Generally, U.S. persons should neither open an account for a blocked person nor permit transactions with blocked persons.
U.S. persons, including foreign branches of U.S. financial institutions and others subject to U.S. jurisdiction, are generally prohibited from opening an account for any individual or entity named on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) or for any individual or entity that is otherwise blocked (such as a blocked government entity or an entity blocked pursuant to OFAC’s "50 Percent Rule"). For more information, see the Basic Information on OFAC and Sanctions FAQ topic page on OFAC's website.
If a U.S. person gains control or possession of any property in which a blocked individual or entity has an interest, however, then the U.S. person is required to block that property and report it to OFAC. (For more information, see FAQ 49.) This means, for example, that if a bank receives an application to open an account—and an initial deposit—from an individual or entity on the SDN List, the bank is obligated to decline to open the account and block the initial deposit.
This blocking requirement also applies to other transactions involving any blocked person. This can be likened to a bouncing ball—once the ball starts moving, it must be stopped if it comes into your possession. If, for example, a customer asks whether they can send money from their U.S. bank to a relative's account with a bank listed on the SDN List, the U.S. bank can say "No. That would be illegal." If, on the other hand, the U.S. bank receives instructions from its customer to debit his or her account and transfer the funds to the blocked bank, the U.S. bank must act on the instructions by blocking the funds that contain a future interest of the blocked bank.
Before taking action, it is important to verify that the individual or entity attempting to open the account or involved in the customer's transaction is the same as the person listed on OFAC's SDN List or that the person is otherwise subject to blocking. There may be instances of "false positives," where the individual's or entity's name is similar to a sanctioned person's name, but the rest of the information provided by the applicant or customer does not match the descriptor information on the SDN List. An institution may need to conduct further due diligence, such as requesting additional identifying information from the individual or entity, to determine whether the match is a "false positive." See FAQ 5 for more information on assessing potential matches to OFAC's sanctions lists.