A comprehensive guide to the US sanctions list

Sanctions – restrictions and penalties imposed in response to violations of international law and threats to global security – are a key tool of US foreign policy. A wide range of sanctions allows the US to achieve policy objectives by exerting economic or diplomatic pressure on designated individuals, entities, or other countries. Since the US is one of the world’s most prominent economic and political actors, its sanctions regime is highly influential globally and often aligns with US allies such as the UK and the EU. 

The US sanctions list is complex and changes frequently in response to internal security interests and geopolitical developments – with new sanctions designations introduced and withdrawn regularly. In 2023 alone, the US added 2500 new designations to its primary sanctions list. 

To contribute to the fight against international crime and avoid potential fines for sanctions breaches, firms doing business in the US must understand their sanctions responsibilities and how to implement effective sanctions screening as part of their anti-money laundering and countering the financing of terrorism (AML/CFT) programs.

Types of US sanctions

The US imposes comprehensive sanctions, targeting another country, or targeted sanctions, which designate specific individuals and entities. These fall into two types: 

• Trade sanctions consist of import and export embargoes, applied to an entire country or specific sections of that country’s economy. Prohibitions on trading arms or dual-use goods are a particularly common type of US trade sanction. 
• Economic sanctions include ‘blocking’ sanctions, or asset freezes, and prohibitions on transactions with designated individuals, entities, or regions. 

Across both types, two categories of sanctions are imposed by the US. 

• Primary Sanctions: These apply to US citizens, residents, and companies. They directly prohibit trading or transacting with sanctions targets. 
• Secondary Sanctions: These apply to entities outside US jurisdiction, prohibiting them from breaching US sanctions under the threat of losing access to the US financial system. They are intended to prevent non-US persons from engaging in activities that might harm US interests.

US sanctions lists

The Office of Foreign Assets Control (OFAC) implements and enforces US sanctions across several programs. Each program relates to the targets’ geographic location or involvement in certain activities. For example, the US maintains sanctions programs against Iran, Russia, and North Korea, as well as those relating to narcotics trafficking, the rough diamond trade, and human rights violations (known as Magnitsky Sanctions). 

As a member of the United Nations (UN), the US is obligated to introduce domestic legislation implementing new additions to the UN Security Council Sanctions List. Separately, as part of the US’s autonomous sanctions regime, OFAC maintains a few different sanctions lists, designating different categories of targets. These are:

• The Specially Designated Nationals (SDN) List: The SDN List records individuals and entities who act on behalf of or are controlled by targeted countries and those designated under sanctions programs unrelated to location, such as terrorist groups or narcotics traffickers. 
• The Consolidated List: This list collects all non-SDN sanctions targets, previously split across multiple lists, in one place. These include the Sectoral Sanctions Identifications (SSI) List for targets of US sanctions on Russia or the Foreign Sanctions Evaders (FSE) List for entities that have violated or attempted to evade sanctions on Iran and Syria. 

OFAC has the power to issue general licenses granting exceptions to sanctions compliance for the trade of certain products and materials, such as medicines and medical equipment, or specific licenses for parties seeking to engage in a prohibited activity.

The consequences of US sanctions violations

Failing to comply with US sanctions can result in civil and, in some cases, criminal penalties, including fines and prison sentences of up to $20 million. 

Fines can vary in amount, depending on the nature of the breach and OFAC’s investigation. For a full breakdown, firms should consult the OFAC guidelines in detail. However, civil monetary penalties may reach as high as $1.8 million for a single breach; OFAC has previously fined firms up to hundreds of millions of dollars for sanctions violations. 

Firms should also consider the reputational consequences of non-compliance: Customers are unlikely to want to do business with an organization associated with sanctions violations, and an inadequate sanctions compliance program can lead to slow business growth. 

Taking a layered approach to sanctions compliance

Learn what a layered approach to sanctions compliance looks like in practice, with a discussion on the ever-evolving sanctions landscape from our expert panel.

Watch on demand

Challenges for US sanctions compliance

Effective compliance with US sanctions is a demanding process requiring adequate time and investment from firms. Particular challenges caused by the nature of the contemporary sanctions landscape and attempts to evade sanctions include: 

• Changes to sanctions lists: New additions to US sanctions lists are extremely common, which means that without a dedicated monitoring system, firms may miss updates and inadvertently increase their risk of sanctions breaches. 
• False positive alerts: Since the scope of the US sanctions list is vast, screening processes can sometimes result in high false positive rates, where accounts are incorrectly flagged as sanctions risks. Incomplete, inaccurate, or outdated information and overly broad screening configurations can cause false positives to spike, straining compliance teams with an unnecessary administrative burden. 
• Corporate transparency: Sanctioned entities often try evading sanctions by enlisting other entities to transact on their behalf or using complex corporate structures to obscure an account’s ultimate beneficial ownership (UBO). A lack of transparency over identifying information can cause problems for firms when onboarding new customers and should be treated as a risk factor for sanctions. 

How to comply with US sanctions

All firms based or operating in the US must, as part of their AML/CFT programs, have policies and procedures in place to mitigate their sanctions risks, including by screening against OFAC sanctions lists. To optimize themselves for US sanctions compliance, firms should: 

• Assess sanctions risks: Rather than taking a blanket approach to sanctions compliance, firms should evaluate which of their customers and products carry the highest risk of sanctions breaches and allocate compliance resources accordingly. 
• Carry out customer due diligence (CDD): Firms must have an accurate, efficient, and up-to-date sanctions screening tool, and CDD processes should include measures for verifying UBO. Firms can also use adverse media and politically exposed person (PEP) screening, either of which might indicate customer involvement in sanctioned activities before official sanctions lists. After onboarding customers, firms should continue to monitor for changes in their sanctions risk level by screening on an ongoing basis. 
• Implement payment screening: Financial institutions (FIs) that process payments should screen these payments for any link to sanctions targets, allowing them to investigate matches and block and report payments when needed. 
• Monitor customer transactions: Given sanctions targets may try to slip through the net of customer due diligence by disguising their identities, FIs should analyze customer transactions for any payments with sanctions evasion red flags. 
• Understand reporting obligations: All transactions blocked or rejected for sanctions-related reasons must be reported to OFAC within ten business days. Guidance from the Financial Crimes Enforcement Network (FinCEN) states firms do not need to file reports with both FinCEN and OFAC, unless a transaction would be considered suspicious even without the involvement of an OFAC sanctions target. 

Smart sanctions screening for US firms 

Complying with US sanctions requires firms to collect, update, and analyze a huge amount of data, from customer identifying information to new sanctions designations to transaction counterparty data. To avoid overloading compliance teams, reducing efficiency, and hindering effective screening, firms should invest in tech-based solutions leveraging artificial intelligence (AI) for streamlined compliance. 

ComplyAdvantage’s sanctions screening solution allows firms to speed up remediation, minimize false positives, and manage risks efficiently with: 

• Comprehensive sanctions data coverage: Firms can dive deep into sanctions information with details on entities owned by, controlled by, or related to sanctioned entities – allowing them to understand beneficial ownership and stay ahead of regulations. 
• Updates in minutes, not months: ComplyAdvantage data is updated rapidly and refreshed constantly, guaranteeing top-tier data quality. Automated systems scan global sanctions lists for changes, with expert manual reviews ensuring accuracy and peace of mind.  
• Advanced screening and matching capabilities: Ensure truly effective global coverage with matching algorithms able to take spelling variations, international naming conventions, and aliases into account, enhancing red flag detection while minimizing false positives.