OFAC restricted-party screening (broader than SDN)

Description

SDN-list screening is the baseline of US sanctions compliance and is necessary but not sufficient. OFAC maintains several additional restricted-party lists with different legal effects and different prohibited activities, and a screening posture that covers only SDN misses a meaningful slice of the prohibited counterparty universe. The slice that gets missed is the activity-specific one, where the prohibitions attach not to all transactions with the named party but to specific transaction types (debt issuance beyond a stated tenor, equity above a stated value, energy-sector services, defense-related services), which makes the violations harder to spot through a one-pass transactional review and easier to build into a routine commercial pattern that operates for months before anyone notices. The lists decompose into five categories beyond SDN. The Sectoral Sanctions Identifications list (SSI) prohibits specific transaction types with named entities in Russia, Venezuela, and elsewhere; the typical pattern is debt or equity beyond stated tenors under the Russia-related Executive Orders, with the prohibited tenor varying by sector and by Directive number under the underlying program. The Foreign Sanctions Evaders list (FSE) targets parties found to have facilitated sanctioned conduct, and carries a blanket prohibition rather than an activity-specific one. The Non-SDN Palestinian Legislative Council list (NS-PLC) and the Non-SDN Menu-Based Sanctions list (NS-MBS) each carry their own program-specific scopes, with NS-MBS in particular operating under the Caesar Act and adjacent authorities on Syria-related counterparties. The Military End User list (MEU) under the EAR (15 CFR Part 744 Supplement No. 7) is technically an export-control list rather than an OFAC list, but it operates in the same compliance workflow and screening vendors typically expose it through the same UI. The 50 Percent Rule layered on top of all of these is the structural feature that catches more operators than any individual list: any entity 50 percent or more owned, directly or indirectly, by one or more SDN-listed persons is itself subject to SDN-equivalent blocking, even if the entity itself is not on any list. The Rule reaches through corporate structures, and the practical consequence is that the screening has to consider beneficial ownership rather than just the named counterparty. Most modern screening vendors handle the 50 Percent Rule analysis through their beneficial-ownership data sources; the operator's job is to verify that the data source is current and that the rule is actually applied in the screening flow rather than offered as an optional toggle that defaults off. The operational decomposition is three pieces. The vendor selection and configuration covers the full set of lists, plus the 50 Percent Rule plus the program-specific screening (Iran under 31 CFR 535, North Korea under 510, Syria under 542, Cuba under 515, Crimea / DNR / LNR under 589, Russia under 587 plus the Sectoral Sanctions Directives). The screening cadence catches list updates: OFAC publishes updates on a near-daily cadence during periods of active enforcement, and a screening run that lags more than 24 hours has measurable miss-risk. The hit-handling procedure documents the disposition of every screening hit, including false-positive determinations, with enough detail that a future audit can reconstruct why each hit was cleared. The cheapest operational pattern is to run continuous screening rather than per-transaction screening, with the continuous run catching list updates against the existing customer base and the per-transaction run catching new counterparties before the first transaction completes.

Applicability

Applies when: markets include US.

How predicates are evaluated

Required by (1 regulation)

• US OFAC

  31 CFR Part 501 + program-specific (Iran 535, NK 510, Syria 542, Cuba 515, Crimea/DNR/LNR 589, Russia 587) — country-based + targeted-list + 50% Rule screening; geo-IP + self-declared-residency + beneficial-ownership data.

  31 CFR Part 501 + program-specific (Iran 535, NK 510, Syria 542, Cuba 515, Crimea/DNR/LNR 589, Russia 587)

  Source →

Fulfilled by (2)

• comply-advantage · full · medium effort · $$
• refinitiv · full · high effort · $$$

Magist does not accept payment from vendors. Methodology.

Evidence formats

• restricted-party screening logs