OFAC Licenses Explained: General vs. Specific for Compliance

OFAC issues General Licenses publicly and Specific Licenses individually to authorize sanctions exceptions.

The Office of Foreign Assets Control (OFAC), part of the U.S. Department of the Treasury, enforces economic sanctions under statutes such as the International Emergency Economic Powers Act and the Trading with the Enemy Act. These sanctions restrict certain transactions with designated countries, entities, and individuals.

OFAC provides two main licensing types to authorize transactions otherwise prohibited:

• General Licenses (GLs) are publicly issued authorizations embedded in OFAC regulations, primarily detailed in 31 CFR Part 501 and related parts. They allow entire classes of transactions without needing individual approval. For example, a GL might authorize specific humanitarian activities or certain financial operations with sanctioned countries.
• Specific Licenses (SLs) require an affected party to submit an application through OFAC's licensing portal for authorization of particular transactions not covered by GLs. OFAC evaluates these requests case-by-case, issuing written approval if granted.

Understanding this distinction is vital for sanctions compliance. Legal professionals must verify whether a transaction is covered under an applicable GL or whether an SL is required to avoid unauthorized dealings.

Noncompliance risks are significant. Civil penalties can range from $250,000 to over $10 million per violation, with criminal penalties reaching $1 million in fines and up to 20 years imprisonment for willful violations, per OFAC enforcement guidance.

Diana Friling, a sanctions compliance expert, stresses economic sanctions laws operate as strict liability offenses, meaning intent is not a defense. This heightens the importance of thorough diligence in distinguishing license types before engaging in transactions subject to U.S. sanctions.