Blocked and rejected are different
When a bank stops a payment on sanctions grounds, it typically either blocks it, freezing the funds in a separate account because a blocked person has an interest in them, or rejects it, declining to process a prohibited transaction that involves no blocked property. The difference shapes what happens next. Rejected funds generally go back to the sender, while blocked funds usually stay frozen until OFAC authorizes their release, often through a license. Banks must report blocked and rejected transactions to OFAC on short timelines, and those reports may lead to questions directed at you. Ask your bank what action it took and why, in writing if possible.
Gathering the transaction record
Assemble the invoice, contract, purchase order, payment instructions, and correspondence about the transaction, along with ownership information for the counterparty and the banks involved. If the counterparty or its owners appear on a sanctions list, you need to know when they were listed and whether the ownership has changed. If you hold blocked property yourself, reporting duties may apply to you as well as to the bank. Avoid rerouting the payment through other banks, currencies, or entities to get around the block, since that can create a separate violation of its own.
Licenses, disclosure, and next steps
We review whether the transaction may fall under an existing general license, whether a specific license request to OFAC makes sense, or whether the funds will need to remain blocked for now. If the episode reveals that past transactions may have broken sanctions rules, we talk through whether a voluntary self-disclosure is appropriate and how to stop the activity going forward. If you or your company were designated, we discuss the process for asking OFAC to remove a listing and what information would need to be presented. We cannot tell you how OFAC will decide a license or removal request. We can make sure the request is complete, accurate, and consistent with the record.
