to Executive Order 13224. Under OFAC's 50 Percent Rule, an entity owned 50 percent or more, directly or indirectly, in the aggregate by one or more blocked persons is itself considered blocked, even if not separately listed; by contrast, an entity that is merely controlled by (but not 50 percent or more owned by) blocked persons is not automatically blocked under that rule, though OFAC cautions against dealings with such entities. This definition is specific to the US/OFAC regime, and practitioners should confirm the precise scope, listed parties, and applicable prohibitions against the relevant executive order, regulation, and OFAC guidance, as terminology and blocking mechanics differ across jurisdictions.
Why it matters
For US persons and entities, dealing with a blocked person can trigger significant legal exposure under OFAC-administered sanctions programs. Because the property and interests in property of blocked persons are frozen, obliged parties must generally not engage in transactions or dealings with them unless the activity is authorized by OFAC through a license or other authority. Failure to identify a blocked person before executing a transaction can result in enforcement action, and OFAC sanctions liability is often applied on a strict-liability basis, meaning intent is not always required for a violation to occur. Practitioners should confirm the precise prohibitions and available authorizations against the applicable executive order, regulation, and OFAC guidance.
Who it's relevant to
Sanctions Compliance Officers
Responsible for designing and operating screening and blocking controls that identify blocked persons before transactions are executed. They must account not only for parties named on the SDN List but also for entities blocked by operation of OFAC's 50 Percent Rule, where an entity owned 50 percent or more, directly or indirectly, in the aggregate by one or more blocked persons is itself considered blocked even if not separately listed.
Screening and Investigations Analysts
Analysts who review screening alerts must distinguish between a listed SDN and an entity that may be blocked through aggregate ownership, and should treat a match as a designation to be investigated rather than as evidence of criminal conduct. They also need to apply judgment where an entity is controlled by (but not 50 percent or more owned by) blocked persons, as such an entity is not automatically blocked under the 50 Percent Rule, though OFAC cautions against dealings with it.
Legal and Contracts Teams
Legal professionals drafting or reviewing agreements often incorporate a defined term "Blocked Person," which may reference parties listed in or subject to specific authorities such as Executive Order 13224, or parties owned or controlled by such persons. They should ensure contractual definitions align with the applicable US/OFAC scope and confirm precise wording against the relevant executive order, regulation, and OFAC guidance.
Institutions Operating Across Jurisdictions
Because the "blocked persons" concept is specific to the US/OFAC regime, organizations operating internationally should recognize that terminology, listing mechanics, and blocking prohibitions differ across jurisdictions. The applicable scope, listed parties, and prohibitions should be confirmed against the relevant regime rather than assumed to be uniform globally.
Inside Blocked Persons
Designated Individuals and Entities
Persons, organizations, vessels, aircraft, and other entities that appear on sanctions lists maintained by an administering authority, such as the US OFAC Specially Designated Nationals and Blocked Persons (SDN) List. Designation typically triggers an obligation to block or freeze property and interests in property.
Property Blocking Obligation
Under US sanctions administered by OFAC pursuant to authorities such as the International Emergency Economic Powers Act, obliged persons generally must block (freeze) assets and reject or hold transactions in which a blocked person has an interest, rather than merely declining the business. Exact obligations should be confirmed against the applicable OFAC program regulations.
Ownership and Control Reach
Blocking obligations may extend beyond named parties to entities owned or controlled by blocked persons. OFAC's guidance generally treats entities meeting a specified ownership threshold by one or more blocked persons as themselves blocked, even if not separately named. The precise threshold and aggregation rules should be verified against current OFAC guidance.
Jurisdictional Scope
The term 'blocked persons' is most closely associated with US sanctions administration. Other regimes use different terminology (for example, 'designated persons' under the UK regime administered by OFSI, or listed persons under EU sanctions regulations). Obligations, terminology, and enforcement bodies diverge by jurisdiction.
Reporting and Recordkeeping Duties
Jurisdictions that impose blocking generally also require obliged persons to report blocked or rejected transactions to the administering authority within specified timeframes and to maintain related records. Specific reporting formats, deadlines, and thresholds should be confirmed against the applicable regulations.
Common questions
Answers to the questions practitioners most commonly ask about Blocked Persons.
Does appearing on a blocked persons list mean a person has been convicted of a crime?
No. Designation as a blocked person is an administrative and regulatory action, not a criminal conviction or finding of guilt. Sanctions authorities typically designate individuals and entities based on their own legal standards and policy objectives, which differ from the criminal-law standard of proof required for a conviction. A blocking action generally reflects that the person meets the criteria for designation under the relevant sanctions program, but it does not by itself establish that they have committed a crime, and it should not be treated as evidence of guilt in a criminal proceeding.
Is blocking a person's assets the same as seizing or confiscating them?
Generally, no. Blocking (sometimes described as freezing) typically means that property is immobilized so that it cannot be transferred, paid out, withdrawn, or otherwise dealt with, but legal title usually remains with the blocked person. This differs from seizure or confiscation, where ownership or control passes to the state, often following a distinct legal process. The distinction matters operationally, because obliged entities are typically required to hold and report blocked property rather than transfer it, and the exact treatment should be confirmed against the applicable sanctions regime.
How should a firm handle a potential match against a blocked persons list?
In many jurisdictions, a firm that identifies a potential match is generally expected to review the alert to determine whether it is a true match or a false positive before acting. Where a match appears genuine, obliged entities are typically required to take steps consistent with the applicable regime, which may include freezing or blocking relevant property, refraining from processing the transaction, and reporting to the competent authority. The precise obligations, timeframes, and reporting channels vary by jurisdiction and should be confirmed against the governing sanctions rules.
What is the difference between screening for blocked persons and screening for politically exposed persons?
These are distinct exercises addressing different risks. Screening against blocked persons or sanctions lists is generally aimed at identifying parties subject to asset-freezing or dealing prohibitions, and a true match typically triggers mandatory blocking and reporting obligations. PEP screening, by contrast, generally identifies individuals who hold or have held prominent public functions and their associates, so that appropriate risk-based measures such as enhanced due diligence can be applied. A PEP status is not itself a prohibition, whereas a confirmed blocked-person match typically carries direct legal consequences.
Do blocking obligations apply only to direct customers, or can they extend to related parties?
Depending on the applicable regime, blocking obligations may extend beyond a direct customer to other parties connected to a transaction or account, such as beneficial owners, counterparties, or entities owned or controlled by a blocked person. Some sanctions programs apply rules under which entities meeting certain ownership or control criteria are themselves treated as blocked. The scope of who and what is captured varies by jurisdiction and program, and firms should confirm the specific reach against the governing rules rather than assuming it is limited to the named account holder.
How should firms keep their screening current given that blocked persons lists change?
Because designations can be added, amended, or removed over time, firms generally maintain processes to update the reference data used in screening and to re-screen customers and relevant parties when lists change. In many jurisdictions, obliged entities are expected to ensure that their screening reflects the applicable current lists, which may include ongoing or periodic re-screening in addition to screening at onboarding. The specific expectations for update frequency and coverage depend on the regime and the firm's risk profile and should be confirmed against applicable requirements and supervisory guidance.
Common misconceptions
A blocked person is the same as a Politically Exposed Person (PEP), and screening against both lists serves the same purpose.
These are distinct. Sanctions screening seeks to identify blocked or designated persons subject to asset-freezing and prohibition obligations, whereas PEP screening identifies individuals whose prominent public function may present a higher risk warranting enhanced due diligence. A PEP is not, by virtue of that status, a blocked person, and PEP status does not trigger a blocking obligation.
When a party is a blocked person, the correct response is simply to decline the business and walk away.
Under blocking regimes such as those administered by OFAC, the obligation typically goes further than declining: obliged persons generally must freeze the relevant property and interests in property and report the action to the administering authority. Simply rejecting the relationship without blocking, where blocking is required, may itself be non-compliant. The correct action depends on the specific program.
Only persons expressly named on a list are blocked.
Blocking can reach entities that are owned or controlled by named blocked persons even where those entities are not separately named. Screening name matches alone may therefore miss exposure, and ownership and control analysis is generally needed to assess the full scope.
Best practices
Confirm which sanctions regime and administering authority applies to your operations and use that regime's terminology and obligations, recognizing that 'blocked persons' is a US-centric concept and other jurisdictions use different terms and rules.
Where a positive match is a potential blocked person, follow the blocking or freezing and reporting steps required by the applicable program rather than defaulting to simply exiting the relationship, and confirm required timeframes against the relevant regulation.
Extend screening and diligence beyond named-party matching to assess ownership and control, since entities owned or controlled by blocked persons may themselves be subject to blocking obligations.
Maintain robust records of screening results, match dispositions, blocking actions, and reports to the administering authority to evidence compliance and support audits.
Keep sanctions list data and screening logic current, as designations change frequently, and calibrate screening to detect and manage exposure while recognizing that no single control eliminates sanctions risk.
Verify specific thresholds, reporting deadlines, and obligations against the current applicable regulations and official guidance rather than relying on assumed universal figures, given that requirements diverge across jurisdictions.