On April 3, 2026, the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC) announced the Zadornov SDN delisting, ending nearly four years of U.S. blocking sanctions. The result followed a deliberate two-stage legal strategy: an administrative petition to OFAC, followed by a lawsuit in federal court. Below, we analyze how this was accomplished and what lessons the case offers.

Who Is Mikhail Zadornov

Mikhail Mikhailovich Zadornov is a Russian economist and public official. From 1997 to 1999, he served as Minister of Finance of the Russian Federation under Prime Ministers Chernomyrdin, Kirienko, and Primakov. Before his government appointment, he chaired the Budget Committee of the State Duma and subsequently served as a Duma deputy across several legislative sessions representing the Yabloko party.

From 2005 to 2017, Zadornov led VTB 24, the retail arm of VTB, Russia’s second-largest bank. In 2018, he was appointed chairman of FC Otkritie Bank to oversee its rehabilitation following the Central Bank of Russia’s bailout of the institution. In late 2022, Otkritie was absorbed by the VTB Group. Zadornov submitted his resignation in December 2022 and left the post of chairman of the board effective January 1, 2023.

How Zadornov Ended Up on the SDN List

In April 2022, OFAC designated Mikhail Zadornov under the Russia-related sanctions program established by Executive Order 14024 in connection with Russia’s invasion of Ukraine. The stated basis was his role as chairman of FC Otkritie Bank, which OFAC characterized as a systemically important Russian state-owned bank operating in the interests of the Russian government.

Shortly thereafter, the United Kingdom imposed its own sanctions on Zadornov in May 2022, followed by Ukraine in February 2023. By the time work on the delisting began, Zadornov was under sanctions in several Western jurisdictions simultaneously.

Notably, Otkritie Bank itself had been added to the SDN list in February 2022, as part of the initial wave of sweeping sanctions against the Russian financial sector. Zadornov’s personal designation, as the head of an already-blocked institution, followed several months later.

Step One: Administrative Petition to OFAC

In December 2023, approximately one year after leaving Otkritie, Zadornov filed a petition with OFAC requesting reconsideration of his designation and removal from the SDN List.

The petition advanced arguments standard to cases of this type: the petitioner no longer held any position in the Russian financial sector, was no longer connected to Russian government structures, and could not influence government policy. In support of the Zadornov SDN delisting request, he also cited precedent: OFAC had previously removed from the SDN list several individuals in analogous circumstances, including former Otkritie colleagues who had departed their roles after sanctions were imposed.

The petition did not produce the desired result. OFAC did not issue a substantive decision, and the administrative review process stalled.

Step Two: Federal Lawsuit

When it became clear that the administrative route had reached a dead end, Zadornov filed suit in the U.S. District Court for the District of Columbia on July 30, 2024 (Case No. 1:24-cv-02239, Zadornov v. Blinken et al.). The defendants included the U.S. Department of State and its then-Secretary Antony Blinken.

Filing suit in this context is a deliberate tactical move. The very act of initiating litigation creates procedural pressure on OFAC: the agency is forced to engage actively in the matter, respond to court inquiries, and defend its position. This dynamic frequently pushes the parties toward genuine negotiations.

Legal Basis of the Lawsuit

The complaint was filed under the Administrative Procedure Act (APA, 5 U.S.C. § 701 et seq.). The key legal arguments included:

• Unlawful delegation of authority. OFAC had effectively transferred authority over the delisting petition to the State Department, which lacks the regulatory mandate to adjudicate such matters. Under 31 C.F.R. § 501.807, the exclusive authority to consider delisting petitions rests with OFAC. The State Department’s role in the sanctions process is advisory at the designation stage; it has no role in reviewing petitions for removal.
• Arbitrary and inconsistent agency action. OFAC acted arbitrarily and inconsistently by placing Zadornov in a materially worse position than other individuals in comparable circumstances, in violation of the principle of equal application of administrative process.
• Unreasonable delay. The absence of a decision on the petition was characterized as unlawful agency inaction subject to judicial review under the APA.
• Absence of factual basis for continued designation. The petitioner argued that no grounds for his continued listing existed: he had left his position at a sanctioned institution, severed any connection to Russian government structures, and exercised no influence over government policy.

Of particular legal significance was the distinction between status-based sanctions (i.e., designation as the head of a sanctioned institution) and conduct-based sanctions. Zadornov’s core argument was that his listing was tied to his position, not to any specific actions of his own, and that once that position was relinquished, the factual predicate for his continued designation had ceased to exist.

Settlement and the Zadornov SDN Delisting

Approximately 1.5 years after the complaint was filed, the parties reached a resolution. A hearing scheduled for February 11, 2026, was vacated by the court on joint motion of the parties. On April 3, 2026, OFAC formally announced the Zadornov SDN delisting.

The U.S. Department of the Treasury published no formal explanation for the decision. An anonymous U.S. official told Reuters only that the sanctions relief reflected the petitioner’s “positive behavioral changes” and did not signal any broader recalibration of U.S. sanctions policy toward Russia.

Key Takeaways: A Strategy That Worked

The Zadornov SDN delisting demonstrates that removal from the OFAC SDN List is achievable even in the context of sweeping Russia-related sanctions, provided the legal strategy is well-structured. Several observations stand out:

• An administrative petition is a necessary first step, but not sufficient on its own. Without additional pressure, OFAC can let a petition sit unresolved for years without issuing a decision on the merits.
• A federal lawsuit is an effective lever. It does not replace the administrative process; it complements it by creating procedural incentives for OFAC to move toward genuine engagement.
• The loss-of-status argument works. The distinction between sanctions tied to an official position and sanctions tied to personal conduct is a critical line of defense for executives of sanctioned organizations who have left their roles.
• Precedent matters. Citing comparable delisting cases, including those of former Otkritie colleagues, reinforced the petitioner’s position: arbitrary differential treatment of individuals in identical circumstances is itself a cognizable legal violation.

If you or your company are on the SDN list and want to understand what legal options exist for delisting, contact us. We will promptly assess your situation and propose a course of action.