Sanctions Law Center has published an overview of the Office of Foreign Assets Control’s October 26, 2026 updates to guidance on blocking property, rejecting transactions, and reporting sanctions actions. The firm’s October 27 article examines distinctions that affect how financial institutions handle payments and document their decisions.
OFAC announced amendments to 11 frequently asked questions as part of its ongoing review of published guidance. The agency identified FAQs 10, 32 through 36, 41, 42, 49, 50, and 53. Its announcement describes a guidance update rather than the enactment of a new statute or the establishment of a new sanctions program.
A central distinction concerns whether a prohibited transaction involves property in which a blocked person has an interest. OFAC’s updated guidance explains that certain prohibited transactions must be rejected when no blockable interest exists. In those circumstances, the payment is returned to the originator rather than forwarded to the beneficiary; blocking involves holding property subject to applicable sanctions restrictions.
For funds that must be blocked, FAQ 32 describes placement in a segregated, interest-bearing account on a U.S. financial institution’s books. Only debits authorized by OFAC may be made from that account. Institutions may use separate blocked accounts or an omnibus account, provided they maintain a clear audit trail that allows individual funds and associated interest to be identified.
The reporting requirements apply to both blocked property and rejected transactions. FAQ 49 states that reports must be submitted through the OFAC Reporting System within 10 business days of the relevant action. Supporting records must accompany the report and may include payment instructions, checks, invoices, letters of credit, bills of lading, or other pertinent documentation.
Annual reporting is a separate obligation addressed in FAQ 50. U.S. persons holding blocked property as of June 30 must submit their annual report by September 30 of that same year, using the required form through the OFAC Reporting System. For institutions holding blocked funds in omnibus accounts, the guidance also addresses reporting each blocked asset separately.
The updated materials also distinguish a customer’s inquiry from an instruction to execute a payment. Under FAQ 53, a question about whether a transfer is permitted does not, by itself, create a rejected transaction that must be reported. Actual payment instructions require a different analysis based on the applicable prohibition and whether a blocked interest is present.
FAQ 42 additionally addresses potential matches to sanctioned persons. OFAC notes that similar names can produce false positives and that further identifying information may be needed to determine whether the person involved is actually blocked. For example, FAQ 42 explains that a bank receiving an initial deposit from a blocked person must decline the account opening and block that initial deposit. The guidance does not make every name similarity a confirmed sanctions match or replace review of applicable regulations, exemptions, and authorizations.
Sanctions Law Center is a Washington, D.C. law firm whose practice includes OFAC licensing, unblocking applications, sanctions compliance counseling, and representation in enforcement matters. Its published overview connects the October guidance revisions with payment handling and reporting procedures relevant to financial institutions.
This release draws on OFAC’s October 26 announcement and updated FAQs. It is provided for general public awareness and is not legal advice; application depends on the specific facts and governing authorities.
Sanctions Law Center publishes information about U.S. sanctions and related legal processes. Its services include compliance counseling for organizations addressing OFAC obligations.
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