General Note on U.S. Person Dealings in Funds or Proceeds Linked to Sanctions-implicating Transactions (System Ed. Note)

Last substantive commentary amendment:
Mar. 30 2026

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TURBOFAC Commentary (2012 words)

General Note on U.S. Person Dealings in Funds or Proceeds Linked to Sanctions-implicating Transactions (System Ed. Note)

A common question that arises in the context of U.S. banks dealing with third-country persons that engage in sanctions-implicating dealings outside of U.S. jurisdiction is whether, and to what extent, U.S. persons must ensure that they do not deal in proceeds that are linked to or derived from such sanctions-implicating activities. As described below, the weight of evidence strongly suggests that OFAC does not interpret its prohibitions broadly in this context, be it in the case of blocking or general embargo prohibitions.

We first note that, when it comes to outward transfers of funds to third country persons that are known to engage in sanctions-implicating transactions, OFAC’s longstanding practice is to consider such transactions prohibited where (i) funds are earmarked for sanctions-implicating activity, or (ii) the non-sanctioned third...