The Six-Year Rule: Where It Comes From

Most legal challenges to OFAC decisions are brought under the Administrative Procedure Act (APA). The APA authorizes federal courts to set aside agency action that is arbitrary, capricious, or otherwise unlawful; making it the primary vehicle for contesting SDN designations, asset freezes, and license denials.

The governing limitations period is set by 28 U.S.C. § 2401(a): any civil action against the United States must be filed within six years of the date the claim accrues. Six years sounds like a long runway. In practice, the statute of limitations for OFAC lawsuits has a way of running out well before most clients realize they need to act.

When the Clock Starts Ticking

The limitations period begins to run when the agency action becomes final and the plaintiff first suffers injury as a result. For individuals added to the SDN list, that moment is generally the date OFAC publishes the designation, not the date the designated person learns about it.

This creates an immediate practical problem for foreign nationals who have no presence in the United States and are not monitoring OFAC publications. Lack of notice does not pause the clock. From the moment the Specially Designated Nationals and Blocked Persons List is updated to include a person’s name, the six-year window is open and counting down.

Challenging an SDN Designation: Why Delay Is Dangerous

When the goal is to challenge the designation itself, the statute of limitations for OFAC lawsuits is anchored to a single event: the date the designation was published. A person designated in February 2022 has a theoretical window through February 2028. Six years seems more than enough time, at first glance.

The reality looks different. The first months after designation typically go toward understanding what has happened and finding competent U.S. sanctions counsel. Analysis, document gathering, and strategy development follow. In most cases, an administrative petition for reconsideration is filed before any litigation is seriously considered. OFAC is not known for speed. Waiting periods of two to three years or more are common. By the time it becomes clear that the administrative route has stalled, the six-year window may have fewer than two years remaining. That is barely enough time to build and file a federal court challenge.

Unblocking Assets: A Different Accrual Logic

Before turning to the accrual question, it is important to define the scope of this section. For OFAC to consider a specific license application to release blocked property, the assets must have been blocked by a U.S. person with a blocking report filed with OFAC as required by 31 CFR § 501.603. For sanctions purposes, this term “U.S. person” covers U.S. citizens and lawful permanent residents wherever located, entities organized under U.S. federal or state law, foreign branches of such entities, and any person physically present in the United States, including U.S. branches and subsidiaries of foreign banks. Assets blocked by a foreign bank with no U.S. presence fall outside the scope of this section: such an institution is not a U.S. person, is not required to file a blocking report with OFAC, and the license route is accordingly unavailable to its clients.

Cases seeking the release of blocked assets – frozen accounts, intercepted wire transfers, or other property held under OFAC authority – present a more nuanced limitations picture. The statute of limitations for OFAC lawsuits of this type does not necessarily run from a single triggering date.

One possible accrual point is the initial blocking itself: the date on which a U.S. bank froze the funds in compliance with OFAC’s requirements. A second, and often more favorable option also exists: a denial of a specific license application constitutes an independent final agency action and may open a fresh six-year window. Every time OFAC formally refuses to authorize the release of blocked property, a new limitations period may begin to run.

This stands in contrast to SDN designation challenges, where the limitations period is usually anchored to a single historical date.

Why OFAC Denials Have Different Legal Consequences: License Applications and SDN Reconsideration Compared

A denial of a specific license to release blocked assets is generally treated as an independent final agency action, issued at the conclusion of a separate administrative proceeding initiated by the applicant’s license application. A legal challenge to such a denial accordingly follows its own six-year limitations period, running from the date of the denial rather than from the date of the original blocking.

The picture may be different for a denial of a petition to reconsider an SDN designation. OFAC-specific case law on this question remains comparatively limited and not fully uniform. In some cases, a court may characterize such a petition as an attempt to relitigate the original designation rather than as a separate new final agency action. Relying on a reconsideration denial as the basis for a fresh limitations period may therefore require additional legal argument. Against that backdrop, a license denial generally offers a more procedurally secure foundation for calculating a new period of judicial review.

Filing an Administrative Petition Does Not Toll the Limitations Period

A common and costly misconception is that submitting an administrative petition to OFAC, whether an original application a reconsideration request, suspends the running of the statute of limitations. It does not.

Under 28 U.S.C. § 2401(a), the six-year period runs continuously from accrual. Administrative exhaustion is not a tolling event. While a client is corresponding with OFAC, waiting on a response, or hoping for an administrative resolution, the limitations clock keeps moving. The practical implication is straightforward: evaluating litigation options should begin in parallel with the administrative process, not after it has been exhausted.

Breaking the Impasse in SDN Cases: How an Unreasonable Delay Lawsuit Forces OFAC to Act

The APA makes judicial review available only for final agency action. When OFAC simply fails to respond to an administrative petition for removal from the SDN list, there is no denial, no ruling, and nothing for a court to review. The agency’s silence creates a procedural deadlock: the six-year clock keeps running, but the door to a judicial challenge remains closed.

The APA provides a direct solution. Under 5 U.S.C. § 706(1), a federal court may compel agency action that has been unreasonably delayed or withheld. Under 5 U.S.C. § 555(b), agencies are required to conclude matters presented to them within a reasonable time. Courts evaluate whether a delay is unreasonable using the six-factor framework established in TRAC v. FCC, 750 F.2d 70 (D.C. Cir. 1984), considering among other things the length of the delay, the nature of the agency’s regulatory responsibilities, and the harm to the petitioner from continued inaction.

When a court orders OFAC to act and the agency issues a denial, that denial constitutes an independent final agency action and with it, the possibility of a judicial challenge to the designation becomes available. The unreasonable delay lawsuit is not a workaround; it is the procedural key that unlocks the courthouse door.

There is, however, a critical timing constraint. A claim under 5 U.S.C. § 706(1) is legally distinct from a judicial review under 5 U.S.C. § 706(2). Filing the unreasonable delay action does not toll the six-year limitations period under 28 U.S.C. § 2401(a) for the underlying designation challenge. However, this is not an argument against bringing the unreasonable delay lawsuit. It is an argument for starting the parallel assessment of judicial review options early.

The Unreasonable Delay Lawsuit in Asset Unblocking Cases: An Additional Dimension

Everything discussed in this section applies where assets have been blocked by a U.S. person and a blocking report has been filed with OFAC pursuant to 31 CFR § 501.603.

In asset unblocking cases, the unreasonable delay lawsuit operates under the same procedural framework: 5 U.S.C. § 706(1), 5 U.S.C. § 555(b), and the TRAC factors. When OFAC fails to act on a pending specific license application, a court can order the agency to issue a decision. The strategic value of this tool, however, is considerably greater here than in SDN designation cases.

The reason lies in the accrual mechanics. As discussed above, each formal denial of a specific license application constitutes an independent final agency action and may open a fresh six-year limitations period. An unreasonable delay lawsuit in an asset unblocking case can therefore accomplish two things at once: it forces OFAC off the sidelines, and if a denial follows, it generates a new accrual point that may significantly extend the effective limitations window beyond the date of the original freeze.

Consider the following scenario. Assets are blocked in 2022, giving the client a theoretical window through 2028 to challenge the blocking directly. A specific license application is filed in 2023. OFAC does not respond. An unreasonable delay lawsuit is filed in 2025. In 2026, the court orders OFAC to rule; OFAC issues a denial. That 2026 denial opens a fresh six-year window running through 2032. Instead of racing against an expiring clock to attack a 2022 blocking order, the client now has a clean six years to challenge the license denial in court.

Corner Post and What It Changes

In 2024, the Supreme Court issued its decision in Corner Post v. Board of Governors, holding that APA claims accrue and the six-year limitations period begins when a particular plaintiff first suffers injury from the challenged agency action, not when the action was originally taken.

For the typical OFAC-designated person, Corner Post changes little: injury from a designation is felt immediately upon publication. The decision carries more weight in atypical situations, for example, where a person was designated based on alleged affiliation and the real-world consequences of that designation did not materialize until later. In those circumstances, Corner Post may shift the accrual date meaningfully in the plaintiff’s favor and reopen a window that might otherwise appear closed.

Key Takeaways

The statute of limitations for OFAC lawsuits is not a procedural formality. It is a hard deadline that determines whether federal court remains a viable option at all.

In SDN designation cases, the clock runs from a single date and does not pause for any administrative proceedings. Where OFAC’s silence creates a merits deadlock, the unreasonable delay lawsuit is the right tool to break it, but it takes time and does not stop the underlying clock. Parallel assessment of litigation options should begin early.

In asset unblocking cases, where assets have been blocked by a U.S. person and a blocking report has been filed, the accrual analysis is more flexible. The unreasonable delay lawsuit carries additional strategic weight: a compelled license denial may open a fresh six-year window, giving the client a significantly stronger position than a race against the original blocking date would allow.

Early consultation with a U.S. sanctions attorney allows for a thorough accrual analysis and ensures that the administrative and litigation tracks are built to reinforce each other, rather than leaving one strategy to quietly foreclose the other.