A specially designated national may include people and/or groups involved in crimes like narcotics trafficking and terrorism.
The OFAC blocks and may seize the assets of these SDNs. The OFAC publishes a list of SDNs to help the government prevent money laundering and terrorism financing in the U.S. and worldwide. Since the OFAC prohibits U.S. companies and citizens from doing business with SDNs, U.S. businesses must identify specially designated nationals through their due diligence programs.
History of the Specially Designated Nationals List
On September 23, 2001, then-President George W. Bush signed an executive order designating individuals and organizations as SDNs if they met certain criteria. In the wake of the terrorist attacks of September 11, 2001, this executive order gave the U.S. government a way to hinder terrorism funding.
What Is the Purpose of the Specially Designated Nationals SDN List?
The OFAC includes people and entities on this list for national security reasons and because they have violated U.S. foreign and sanctions policies. As a result, these specially designated nationals can’t participate in the global business marketplace, especially the U.S. financial system. Since the U.S. is a huge presence in the worldwide business market, it’s difficult for those placed on the Specially Designated Nationals list to do business internationally, particularly in U.S. dollars.
How Does the Specially Designated Nationals List Work?
When the OFAC adds a person or organization to the SDN list, it offers information explaining its decision. Organizations and citizens can use the OFAC's search engine to identify SDNs by inputting specific parameters, such as country or sanctions.
The search returns the names of SDNs with codes that indicate why they were included on the list. For example, "BPI-PA," means that the individual or entity is “blocked pending investigation” under the USA Patriot Act.
Because some individuals and/or organizations may use aliases, the search results also return a score indicating whether a name is similar to an SDN on the list. The higher the score, the better the chance of a match — a score of 100 indicates an exact match.
Since the OFAC updates the SDN list regularly, users should search the list before they conduct transactions or enter into new relationships with organizations or individuals from other countries.
To get their name removed from the SDN list, a person or business is required to submit a petition for removal or ask the OFAC for "administrative consideration." A person or business asking the OFAC to reconsider must convince the agency that they have changed their behavior and will stop participating in prohibited activities. Additionally, the OFAC may remove a name from the SDN list if the person or business can show the OFAC that it was wrong to place them on it in the first place.
Compliance refers to the regulations, laws, and guidelines governing businesses and financial institutions.
- 1What is SOC 2?
- 2What is Section 314(b)?
- 3Financial Crimes Enforcement Network (FinCEN)
- 4Customer Due Diligence
- 5Customer Identification Program
- 6What is Section 314(a)?
- 7Suspicious Activity Report
- 8Politically Exposed Person
- 9Specially Designated Nationals
- 10What is a Currency Transaction Report?
- 11What is OFAC?
- 12What is the Bank Secrecy Act (BSA)?
- 13What is PCI DSS Certification?
- 14What is AML Compliance?
- 15Office of the Comptroller of the Currency (OCC)
- 16Personal Identifiable Information (PII)
- 17Compliance Risk Management?
- 18What is Know Your Customer (KYC)?
- 19Know Your Business (KYB)