INTERNATIONAL TRADE LAW
Does OFAC Sanctions Compliance Apply to My Company?
If your company is a “U.S. person,” OFAC sanctions apply to you — full stop — and many non-U.S. companies are pulled in too when a deal touches U.S. dollars, U.S.-origin goods, or U.S. persons. There is no minimum size, industry, or transaction volume that exempts you. The real questions are how much exposure you carry and what controls that exposure demands. This guide helps you answer both.
Are You a “U.S. Person”?
OFAC’s core prohibitions bind every U.S. person, a term defined more broadly than most owners expect.
| You are a U.S. person if you are… | Covered wherever located? |
|---|---|
| A U.S. citizen | Yes |
| A lawful permanent resident (green-card holder) | Yes |
| Any individual physically present in the U.S. | While in the U.S. |
| An entity organized under U.S. law | Yes, including foreign branches |
If any of these describe you or your business, you are subject to OFAC rules regardless of where you operate or whether you have ever heard of the SDN List. For the broader picture of what that means day to day, see our overview of OFAC sanctions compliance.
When Non-U.S. Companies Get Pulled In
Foreign companies often assume sanctions are an American problem. They are not. U.S. jurisdiction attaches to a transaction in several common ways:
- U.S. dollar clearing. A dollar payment typically routes through a U.S. correspondent bank, giving OFAC a hook even if neither trading party is American.
- U.S.-origin goods, software, or technology. Items made in the U.S. can carry sanctions and export restrictions with them as they move abroad.
- Facilitation. A U.S. person (or U.S.-owned subsidiary) approving, financing, or supporting a transaction that the U.S. person could not do directly is itself prohibited.
- Foreign subsidiaries of U.S. firms. For the Cuba and Iran programs, OFAC’s rules reach entities owned or controlled by U.S. companies.
Risk Factors That Raise Your Exposure
Being subject to the rules is binary; your risk level is a spectrum. These factors push it up.
| Higher-risk signal | Why it matters |
|---|---|
| Customers, suppliers, or agents in or near sanctioned regions | Direct prohibition risk and 50% Rule exposure |
| Complex ownership or intermediaries you cannot see through | Hidden blocked owners trigger the 50% Rule |
| Cross-border payments, trade finance, or third-party logistics | More parties, more screening gaps |
| Dual-use goods, technology, or anything export-controlled | Overlapping OFAC and export-control duties |
| Prior compliance gaps in AML, export, or anti-corruption | Signals weak controls OFAC weighs in enforcement |
A Quick Exposure Assessment
You can get a working read on your exposure in an afternoon:
- List your touchpoints. Map customers, vendors, agents, and the countries your goods and payments move through.
- Identify the U.S. nexus. Note where dollars clear, where U.S.-origin items appear, and which entities are U.S.-owned.
- Screen representative counterparties. Run names against the SDN List and check beneficial ownership for the 50 Percent Rule.
- Flag the high-risk lanes. Anything touching a comprehensive program (currently Cuba, Iran, North Korea, and the Crimea, Donetsk, and Luhansk regions of Ukraine) deserves a closer look — and program lists change, so confirm current status with OFAC.
- Decide on controls. Match the depth of your program to the risk you found. A formal sanctions risk assessment turns this into a documented baseline.
Frequently Asked Questions
We only sell domestically — does OFAC still apply? Yes, the rules apply, but your risk is low. You still cannot do business with an SDN, even a domestic one, so basic screening is prudent.
Does a small business get a pass? No. OFAC has no small-business exemption. Penalties are strict-liability, and several enforcement actions have involved small and mid-sized firms.
We are a foreign company with no U.S. office. Are we safe? Not necessarily. If you clear U.S. dollars, handle U.S.-origin goods, or deal with U.S. persons, you can face U.S. enforcement.
How do I know which program a country falls under? Check OFAC’s Sanctions Programs and Country Information page; statuses change as programs are added, eased, or removed.
The only way to know your true exposure is to map it against your actual customers, products, and payment routes. Reidel Law Firm delivers a flat-fee import/export compliance memo that does exactly that and tells you what controls you need. Get an export compliance memo →
