OFAC Blocked Funds

Money or assets frozen because they belong to or involve a sanctioned party, held in a blocked account and reported to OFAC.

TL;DR

TL;DR: Blocked funds are assets frozen because they involve a sanctioned party; they must be held in a blocked account and reported to OFAC.

When funds become blocked

Funds become blocked when they belong to, or involve, a party on the SDN List or otherwise covered by a blocking program. The blocking happens the moment the sanctions match is identified. From that point the funds cannot be released, transferred, or used, and they must be placed in a blocked account and reported to OFAC, including a blocked property report within 10 days. The blocked account keeps the funds identifiable and separate, which is required while the block remains in place.

Blocked versus simply rejected

Blocking is not the same as rejecting a transaction. Rejected funds are returned and the transaction never completes. Blocked funds are frozen in place because they involve a blocked party, and returning them could itself facilitate a prohibited transfer. Knowing which outcome applies to a given match is a core compliance skill. Releasing blocked funds without OFAC authorization is itself a violation, so the freeze stays until the matter is resolved.

Blocked funds in agent payments

For agents, the control is to stop before funds become blocked. sanctionsai.dev screens the counterparty before payment and returns BLOCK for a flagged party, so the agent halts the transfer before value moves. Once a BLOCK is returned, the 4-Gate protocol's STOP gate freezes the flow, and the dispute_open tool can document the finding for the required reporting.