OFAC sanctions are economic and trade restrictions enforced by the U.S. Treasury Department. Not every transaction by a company in Türkiye is automatically subject to OFAC rules. However, due to the payment system, the subject of the transaction, and the relevant sanctions program, U.S. sanctions may have an impact on a specific transaction.
OFAC sanctions are not uniform.
OFAC applies broad country or territory restrictions in some programs, and targeted measures against specific individuals and entities in others. Furthermore, lists outside the SDN list may contain different prohibitions and restrictions. Therefore, one should not conclude that “transactions are permitted” or “transactions are prohibited” based solely on the name of a single country or a single list search.
What risks should businesses operating in Türkiye be aware of?
- Whether the transaction parties are listed on OFAC;
- The direct or indirect ownership percentages of blocked individuals in companies not on the list;
- Payment made via a US bank or US financial system;
- Program-specific restrictions, licenses, and exceptions for goods, services, and destinations;
- Whether there is a risk of secondary sanctions under the relevant program for individuals outside the U.S.
Under OFAC’s 50% rule, if a blocked individual’s total direct or indirect ownership in a company is 50% or more, the company may be placed on the block even if its name isn’t explicitly listed. However, a similarity in name alone doesn’t prove a genuine listing match; a comparison of identity and company information is necessary.
How can the integration process be established?
Pre-transaction screening of parties and partners, documentation retention, and understanding of payment flows are fundamental steps. If a risk signal is identified, the current text of the relevant sanctions program, general licenses, and OFAC disclosures should be reviewed. Expert legal opinions or a specific license assessment from OFAC may be considered if necessary. The appropriate approach varies depending on the field of activity and transaction chain.
Are OFAC sanctions directly applied in Türkiye?
OFAC administers sanctions based on U.S. law. The mere fact that a company established in Türkiye conducts all its activities in Türkiye does not automatically render it subject to an OFAC ban. However, transactions with U.S. individuals, payments transiting the U.S. financial system, elements originating in the U.S., or secondary sanctions provisions specific to the relevant program may alter the assessment. The question of applicability must be answered on a case-by-case basis, involving each party, transaction, and program. Obligations under Turkish law must also be examined separately; the scope of the two systems should not be considered the same.
For example, a contract between two companies in Turkey might create a Turkish legal issue. However, if the payment goes through a US bank, the bank may have to perform a different enforcement check. Therefore, contract performance and payment are separate matters. The article on the collection of foreign receivables in Turkey explains the collection methods, while this article explains the enforcement framework.
What are the differences between OFAC lists?
The SDN List contains blocked individuals and entities. Other OFAC lists may have different legal restrictions. When you find a name search result, the first thing to do is determine which list the record belongs to and which program code it is associated with. Just because the same last name appears doesn’t mean the person is actually listed. Since the OFAC search tool can find similar spellings, verification should be done using data such as date of birth, address, registration number, and aliases.
Key check points based on transaction type.
| Process | The main question | The record to be examined |
|---|---|---|
| Export or import | Are there any restrictions on the party, product, and destination? | Contract, customs and shipping documents |
| International payment | Is there a US connection or blocking party in the payment chain? | Bank letter and payment message |
| Partnership or investment | Does the total ownership of the blocked individuals reach 50 percent? | Commercial registry and partnership scheme |
| Debt collection | Does the collection method conflict with the sanction restriction? | Accounts receivable and payment schedule |
The practical significance of the 50% rule.
According to OFAC, an entity in which one or more blocked individuals directly or indirectly hold a total of 50% or more ownership can also be considered blocked. The entity’s name does not need to appear on the SDN list. When ownership is calculated through subsidiaries, the chain of ownership is carefully examined. Management control alone does not automatically create blocked status under the 50% rule; other grounds for enforcement and specific transaction relationships must be investigated.
Especially in recurring transactions, it is necessary to review the current status of the parties and partners for each new order. A successful previous transaction does not automatically guarantee a new one. The date of the decision and its written and documented justification are also important, as rules, lists, and the payment chain may change.
Therefore, it is not sufficient for a Turkish company to simply inquire about the counterparty’s trade name. Information on the ultimate beneficiary, share changes, and intermediary companies in different countries must be recorded. A partnership review conducted under company law also helps in understanding the risk of sanctions.
Transactions linked to Iran and Russia.
No single general conclusion can be drawn for transactions involving Iran and Russia. The relevant program, parties, goods and services, payment date, and valid licenses are all important factors. The legal existence of a receivable related to Iran and the avenue for collection are distinct issues. Articles on commercial receivables in Iran and receivables in Russia address the aspects of collection under Turkish law separately.
How is compliance verification documented?
Just as important as conducting a scan before the process is documenting how the scan was performed. The date of the list used, the exact title and alternative names searched, any potential matches found, why these were considered correct or incorrect matches, and the person who made the decision should all be included in the file. Ongoing processes should be reviewed as sanction lists and general licenses may change.
OFAC’s compliance framework includes components such as management support, risk assessment, internal controls, testing and auditing, and training. A business operating in Türkiye can adapt this approach to its own processes depending on the nature of its operations. This framework does not mean that every transaction is automatically subject to U.S. law; it helps in identifying relevant risks early.
What to do if payment is delayed?
If payment is pending, the documents requested by the bank and any written explanation should be obtained. It is crucial to distinguish between a genuine listing of a party, a block due to partnership, incomplete identification information, or the bank’s internal policy. Once the documents are complete, applicable restrictions, licenses, and potential application options are reviewed. Using a different intermediary or payment channel before the situation is clarified may create new legal risks.
The decision-making process when a risk signal is observed.
The first step is to clearly define the process and the parties involved. Then, the result of the list is verified to ensure it’s a genuine match. The third step involves reviewing the relevant enforcement program’s prohibition, exception, and licensing provisions. Finally, payment, delivery, and contractual obligations are considered together. This sequence minimizes unnecessary delays due to incorrect name matches and prevents overlooking genuine restrictions. At each stage, it should be noted which information is definite and which awaits verification.
Why is the connection with Turkish law kept separate?
In Turkish law, the fact that a receivable is enforceable does not guarantee that payment will be processed smoothly through international banking channels. Similarly, the possibility of obtaining a license under OFAC does not eliminate contractual, enforcement, tax, or customs obligations under Turkish law. The parties to the transaction should plan both the performance of the contract and the method of collection before a dispute arises. If necessary, a sanctions analysis and a litigation or enforcement strategy under Turkish law should be established in the same file, but with separate justifications.
Keeping transaction documents up-to-date ensures a sound legal assessment.
This content is for general information only; obligations under Turkish law and the application of US sanctions should be considered separately.
Companies that conduct regular transactions should repeat the initial screening when a new customer or supplier is added. Changes in partnership, the use of a different bank, or a change in delivery location can affect the basis of the previous assessment. Therefore, the transaction file should include not only the result but also the documents leading to the result. If a dispute arises, the contract date, payment instructions, and correspondence can be examined together to easily and consistently explain why each step was taken. The dates on the documents are important.
Frequently Asked Questions
Are all companies in Türkiye subject to OFAC sanctions?
No. Applicability is reviewed based on US connection, parties, activity, and the relevant program. Some programs may also pose risks to individuals outside the US.
Is it sufficient that my name doesn’t appear on the SDN list?
No. Other lists, the 50% ownership rule, and program-specific restrictions should also be reviewed.
Does paying with US dollars alone mean it’s prohibited?
No. The payment channel is an important factor; whether it is prohibited or not is determined by the parties to the transaction and the applicable rules.
Is the bank’s refusal decision an OFAC decision?
Not always. The bank may also choose not to act based on its own risk policy. A definitive conclusion cannot be drawn without seeing the reasoning and documentation.
If you have a general license, is an application required?
For transactions that fully meet the terms of a general license, a separate specific license may not be required. The terms and reporting obligations should be reviewed.
