What is OFAC Screening?
OFAC screening is the check performed against the Specially Designated Nationals list and other sanctions lists maintained by the US Office of Foreign Assets Control.
Every investor, wallet, and counterparty in a tokenized real estate offering is screened to ensure they are not subject to US sanctions before they can hold or transact in the token.
What OFAC Is and What It Enforces
The Office of Foreign Assets Control is the US Treasury body that administers and enforces economic sanctions. It maintains lists of individuals, entities, and jurisdictions with whom US persons cannot transact, most prominently the Specially Designated Nationals and Blocked Persons list, known as the SDN list.
OFAC sanctions apply on a strict liability basis. An issuer that allows a sanctioned party to subscribe, hold tokens, or receive distributions faces civil and criminal penalties whether or not it knew the counterparty was sanctioned. The compliance burden sits with the issuer and its service providers.
What Screening Involves
Screening checks the investor’s name, date of birth, address, nationality, and other identifying information against the SDN list, the consolidated sanctions list, and applicable program-specific lists. For entities, the screening extends to beneficial owners and controlling parties, since OFAC’s 50 Percent Rule treats entities owned 50 percent or more by sanctioned persons as themselves sanctioned.
In tokenized offerings, screening also extends to wallet addresses. Specialized analytics providers maintain databases of wallets associated with sanctioned actors, mixers, and other high-risk activity. A wallet that triggers a hit cannot be whitelisted, and an existing wallet that becomes flagged after onboarding is blocked from further transfers.
When Screening Happens
Screening is not a one-time check at onboarding. It is an ongoing obligation. Investors are screened at subscription, and then continuously monitored against updates to the sanctions lists for as long as they hold tokens or remain on the platform.
If an existing holder appears on the SDN list after a sanctions update, the issuer must block their position, freeze any pending distributions, and report the match to OFAC. The smart contract enforces the block at the protocol level, preventing further transfers from the affected wallet until the situation is resolved.
Why OFAC Screening Matters
For the issuer, OFAC screening is a hard legal requirement. Penalties for sanctions violations can run into millions of dollars per transaction, with criminal exposure for willful breaches. Banking and custodial relationships also depend on it. A platform without effective screening will not retain access to financial infrastructure.
For investors, screening is also a protection. The cap table is restricted to verified, non-sanctioned counterparties, which keeps the offering legally clean and avoids the reputational damage of sitting on a register alongside a sanctioned actor. Effective screening is a precondition for serious capital, not a friction to minimize.
OFAC Screening at Node Proptech
Every Node Proptech investor and every wallet is screened against OFAC and other applicable sanctions lists at onboarding, and continuously monitored thereafter. Wallet-level analytics complement identity-based screening, with the smart contract enforcing blocks at the protocol level whenever a counterparty fails sanctions checks. Reporting and remediation follow OFAC guidance for any matches identified during the life of an offering.