Category: Sanctions Programs

Specific License

Also known as: OFAC Specific License

Simply put

A specific license is a written authorization issued by the U.S. Treasury's Office of Foreign Assets Control (OFAC) that permits a particular person or entity to carry out a transaction that would otherwise be prohibited under U.S. sanctions. Unlike a general license, which applies broadly to a class of transactions, a specific license is granted individually in response to a written application and is generally limited to the party and dealings it names. It authorizes conduct that would otherwise be restricted, but does not amount to a blanket exemption from sanctions.

Formal definition

In the context of the U.S. sanctions regime administered by OFAC, a specific license is a written document issued to a particular applicant authorizing a specified transaction or set of transactions that would otherwise be prohibited under the applicable sanctions program. It is issued in response to a written license application and is generally limited in scope to the named person or entity and the particular activity described, subject to any conditions OFAC imposes. This distinguishes it from a general license, which authorizes a defined category of transactions without the need for individual application. A specific license authorizes only the conduct it expressly permits and does not otherwise relieve a party of applicable sanctions obligations; parties should confirm the precise terms, conditions, and scope against the license as issued and the relevant OFAC program requirements. Comparable authorization mechanisms may exist under other sanctions authorities, but the term as defined here is specific to the OFAC framework.

Why it matters

For U.S. sanctions compliance, the distinction between what is prohibited and what is permitted often turns on whether a valid authorization exists. A specific license is the mechanism through which OFAC can allow an individual party to proceed with a transaction that would otherwise be blocked, without lifting the underlying sanctions program. For compliance teams, recognizing when a proposed dealing requires a specific license, rather than falling within an existing general license or an outright prohibition, is central to avoiding inadvertent violations, since sanctions liability in the U.S. framework is generally strict and does not depend on intent.

Because a specific license is issued to a named party and is generally limited in scope to the particular activity it describes, it cannot be relied upon by third parties or extended to related dealings that fall outside its terms. This matters operationally: financial institutions processing a transaction, or counterparties relying on a customer's assertion that they hold a license, should confirm the precise terms, conditions, and scope of the license as issued rather than assume broad coverage. A specific license authorizes only the conduct it expressly permits and does not otherwise relieve a party of applicable sanctions obligations.

Misreading the boundary between a general and a specific license is a recurring source of compliance risk. Treating a specific license as a blanket exemption, or assuming that conduct requires no authorization when in fact a specific license is needed, can expose an obliged entity to enforcement exposure. Exact application procedures, program requirements, and the conditions attached to any license should be confirmed against the relevant OFAC program and the license document itself.

Who it's relevant to

Sanctions Compliance Officers

Responsible for determining whether a proposed transaction is prohibited, permitted under a general license, or requires a written specific license application to OFAC. They must confirm the precise scope and conditions of any license relied upon and ensure that activity does not extend beyond what the license authorizes.

Financial Institutions and Obliged Entities

Banks and other institutions processing transactions may need to verify that a customer or counterparty holds a valid specific license before facilitating dealings that would otherwise be blocked. They should confirm the license terms as issued rather than rely on assertions of broad coverage.

Legal and Regulatory Advisers

Counsel advising clients on U.S. sanctions exposure often prepare and submit specific license applications and interpret the terms and conditions of licenses OFAC issues. They advise on the boundary between general and specific licenses and on residual sanctions obligations that a license does not relieve.

Businesses Seeking to Engage in Restricted Transactions

Companies or individuals whose intended dealings would otherwise be prohibited under an OFAC program may apply for a specific license to authorize that particular activity, and must operate strictly within the named scope and any conditions attached.

Inside Specific License

Authorization for a Specific Transaction or Party

A specific license is an individualized authorization issued by a sanctions authority (for example, OFAC in the US under its regulatory programs, or HM Treasury's OFSI in the UK) permitting a named person or entity to engage in a particular transaction or activity that would otherwise be prohibited under the applicable sanctions regime. Unlike a general license, it does not apply broadly to a class of persons or transactions.

Application-Based Process

A specific license generally must be applied for by the party seeking to conduct the otherwise-prohibited activity. The issuing authority reviews the request on a case-by-case basis and exercises discretion in granting, denying, or conditioning it. Requirements and review timelines vary by authority and program and should be confirmed against the applicable regulator's guidance.

Defined Scope and Conditions

A specific license typically identifies the authorized parties, the permitted activity, and any limitations, reporting obligations, recordkeeping requirements, expiration dates, or other conditions attached to the authorization. Activity outside these stated parameters generally remains prohibited.

Relationship to General Licenses

Where a general license (a broad authorization published by the authority that permits a category of transactions without individual application) does not cover a given situation, a party may need to seek a specific license. The two are distinct mechanisms and should not be treated as interchangeable.

Jurisdiction-Specific Framework

The concept of a specific license exists within particular sanctions regimes, and the terminology, issuing body, and procedures differ across jurisdictions. Exact eligibility, scope, and process should be verified against the relevant authority's regulations rather than assumed to be uniform.

Common questions

Answers to the questions practitioners most commonly ask about Specific License.

Does holding a specific license mean the underlying transaction is legal in all respects?

No. A specific license authorizes a particular party to engage in an otherwise prohibited transaction under the sanctions program it is issued against, but it does not waive obligations under other applicable laws, regulations, or sanctions regimes. The transaction may still be subject to other legal requirements, and authorization is generally limited to the precise terms, parties, and conditions set out in the license itself. Anything falling outside those terms typically remains prohibited.

Is a specific license the same thing as a general license?

No, these are distinct concepts and should not be treated interchangeably. A general license authorizes a defined category of transactions for anyone meeting its stated conditions, without a separate application. A specific license, by contrast, is issued to a named applicant in response to an individual application and authorizes a particular transaction or set of transactions on terms tailored to that request. In many regimes, an applicant is expected to confirm no general license already covers the activity before seeking a specific license.

Who is typically permitted to rely on a specific license?

Reliance is generally limited to the named licensee and the specific transaction or activity described in the license, subject to its conditions. Third parties not identified in the license generally cannot rely on it for their own dealings, even where the transactions appear similar. Firms should review the exact scope, parties, and expiry terms of any license presented to them, and confirm applicability against the issuing authority's terms rather than assuming broader coverage.

How should an obliged entity handle a customer or counterparty who claims to hold a specific license?

As an operational matter, firms typically verify the existence and scope of the asserted license, confirm that the specific transaction falls within its stated terms, parties, and validity period, and retain supporting documentation. A claimed license does not remove the firm's broader obligations to conduct due diligence and monitor for other financial crime risks. Where doubt exists about scope or authenticity, firms generally seek confirmation from the relevant sanctions authority.

What record-keeping considerations apply when acting under a specific license?

Firms generally retain a copy of the license, evidence linking the executed transaction to its authorized terms, and any conditions or reporting requirements attached to it. Some licenses impose specific reporting or record-retention obligations on the licensee. Exact retention periods and reporting mechanics vary by regime and should be confirmed against the applicable regulation and the terms of the license itself.

What happens if a transaction exceeds the terms or expiry of a specific license?

Activity that falls outside the license's stated scope, parties, value, or validity period is generally not authorized and may remain prohibited under the applicable sanctions program. Continuing or expanding activity beyond the authorized terms may expose the party to enforcement risk. Where circumstances change or additional activity is contemplated, applicants typically must seek an amended or new license rather than assuming existing authorization extends to it.

Common misconceptions

A specific license and a general license are the same thing or can be used interchangeably.

They are distinct authorizations. A general license permits a defined category of transactions without individual application, whereas a specific license is an individualized authorization granted case-by-case to named parties for a particular activity. A party may need a specific license only where no general license covers the situation.

Holding a specific license permits any dealings with the sanctioned party.

A specific license authorizes only the activity described within its stated scope and subject to its conditions. Transactions, parties, or activities falling outside those defined parameters generally remain prohibited, and conditions such as reporting, recordkeeping, or expiration dates typically apply.

Specific license processes are the same across all sanctions regimes.

The issuing authority, terminology, eligibility criteria, and application procedures vary by jurisdiction and program. Practitioners should confirm the exact requirements against the applicable authority's regulations rather than assume a single global standard.

Best practices

Confirm first whether an applicable general license already authorizes the intended activity before applying for a specific license, to avoid unnecessary applications.

Identify the correct issuing authority and program for the relevant jurisdiction, and follow that authority's published application requirements and guidance rather than assuming a uniform process.

Read the granted license carefully and operate strictly within its stated scope, named parties, and conditions, treating any activity outside those parameters as potentially still prohibited.

Track and comply with all attached conditions, including any reporting obligations, recordkeeping requirements, and expiration dates, and diary key renewal or reporting deadlines.

Maintain complete documentation of the application, the license itself, and evidence of compliance with its terms to support audit and regulatory examination.

Where the application or scope is uncertain, seek legal or specialist sanctions advice and verify exact requirements against the applicable regulation before proceeding.