Office of Foreign Assets Control OFAC

Treasury has blocked enemy assets since the First World War. Its Office of Foreign Funds Control froze Axis assets in 1940, and the Office of Foreign Assets Control was formally created in December 1950, after China entered the Korean War, to block Chinese and North Korean assets. OFAC is part of Treasury's Office of Terrorism and Financial Intelligence, and its staff of a few hundred lawyers, analysts, and investigators has become one of the most consequential foreign policy tools the government has.

Most sanctions rest on the International Emergency Economic Powers Act of 1977, which lets the President block property and transactions after declaring a national emergency, along with country-specific statutes passed by Congress. OFAC publishes the Specially Designated Nationals list, whose members' U.S. assets are frozen and with whom Americans may not deal, and it runs dozens of sanctions programs targeting countries such as Russia, Iran, North Korea, Cuba, and Venezuela, as well as terrorists, drug cartels, cybercriminals, and human rights abusers.

Because the dollar dominates global finance, OFAC's reach extends far beyond U.S. borders: foreign banks often comply to avoid losing access to the American financial system. It issues licenses that permit otherwise banned transactions, such as humanitarian aid, and imposes civil penalties under a strict liability standard, meaning companies can be fined even for unintentional violations. Critics argue that heavy reliance on sanctions encourages rivals to build alternatives to the dollar.