The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the United States Treasury Department. It is an institution responsible for administering and enforcing economic and trade sanctions to support U.S. national security and foreign policy objectives. OFAC's roots trace back to the Office of Foreign Funds Control (FFC), established in 1940 following the German invasion of Norway, to prevent Nazi use of occupied countries' assets. OFAC itself was formally created in December 1950 as the Division of Foreign Assets Control, after President Harry S. Truman declared a national emergency following China's entry into the Korean War, which led to the blocking of all Chinese and North Korean assets subject to U.S. jurisdiction.
OFAC's mechanism is primarily based on the authority granted by the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA). It enforces sanctions by preventing "prohibited transactions" and has the power to levy significant penalties, freeze assets, and bar parties from operating in the U.S.. A key mechanism is the maintenance of sanctions lists, most notably the Specially Designated Nationals and Blocked Persons (SDN) List, which includes individuals and entities with whom U.S. persons are generally prohibited from transacting. OFAC can issue general or specific licenses to authorize certain transactions that would otherwise be prohibited.
OFAC connects to the broader U.S. government effort to combat illicit finance, operating under the Office of Terrorism and Financial Intelligence within the Treasury Department since 2004. Its actions are often coordinated with international mandates, such as those from the United Nations. Recently, OFAC has issued new guidance, such as the Guidance on Sham Transactions and Sanctions Evasion on March 31, 2026, which signals that companies must look beyond the formal 50 Percent Rule (which blocks entities owned 50% or more by a sanctioned person) to assess control and other economic realities. It has also been active in issuing and amending General Licenses, for example, related to Venezuela and Russia, to adjust the scope of sanctions.