In the case of certain sanctions programs, a transaction may be prohibited for U.S. persons, but there may be no blockable interest (i.e., no interest of a Specially Designated National (SDN), blocked government, or other blocked person) in the transaction. In this situation, the transaction should be rejected and returned to the originator. Rejected transactions must not be processed forward to the beneficiary.
The following examples may help illustrate which transactions should be blocked and which should be rejected under certain OFAC sanctions programs. For information on specific prohibitions, authorizations, or exemptions under a particular OFAC sanctions program, please see the relevant OFAC implementing regulations and the Sanctions Programs and Country Information page on OFAC's website.
- A U.S. bank is reviewing a commercial payment destined for the account of XYZ Import-Export Co. at the Bank of XYZ in Iran. The Bank of XYZ is an Iranian financial institution and wholly-owned by the Government of Iran; accordingly, Bank of XYZ is blocked pursuant to 31 CFR § 560.211 (Iranian Transactions and Sanctions Regulations (ITSR)). The U.S. bank must block the payment.
- A U.S. bank is reviewing a commercial payment destined for the account of ABC Import-Export Co. in Tehran, Iran, at a non-blocked bank in a third country. In this example, ABC Import-Export in Tehran is not a blocked person, so there is no blockable interest in this payment. Processing the payment, however, would mean facilitating trade with Iran, exporting a service to Iran, and engaging in a trade-related transaction with Iran. These activities are prohibited pursuant to 31 CFR §§ 560.204, 560.206, and 560.208 of the ITSR, so the U.S. bank must reject the payment.
- A U.S. bank is reviewing a wire transfer destined for an individual in the Crimea region of Ukraine. The individual is not a blocked person, and there is no other blockable interest in this payment. Processing the payment, however, would mean exporting a service to the Crimea region of Ukraine, which is prohibited pursuant to 31 CFR § 589.207 (Ukraine-/Russia-Related Sanctions Regulations (URSR)); therefore, the U.S. bank must reject the payment.
Blocked and rejected transactions must be reported to OFAC through the OFAC Reporting System (ORS) within 10 business days, pursuant to 31 CFR §§ 501.603 and 501.604. To register for access or to log in to ORS, please see the OFAC Reporting System page on OFAC's website.