5 Compelling Reasons to Hire an Audit Firm in UAE
July 4, 2025
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) enforces economic and trade sanctions to safeguard national security and advance U.S. foreign policy objectives. As global financial systems grow more interconnected, understanding OFAC sanctions and the implications of blocked funds often called “frozen” funds is essential for businesses, financial institutions, and individuals. Blocked funds occur when transactions or accounts are restricted due to sanctions, preventing access until specific conditions are met or licenses are obtained.
This comprehensive guide, informed by Tulpar Global Taxation, dives into the complexities of OFAC sanctions, reasons for blocked funds, and actionable steps to address these challenges.
In 2025, OFAC’s sanctions enforcement has intensified, targeting entities involved in terrorism, narcotics trafficking, and weapons proliferation. The Specially Designated Nationals (SDN) List, updated frequently, imposes strict compliance requirements. Noncompliance can lead to penalties, including fines up to $20 million or imprisonment for up to 30 years. Staying informed is critical, as sanctions lists evolve rapidly, impacting businesses globally.
Tulpar Global Taxation specializes in international tax and compliance, offering tailored solutions to navigate OFAC regulations. Their expertise includes designing risk-based Sanctions Compliance Programs (SCPs) aligned with OFAC’s Framework for Compliance Commitments. By integrating advanced screening tools and strategic guidance, Tulpar helps businesses mitigate risks and ensure operational continuity in complex sanctions environments.
Financial institutions are critical in enforcing OFAC sanctions, ensuring transactions and accounts comply with U.S. regulations. Their role involves identifying and managing transactions linked to sanctioned entities, countries, or individuals, with non-compliance risking severe penalties.
Financial institutions implement robust SCPs to meet OFAC requirements, including:
The dynamic nature of sanctions lists, such as OFAC’s August 2024 update adding 402 entities to the SDN List, poses challenges. Financial institutions must update screening systems continuously, a process Tulpar Global Taxation streamlines through compliance advisory services. Extraterritorial regulations further complicate compliance, requiring global coordination.
Financial institutions stop, investigate, or block transactions to ensure compliance with OFAC sanctions, triggered by potential violations or red flags.
The process includes:
If a transaction is stopped for investigation, swift action minimizes disruptions and resolves issues efficiently.
Preventing Future Investigations
Blocked funds, frozen due to sanctions, are held in segregated accounts until OFAC authorizes release, posing financial and operational challenges.
Blocked funds are restricted assets linked to sanctioned entities or jurisdictions.
An OFAC license authorizes transactions otherwise prohibited, offering a pathway to release blocked funds.
Rejected transactions are declined without freezing funds, often due to sanctions concerns or institutional policies.
Refusals unrelated to sanctions stem from internal policies or risk management.
OFAC offers tools and guidance to support compliance and navigate sanctions challenges.
Mastering OFAC Compliance in 2025: Navigating OFAC sanctions and blocked funds demands proactive compliance. Understanding financial institutions’ roles, investigation triggers, and resolution steps for blocked or rejected transactions is key. OFAC licenses, resources like the Sanctions List Search Tool, and expertise from Tulpar Global Taxation ensure compliance and operational continuity.
“Blocked funds” are assets, accounts, or transactions that OFAC freezes when they involve sanctioned individuals, entities, or jurisdictions. These funds are frozen until they’re either licensed or legally unblocked.
The top sanctioned countries include Iran, North Korea, Cuba, Syria, and Russia—as well as sectoral sanctions on Venezuela, Belarus, and Myanmar.
Financial institutions must notify customers of blocked funds and file notice with OFAC using Form TD F 90‑22.50 within 10 business days; annual reporting is due by September 30 for assets blocked as of June 30. Tulpar Global Taxation helps clients track these timelines and notifications.
You can apply for a specific OFAC license or demonstrate that a general license applies. Steps include preparing a robust justification, submitting required documents, and following up with OFAC. Tulpar Global Taxation manages your submission from start to finish.
License reviews vary simple cases may resolve within months, while complex cases can stretch longer. Processing times depend on the clarity of documentation and inter-agency review cycles. Tulpar Global Taxation helps streamline the process and manage expectations.
You’ll need: proof of identity, account details, purpose of release, relevant contracts/invoices, and legal rationale for release. Detailed submission with supporting evidence significantly boosts approval chances . Tulpar Global Taxation ensures your application is complete and compliant.
Yes, if the assets are unblocked by OFAC due to changes in sanction lists or expiration of sanctions regimes. For example, Syria sanctions were fully lifted on July 1, 2025, and formerly blocked Syrian funds were automatically unblocked.
Denials are final unless you submit new evidence or file an administrative appeal. In some cases, you may reapply or pursue Federal Court review. Tulpar Global Taxation crafts stronger reapplications and navigates appeal processes.
Banks must monitor transactions, block assets tied to OFAC targets, notify OFAC within 10 days, maintain blocked accounts, and annually report balances. Tulpar Global Taxation supports banks with compliance audits and policy development.
They specialize in international compliance, OFAC licensing, risk‑based programs, and inter-agency coordination. Their tailored strategies, documentation expertise, and case monitoring improve approval odds and reduce delays.
Contact Us:
