Specially Designated Nationals and Blocked Persons are individuals, groups, or entities subject to economic sanctions administered by the United States Department of the Treasury. Their designation has far-reaching implications for organisations operating across financial services, trade, payments, and regulated industries.
As sanctions regimes expand and enforcement activity increases, understanding how the SDN List operates is essential for organisations with global exposure.
This guide explains what Specially Designated Nationals and Blocked Persons are, how the SDN List works, and why effective sanctions screening is now a core compliance requirement.
What Are Specially Designated Nationals and Blocked Persons?
Specially Designated Nationals and Blocked Persons are individuals or entities designated by the US Office of Foreign Assets Control, commonly referred to as OFAC.
When a person or organisation is added to the SDN List:
- Their assets within the US jurisdiction are frozen
- US persons are generally prohibited from engaging in transactions with them
- Certain non-US persons may also be restricted if transactions involve US dollars, US goods, or the US financial system
Designations may relate to terrorism, narcotics trafficking, cybercrime, corruption, human rights abuses, or threats to international security.
Why the SDN List Matters Globally
Although the SDN List is administered by the United States, its impact extends well beyond US borders.
Many international transactions pass through the US financial system or involve US-origin goods, services, or technology. As a result, non-US organisations may still face enforcement action if they transact with Specially Designated Nationals.
Consequences of sanctions breaches can include:
- Significant financial penalties
- Asset freezes
- Loss of correspondent banking relationships
- Reputational damage
- Increased regulatory oversight
For regulated entities, sanctions compliance is a foundational operational requirement rather than a defensive afterthought.
The Role of Sanctions Screening
Sanctions screening is the process of checking customers, counterparties, suppliers, and beneficial owners against sanctions lists such as the SDN List.
Screening should be conducted:
- At onboarding
- On an ongoing basis
- When relevant changes occur in ownership or control
Effective sanctions screening typically includes:
- Reliable identity verification
- Automated monitoring for new designations
- Alerts for potential matches
- Enhanced due diligence for higher-risk relationships
- Clear record-keeping and audit trails
Because the SDN List can be updated multiple times per week, manual screening approaches are rarely sufficient at scale.
Beyond OFAC: The International Sanctions Landscape
OFAC is not the only authority issuing sanctions.
Global organisations must also consider:
- The UK Office of Financial Sanctions Implementation consolidated list
- European Union restrictive measures
- United Nations Security Council sanctions
- National sanctions lists in jurisdictions such as Australia, Canada, and Japan
The challenge lies in managing overlapping regimes with different legal thresholds, reporting obligations, and enforcement practices.
Effective compliance programmes integrate multiple sanctions lists and apply consistent risk-based screening controls across jurisdictions.
How Individuals and Entities Become Designated
Designation on the SDN List may result from involvement in:
- Terrorism or terrorist financing
- Weapons proliferation
- Cyber-enabled crime
- Serious human rights abuses
- Corruption
- Narcotics trafficking
- Threats to international peace and security
OFAC relies on intelligence, law enforcement cooperation, and international partnerships to identify targets. Removal from the SDN List is possible but typically complex and time-consuming.
Best Practices for Sanctions Compliance
Organisations exposed to sanctions risk should implement the following measures:
Risk-Based Screening
Apply screening depth and frequency proportionate to geographic exposure, customer type, and transaction profile.
Up-to-Date Screening Technology
Use systems that support fuzzy matching, multiple list coverage, and automatic updates.
Staff Training
Ensure compliance teams understand how to assess potential matches and escalate appropriately.
Clear Escalation Procedures
Define internal workflows for reviewing and resolving potential sanctions hits.
Regular Audits
Periodic testing and independent reviews help ensure controls remain effective and defensible.
Frequently Asked Questions
What is the SDN List?
The SDN List is a sanctions list maintained by OFAC that identifies individuals and entities subject to US economic sanctions.
Do non-US companies need to screen against the SDN List?
Many non-US organisations screen against the SDN List because OFAC can assert jurisdiction where US dollars, US persons, or the US financial system are involved.
How often is the SDN List updated?
The list is updated frequently, sometimes multiple times per week.
Is sanctions screening part of AML and KYC?
Yes. Sanctions screening complements AML and KYC processes by identifying prohibited relationships.
