USA Law and Practice Contributed by: Bruce G. Paulsen, Brian Maloney and Hannah Thibideau, Seward & Kissel LLP
4. Delisting Challenges 4.1 Process
or evidence establishing that the listing has an insufficient basis or that the circumstances result - ing in the listing no longer apply. If OFAC denies a petition, the petitioner may challenge that determination under the Administrative Procedure Act (APA) in federal court, or file another administrative petition. Under the APA, courts are to “hold unlaw - ful and set aside agency action, findings, and con - clusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with [the] law”. However, because the courts are to defer to and presume the validity of OFAC’s determination, meet - ing this standard is typically difficult. As OFAC has emphasised modernisation as one of its top priorities, there has been an increase in delistings. For example, in May 2026, OFAC removed sanctions on 76 “outdated” targets, which were removed from the SDN List. The removals were cited as part of the Treasury Department’s modernisation initiative. The outdated entries included deceased individuals, scrapped or decommissioned vessels, persons des - ignated as part of illicit financial networks that are no longer in operation, and individuals who were des - ignated more than ten years ago who lack sufficient identifiers for continued screening and do not appear to be an ongoing threat. 4.2 Remedies Should a petitioner successfully bring a delisting chal - lenge under the APA, the available remedy would be the delisting itself. The APA can be enforced only through equitable, injunctive relief, and does not permit plaintiffs to obtain damages against a federal agency, such as OFAC; see 5 USC. § 702 (prohibit - ing the award of money damages for violations of the APA). 4.3 Timing Since each application is considered on a case-by- case basis, there is no fixed time within which OFAC provides delisting determinations. Generally, the review process can be lengthy. OFAC advises that its review timing depends upon a range of factors, including: • whether OFAC needs additional information;
OFAC explains that “the power and integrity of [its] sanctions derive not only from [OFAC’s] ability to des - ignate and add persons to sanctions lists, including the [SDN List], but also from [OFAC’s] willingness to remove persons from such lists consistent with the law”. Accordingly, OFAC regularly receives and con - siders challenges to sanctions designations. Delisting is possible in a host of circumstances, such as: • where there is a demonstrable positive change in behaviour; • if an SDN or listed person dies; • when the basis for the designation or other sanc - tion no longer exists; or • when the designation or other sanction was based on mistaken identity. The delisting petition procedures are set forth at 31 CFR § 501.807. Persons seeking to challenge a designation must submit a written request for removal (referred to as a “petition” or “request for consideration”). The petition should include: • the listed person’s name and mailing address (including email address) and, if appropriate, their authorised representative’s name and mailing address (including email address); • proof of the listed person’s identity (such as a copy of a government-issued identification card); • the date of the relevant OFAC listing action (such as the designation or identification); • the SDN listing (or other OFAC listing) as it appears on the SDN List (or other OFAC list); • a request for the reconsideration of OFAC’s deter - mination, including a detailed description of why the listed person should be removed; and • if writing on behalf of a petitioner, a signed authori - sation from the petitioner indicating that the repre - sentative is writing on behalf of the petitioner and identifying their relationship to the petitioner. OFAC also encourages petitioners to include arguments
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