OFAC Issues Guidance on SDN List

In mid-February 2008, the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) issued a guidance document entitled, "Guidance on Entities Owned by Persons Whose Property and Interests in Property are Blocked." 

This guidance answers the frequently asked question of whether a U.S. person can do business with a company who is not on the specially designated nationals (SDN) list, even though one of its partners, shareholders, or members is on the SDN list. The guidance states that:

A person whose property and interests in property are blocked pursuant to an Executive order or regulations administered by OFAC (a "blocked person") is considered to have an interest in all property and interests in property of an entity in which it owns, directly or indirectly, a 50% or greater interest. The property and interests in property of such an entity are blocked regardless of whether the entity itself is listed in the annex to an Executive order or otherwise placed on OFAC's list of Specially Designated Nationals ("SDNs"). Accordingly, a U.S. person generally may not engage in any transactions with such an entity, unless authorized by OFAC.

OFAC cautions, however, that, "In certain OFAC sanctions programs (e.g., Cuba and Sudan), there is a broader category of entities whose property and interests in property are blocked based on, for example, ownership or control."