The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced on May 28, 2026 that it had removed 76 targets from the Specially Designated Nationals and Blocked Persons List (“SDN List”) as part of an ongoing effort to reevaluate legacy sanctions designations. OFAC stated that the action reflects its broader initiative to modernize the administration of U.S. sanctions by maintaining sanctions measures that are current, strategically focused, and responsive to evolving national security and foreign policy considerations. As OFAC has repeatedly said over the years—and as it reiterated in connection with its most recent action—“the power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate persons and add them to the SDN List, but also from its willingness to remove persons from the SDN List when appropriate and consistent with the law” since “[t]he ultimate goal of sanctions is not punishment, but to bring about a positive change in behavior.” Thus, this recent development in conjunction with public statements by U.S. officials potentially signals important trends for both the sanctions compliance community and persons currently contemplating seeking removal of an existing designation.
Three strategic insights emerge from this development:
1) OFAC wants the Compliance Community to Focus on the Highest Risks
OFAC explained that the most recently delisted entries consisted of a range of outdated targets, including deceased individuals, vessels that have been scrapped or decommissioned, and persons previously linked to illicit financial networks that are no longer active. The group also included individuals designated more than a decade ago for whom limited identifying information remains available and who, based on current assessments, do not appear to present an ongoing risk. OFAC further noted that each removal underwent an interagency review process designed to confirm that the delistings would not conflict with or detract from U.S. foreign policy or national security objectives.
The most immediate beneficiaries of this “clean-up” to the SDN list will be U.S. financial institutions and entities engaged in regular sanctions screening facing compliance burdens from obsolete entries and “false positives.” OFAC has been looking to identify ways to “relieve that burden while helping to prioritize more impactful activities to implement sanctions, including scrutinizing for sanctions evasion.” The scope of this most recent reduction is still modest when compared to the length of the SDN list as a whole. The SDN list currently contains “over 17,000 names connected with sanctions targets.” —a substantial portion of which were added over the last decade. A substantial portion of these new designations reflects OFAC’s focus on active foreign policy priorities, including efforts to address Iranian oil and sanctions-evasion networks, counter transnational narcotics, and military and security linked economic actors in Cuba. Indeed, available 2026 data indicates that OFAC has continued to act at a significant pace, with 614 designations, 255 removals, and 869 total actions across 47 action days so far this year. And even these numbers significantly understate the scope of sanctioned entities as numerous entities that are owned 50 percent or more by SDNs do not appear on the SDN list but like SDNs are similarly blocked as matter of law under OFAC’s rules. OFAC’s action recognizes the need to help financial institutions and companies stay focused on the highest national security risks and to devote scare resources toward the “the most sophisticated terrorist financing and sanctions evasion schemes.”
2) The Recent Action Reflects the U.S. Government Efforts to Modernize Sanctions
While last week’s announcement may reflect only a modest reduction to the current SDN list, it reflects a notable shift in how OFAC is publicly framing sanctions effectiveness. Rather than measuring success by the number of individuals, entities, and vessels added to the SDN List, OFAC is emphasizing that sanctions should be evaluated by their impact and national security benefit. The action follows Secretary Bessent’s recent remarks at the No Money for Terror conference in Paris, where he emphasized that OFAC is “tailoring our sanctions program for the 21st century,” adding that “sanctions should not linger so long that their intended effects create unintended consequences.”
Secretary Bessent’s sanctions modernization initiative follows an earlier sweeping review issued by the U.S. Department of the Treasury. Among other things, the October 2021 Sanction Policy Review focused on the front-end use of sanctions, emphasizing that U.S. sanctions should be deployed only in support of a clear and achievable policy objective. Although Treasury’s latest modernization initiative is still unfolding, it appears to focus on the back end of sanctions: the petition process and the effort to clean up the SDN List.
According to Greg Gatjanis, Senior Policy Advisor at Fluet and a former Associate Director for Global Targeting at OFAC, “OFAC’s mass removal of sanctioned foreign persons is a thoughtful, bold, and balanced step toward sanctions modernization. It responds to the pressures on the banking and compliance communities, allows OFAC to focus on targets of the highest strategic value, and strengthens national security. Above all, the effort underscores a core principle: adding individuals and entities to OFAC’s SDN List demonstrates the power of sanctions, while removing them demonstrates the integrity of sanctions.”
3) The Recent Action Reflects the U.S. Government Efforts to Modernize Sanctions
The Secretary and OFAC’s public statements align with OFAC’s existing delisting framework. Under 31 C.F.R. § 501.807, a person may seek removal from a sanctions list by submitting a request for administrative reconsideration of the designation of a blocked individual or property. OFAC’s process generally allows designated persons to provide arguments or evidence that the designation was made in error, that the circumstances resulting in the designation no longer apply, or that other grounds exist for removal. Critically, sanctioned persons are not forever tied to the circumstances leading to their original designation and may propose corrective measures designed to resolve the grounds for designation, including corporate restructuring, the removal of individuals from roles within a blocked entity, or other similar actions that the person believes would eliminate the basis for the sanctions. OFAC often will request additional information during the review process and, where appropriate, coordinate with other U.S. government agencies before making a determination.
While many delisting requests are initiated by designated parties through OFAC’s administrative reconsideration process, Treasury’s latest action demonstrates that OFAC is seeking to implement a more dynamic and targeted approach to sanctions administration intended to keep sanctions measures focused on current national security and foreign policy priorities. That approach may be potentially instructive to persons seeking a path to successfully challenge an existing designation.
Fluet’s International Trade team is highly experienced in advising clients on OFAC sanctions matters, including designation delisting petitions, sanctions compliance obligations, and the broader regulatory and national security implications that arise in this context.
