What is an OFAC license and what is it needed for?

An OFAC license is an official authorization from OFAC to conduct transactions that would otherwise be prohibited under OFAC sanctions. There are two types of licenses: general licenses, which automatically apply to certain categories of operations, such as humanitarian aid, and specific licenses, issued individually upon request. A specific license allows the execution of a particular transaction, such as unblocking funds or making a payment with a sanctioned party. Licenses are necessary to legally interact with sanctioned entities without violating OFAC requirements and avoiding penalties.