What Is an OFAC Licence?
An OFAC licence is a legal authorisation that permits a person — U.S. or non-U.S. — to engage in a transaction that would otherwise be prohibited by U.S. economic sanctions. OFAC administers more than 35 active sanctions programmes, many of which impose broad prohibitions on transactions involving specific countries, governments, entities, or individuals. Where a prohibition applies, engaging in the relevant transaction without an OFAC licence exposes the parties to civil penalties of up to $1.4 million per transaction. An OFAC licence is the only mechanism by which an otherwise-prohibited transaction can be conducted lawfully.
OFAC licences come in two fundamental forms: general licences and specific licences. Understanding the distinction — and correctly identifying which type of licence applies to a given situation — is essential before committing to any transaction that may involve a sanctions nexus.
General Licences vs Specific Licences
General licences are regulatory authorisations published within OFAC's sanctions regulations that permit certain categories of transactions without requiring any individual to apply to OFAC for permission. If a transaction falls squarely within the terms of an applicable general licence, the parties may proceed without contacting OFAC — provided they meet all of the general licence's conditions and maintain required records. General licences are interpretive documents, however, and determining whether a particular transaction is covered requires careful legal analysis.
Specific licences, by contrast, require a formal written application to OFAC's Licensing Division. They are granted case-by-case, based on OFAC's assessment of whether the applicant has demonstrated a policy basis for the authorisation. A specific licence, once granted, authorises only the specific parties and transaction described in the application — it cannot be used for transactions beyond its scope.
| Feature | General Licence | Specific Licence |
|---|---|---|
| Application Required | No — self-executing | Yes — formal written application to OFAC |
| Who Can Use | Any person who meets the stated conditions | Only the named licensee(s) |
| Duration | Ongoing (until revoked or amended) | Fixed term; transaction-specific |
| Examples | Personal remittances, official government business, journalistic activity | Blocked asset releases, specific trade transactions, wind-down authorisations |
Who Can Apply for an OFAC Specific Licence?
Any person — U.S. citizen, U.S.-incorporated entity, or non-U.S. person — may apply for an OFAC specific licence. OFAC's jurisdiction is extraterritorial, and its licensing programme is correspondingly available to applicants from any country. Dubai companies, UAE nationals, and other non-U.S. persons regularly apply for OFAC specific licences to authorise transactions involving sanctioned parties or jurisdictions, the release of blocked assets, or the performance of wind-down activities under recently imposed sanctions programmes. The application must be submitted in English and must provide sufficient detail for OFAC to evaluate the policy basis for the requested authorisation.
Major Categories of OFAC Licences Available to Dubai Businesses
The following categories of OFAC specific licences are among those most commonly sought by Dubai and UAE businesses:
- Humanitarian, food, and medicine licences: Authorisations for the export or re-export of food, medicine, and medical devices to comprehensively sanctioned jurisdictions — including Iran and North Korea — where general licences do not provide sufficient coverage for the specific transaction structure.
- Iran-related business licences: Specific licences for transactions involving Iranian parties that fall outside the scope of available general licences, including certain oil and gas sector transactions, financial institution activity, and transactions involving Iranian government entities.
- Russia wind-down licences: Following the imposition of expanded Russia sanctions since 2022, specific licences have become increasingly necessary for UAE companies to wind down pre-existing contractual arrangements, liquidate blocked assets, and transition supply chains away from sanctioned Russian entities.
- SDN blocked asset releases: Applications to OFAC for the release of property blocked because of its ownership or control by an SDN-listed party, including funds in transit, trade finance instruments, and real estate held through blocked entities.
- Legal services licences: Authorisations for the provision of legal services to sanctioned individuals or entities, including fees for representation in OFAC enforcement proceedings or other legal matters.
- Personal remittances and family support: Licences for personal remittances to individuals in sanctioned jurisdictions, including Iran and Cuba, that exceed the amounts authorised under applicable general licences.
The OFAC Licence Application Process
A well-prepared specific licence application substantially improves the prospect of approval and can reduce OFAC's processing time by avoiding the need for follow-up questions. The process involves the following steps:
- Assess the transaction: Identify precisely which OFAC prohibition applies and confirm that no applicable general licence already authorises the transaction. An incorrect general licence reliance is itself a sanctions violation.
- Identify the applicable programme: Determine which OFAC sanctions programme governs the transaction, as this determines which OFAC office will review the application and what policy considerations apply.
- Gather documentation: Compile all supporting documentation — contracts, corporate ownership records, beneficial ownership information, financial statements, and evidence of the transaction's purpose — that OFAC will need to evaluate the application.
- Draft the application: Prepare a detailed written application explaining the proposed transaction, identifying all parties, demonstrating the policy basis for the authorisation, and addressing any potential policy concerns proactively.
- Submit via the OFAC licensing portal: Submit the application through OFAC's online licensing system. OFAC assigns an application number and acknowledges receipt; subsequent communications are managed through the portal.
- Follow-up and supplementation: OFAC may issue requests for additional information. Prompt, complete responses to such requests are essential to avoid further delays. Shaun Gregory Morgan manages all follow-up communications on behalf of clients.
What OFAC Considers When Evaluating Licence Applications
OFAC's Licence Evaluation Factors
- U.S. foreign policy and national security objectives: Whether granting the licence advances or undermines the objectives of the relevant sanctions programme.
- Humanitarian grounds: Whether the transaction involves food, medicine, or medical devices destined for civilian populations in sanctioned jurisdictions.
- Sanctions nexus: The nature and degree of the sanctions nexus — direct transactions with SDN-listed parties are evaluated more stringently than indirect or incidental connections.
- Completeness and accuracy of the application: OFAC's Licensing Division processes high volumes of applications. Well-organised, complete, and accurate applications receive faster and more favourable treatment.
- Consistency with prior licensing practice: OFAC's prior decisions in similar matters — which Shaun Gregory Morgan tracks closely — provide a guide to the policy positions likely to be applied to a new application.
OFAC Licence Processing Times
OFAC does not publish formal service level standards for specific licence applications, and processing times vary considerably. In practice, relatively straightforward applications involving well-established licence categories — such as personal remittances or legal fees — are typically processed within 30 to 60 days. Complex applications involving high-priority sanctions programmes (Iran, North Korea, Russia), significant financial transactions, or novel legal questions can take 90 to 120 days or longer. Where the transaction is time-sensitive, the application should be submitted at the earliest possible stage and should clearly communicate the time-sensitivity and its commercial justification.
OFAC Licence Denial and Reconsideration
OFAC licence denials are not uncommon — particularly for applications that lack sufficient supporting documentation, that do not clearly articulate the policy basis for the authorisation, or that involve transactions with a direct nexus to high-priority sanctions targets. A denial is not, however, necessarily the end of the road. OFAC's regulations provide for a formal reconsideration process through which the applicant can submit additional information, address OFAC's policy concerns directly, or present new arguments in support of the application. Where reconsideration is also unsuccessful, alternative legal strategies — restructuring the transaction, identifying applicable general licences, or exploring third-party solutions — should be evaluated with specialist counsel.
Compliance Obligations After OFAC Licence Approval
The grant of an OFAC specific licence is not the end of the legal process — it is the beginning of a compliance obligation. OFAC specific licences typically include conditions that are legally binding on the licensee. Common conditions include: maintaining complete records of all transactions conducted under the licence for a minimum of five years; filing periodic or post-transaction reports with OFAC's Licensing Division; restricting use of the licence to the specific parties and transactions identified in the application; and, in some cases, providing OFAC with the right to audit the licensee's records. Violating any condition of an OFAC licence constitutes an independent sanctions violation.
Why Dubai Companies Need OFAC Licensing Expertise
Several structural features of Dubai's economy create licensing needs that do not arise in most other jurisdictions. First, Dubai's position as a global re-export hub means that local trading companies regularly encounter U.S.-origin goods with sanctions implications. Second, the UAE's proximity to Iran and its historical trading relationships with the region create frequent encounters with Iran sanctions licensing issues. Third, the rapid expansion of Russia sanctions since 2022 has created urgent wind-down licensing needs for UAE companies with pre-existing Russian business relationships. Fourth, DIFC and ADGM financial institutions encounter blocked assets and prohibited transactions as a routine consequence of serving a globally diverse client base. Fifth, Dubai's real estate sector — a frequent vehicle for cross-border wealth management — encounters SDN-related blocking issues in connection with property transactions involving directly or indirectly sanctioned parties.
How Shaun Gregory Morgan Prepares OFAC Licence Applications
A successful OFAC licence application requires legal expertise, strategic positioning, and meticulous preparation. Shaun Gregory Morgan's licence preparation process includes:
- Sanctions programme analysis: Precise identification of the applicable OFAC regulations, general licences, and policy framework governing the proposed transaction.
- Transaction structuring advice: Where possible, restructuring the transaction to maximise the prospect of licence approval and minimise the sanctions nexus — reducing both regulatory risk and processing time.
- Application drafting: Preparation of a comprehensive, professionally presented written application that presents the strongest possible case for authorisation, anticipates OFAC's policy concerns, and provides all required supporting documentation.
- OFAC follow-up management: Managing all communications with OFAC's Licensing Division, including responses to supplemental information requests, to keep the application on track for approval.
- Post-approval compliance: Advising on and implementing the record-keeping, reporting, and operational compliance obligations attached to the approved licence.