How does OFAC use sanctions against clinics and medical centers
The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury has long been known as a key tool of U.S. foreign policy and national security. OFAC’s focus is usually associated with large corporations, banks, the energy sector, or the defense industry. However, in recent years, the healthcare sector, including private and public clinics, medical centers, and networks of healthcare providers, has often come under the scope of sanctions policy.
Sanctions against medical institutions seem controversial, as healthcare is traditionally perceived as a humanitarian field. But OFAC views medicine not only through the lens of humanitarian aspects but also as a potential channel for financing prohibited activities, evading sanctions, and strengthening the influence of entities controlled by sanctioned individuals or regimes.
Why is OFAC interested in the healthcare sector?
OFAC operates on the principle that any organization — even if it is formally engaged in humanitarian activities — can be involved in illegal activities, directly or indirectly falling under sanctions restrictions. Medical institutions may be of interest to the regulator for several reasons:
- Financial flows through the healthcare system
Clinics and medical centers often deal with large sums of money: purchasing equipment, importing medicines, insurance payments, charitable donations. These financial operations can be used for money laundering or bypassing sanctions if the institution is connected with prohibited entities. - Connection with government structures or armed formations
In some countries, medical institutions are under the direct control of government bodies that are already under sanctions. For example, military hospitals in states with a sanctions regime may serve not only civilians but also military structures listed by OFAC. - The use of the medical field to bypass export control
Medical equipment may contain dual-use technologies. Under the pretext of supplying equipment for hospitals, prohibited organizations can obtain technologies that are further used for military or intelligence purposes. - Political and propaganda goals
In some cases, medical centers become part of the political infrastructure: they may participate in legitimizing sanctioned authorities or serve the elite under personal sanctions.
The main reasons for imposing sanctions on medical institutions
While the Office of Foreign Assets Control (OFAC) officially recognizes the vital role of humanitarian supplies, including medical goods and equipment, there are clear reasons why sanctions against medical institutions can be fully justified from the perspective of the American authorities. One of the primary reasons is establishing a direct link with terrorist or extremist organizations. If a medical center is financed or managed by any entity included on the SDN (Specially Designated Nationals) list, that institution automatically falls under sanctions. In such cases, the fact that the institution provides medical assistance to the civilian population does not negate that its control by prohibited persons makes it a legitimate target for sanctions pressure. Thus, despite a seemingly noble purpose, the key factors are the beneficiary and the source of management.
Another significant reason for imposing sanctions is the discovery of financing through illegal channels. Some clinics and medical centers may use offshore accounts or so-called “grey” charitable funds, which are already under close OFAC observation, to obtain money. If an investigation finds convincing evidence that these funds are being directed toward other, non-medical purposes—such as purchasing weapons, financing terrorist activities, or supporting repressive forces—sanctions become inevitable. OFAC meticulously tracks the movement of financial flows to prevent the use of charitable and medical organizations as a front for illegal operations.
Furthermore, a medical institution may face sanctions in the event of receiving and using prohibited technologies. If a clinic obtains equipment or software subject to U.S. export control without a proper license and in violation of the established sanctions regime, it risks being added to the sanctions list. It is important to note that even an unintentional violation of export control rules can lead to serious consequences, including the blocking of all assets.
Finally, direct subordination to a sanctioned government is also a valid reason for sanctions. Hospitals and medical centers that are financed or managed by the health ministries of countries under full U.S. blocking sanctions may also be added to the SDN list. This is particularly relevant for state-run medical institutions in countries accused of systematic human rights violations, sponsoring international terrorism, or other crimes that pose a threat to international security. In such cases, the connection to government structures makes the medical facility a part of the sanctions regime.
Practical implications of sanctions for the clinic
The imposition of OFAC sanctions on a medical institution has multifaceted consequences that go far beyond purely financial restrictions.
Blocking financial transactions
All assets of the clinic in the jurisdiction of the USA will be frozen. Any transactions using US dollars through international banks are blocked. Even if the clinic does not have direct accounts in the USA, operations may “get stuck” at the stage of correspondent bank transfers.
Loss of access to suppliers
American companies, as well as many European and Asian suppliers that follow OFAC rules, will stop supplying medical equipment, consumables, and medicines. This could lead to a serious shortage of resources.
Disruption of international projects and grants
International organizations, including the UN or international NGOs, are often required to comply with the US sanctions regime. Therefore, any joint projects with the clinic will be suspended, and grant funding will be terminated.
Reputational damage
Being added to a sanctions list is perceived as a sign of serious violations. Even if the clinic continues to operate in the domestic market, patients and partners may refuse to cooperate due to concerns about legal risks.
Challenges with personnel
Medical specialists working in a clinic may face restrictions on travel, training, or internships abroad if their institution is recognized as sanctioned.
