What Is an OFAC Check? Guide to Sanctions Screening

An OFAC check is the process of screening customers and transactions against lists of sanctioned individuals and entities maintained by the U.S. Office of Foreign Assets Control. These screenings are mandatory for financial institutions and increasingly required for cryptocurrency and stablecoin platforms that operate as money transmitters.

The Basics

The Office of Foreign Assets Control, part of the U.S. Department of Treasury, administers economic and trade sanctions. It maintains several lists of sanctioned targets, with the Specially Designated Nationals and Blocked Persons List (SDN List) being the primary tool used for compliance screening. The SDN List contains over 15,200 entries as of 2025 and is updated continuously as new sanctions are imposed and old ones removed.

 Financial institutions must screen all customers and transactions against OFAC lists before processing payments. The goal is to prevent funds from reaching sanctioned countries, organizations, and individuals who pose a threat to U.S. national security or foreign policy.

Primary vs. Secondary Sanctions

OFAC administers two types of sanctions:

• Primary sanctions: Direct prohibitions on U.S. persons and entities within the U.S. These apply automatically.
• Secondary sanctions: Restrictions on foreign entities that engage with sanctioned actors. These target non-U.S. companies doing business with sanctioned countries or individuals.

For stablecoin companies and payment platforms, both matter. A user in a sanctioned jurisdiction might attempt to buy or transact with stablecoins. Even if your company is outside the U.S., if you have U.S. customers or U.S.-based banking relationships, OFAC rules apply to your business.

How OFAC Checks Work

The screening process typically happens in real-time using automated software. When a customer registers or initiates a transaction, their information is checked against the SDN List and other OFAC lists. The system flags exact matches and close matches for human review.

Because the SDN List is updated on a rolling basis with no fixed schedule, screenings are not a one-time event. Ongoing monitoring is required. A person can be added to the list at any moment, so compliance teams must re-screen customers periodically and monitor for changes.

Penalties

OFAC violations carry steep consequences. Civil penalties can reach $377,700 per violation as of January 2025. Criminal penalties are even higher: up to $1 million in fines and 20 years of imprisonment. These are not theoretical risks.

In November 2023, the cryptocurrency exchange Binance settled OFAC violations for $968 million, the largest enforcement action against a crypto platform at that time. The company had failed to screen customers in sanctioned jurisdictions and had processed transactions worth hundreds of millions of dollars in violation of sanctions.

The Connection to Stablecoins

Stablecoin platforms and payment infrastructure companies must treat OFAC compliance as a first-order priority. The Financial Crimes Enforcement Network (FinCEN) classifies stablecoin operators as money transmitters, which means OFAC rules apply directly.

When a user attempts to mint, transfer, or redeem stablecoins, the platform must screen that user against OFAC lists. If a match is found, the transaction must be blocked. Failing to do so creates liability for the platform.

For platforms operating globally, this becomes more complex. A user might be accessing your service from a jurisdiction you didn't intend to serve. Geolocking and KYC (Know Your Customer) systems help, but OFAC compliance requires layered controls.

OFAC and Other Compliance Frameworks

OFAC is separate from the Bank Secrecy Act (BSA) and anti-money laundering (AML) rules, but they work together operationally. While OFAC focuses on sanctions, BSA/AML rules focus on detecting and reporting suspicious activity.

A single customer due diligence program must address all three: OFAC screening, BSA/AML filing, and beneficial ownership identification. Most compliance platforms combine these functions into a single workflow.

The Practical Reality

For a stablecoin company, OFAC compliance is not optional. Regulators expect real-time or near-real-time screening, documented policies, and evidence of monitoring. Ignored, it becomes a regulatory showstopper.

Building this in-house is possible but resource-intensive. Most startups use third-party compliance vendors who maintain updated sanctions lists and provide API-based screening. The cost is typically a few cents per transaction or a monthly subscription based on volume.

The takeaway: OFAC checks are a mandatory part of operating a stablecoin payment platform. They protect your company from massive fines and criminal liability while keeping your platform from becoming a tool for sanctions evasion. Getting this right from the beginning is cheaper and cleaner than fixing compliance failures later.