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What Delisting Actually Changes, Legally
When the Office of Foreign Assets Control (OFAC) removes a person or entity from the SDN List, one specific thing happens: the entry is deleted from the sanctions list. As a legal matter, the individual or company is no longer a blocked person under U.S. sanctions law. But a delisting decision is not, by itself, an instruction to any bank to release a particular account, payment, or asset. That’s exactly why asset unblocking after delisting is a separate, self-contained process that only begins once the delisting has taken legal effect.
Why Banks Don’t Release Funds Automatically
Banks that blocked a client’s funds did so under their own sanctions compliance obligations, not merely as a pass-through of OFAC’s designation. Delisting removes the legal basis for continued blocking, but it does not relieve the bank of its own diligence obligations. The bank still has to confirm that the removed entry actually matches its customer, with name, date of birth, account number, and other identifiers all lining up, and that no other restriction applies, such as a hold tied to the Russian Harmful Foreign Activities Sanctions Regulations (31 C.F.R. Part 587) or a separate sanctions program entirely. That’s why asset unblocking after delisting never happens the same day the updated SDN List is published.
The Correspondent Bank Problem
The picture gets more complicated when the blocked funds sit not with the client’s own bank but with a U.S. correspondent bank that processed an international payment. A correspondent bank may have no direct relationship with the client at all and may rely entirely on confirmation from the originating bank or from OFAC itself. In that setting, asset unblocking after delisting requires a separate round of correspondence, or even prolonged negotiations, with the correspondent bank, typically supported by a legal opinion confirming that the client is no longer a blocked person.
A Lesson From Practice
Practice shows that even a successful removal from the SDN List doesn’t by itself guarantee an immediate release of funds: the bank needs written confirmation of the delisting (an updated SDN List entry or the corresponding Federal Register notice) before it’s willing to unblock a specific account or payment. The same pattern shows up in our earlier pieces on the step-by-step process for lifting an asset block and on challenging OFAC delisting denials in court: delisting opens the door, but it doesn’t walk the client through it.
What the Client Needs to Prepare
- A copy of the updated SDN List entry confirming removal;
- A legal opinion addressing the specific account or payment affected by the delisting;
- A full blocking history: the date funds were blocked, the account number, the amount, and the bank through which the transaction ran;
- Contact details for the compliance department of the bank holding the funds.
When an OFAC Specific License May Still Be Needed
In most cases, no OFAC specific license is required after delisting: asset unblocking after delisting is handled directly by the bank based on the updated list and a legal opinion. There are exceptions, though: if part of the blocked funds relates to a transaction that may itself have violated sanctions law independent of the individual’s SDN status, a bank may take a more conservative position and require a separate confirmation from OFAC, either through a specific license or a formal unblocking notification.
A Practical Action Plan
- Confirm the effective date of the delisting and obtain an official excerpt from the SDN List;
- Send the bank written notice of the delisting along with a supporting legal opinion;
- If the bank delays or refuses, request its reasons in writing;
- If needed, approach OFAC for formal confirmation of the client’s status or for a specific license;
- Make sure the bank files its unblocking report with OFAC as required.
Bottom Line
Removal from the SDN List is a necessary but not sufficient condition for getting assets back. Asset unblocking after delisting requires a separate, often multi-step engagement with the bank and, where needed, with OFAC directly. Clients who have just won delisting should start preparing for this next phase before the bank’s first refusal, not after.
