US Person
Under OFAC’s sanctions regulations, a US person is any US citizen, permanent resident alien, entity organised under US law or the law of any US jurisdiction, or any individual physically located within the United States, regardless of nationality. This is a genuinely different test from the “US person” definition used for tax purposes under FATCA and IRS rules, and most search results for this exact phrase are actually about the tax version.
Key takeaways
- OFAC’s “US person” definition covers citizens, green card holders, US-organised entities (including foreign branches), and anyone physically present in the US, regardless of nationality.
- Most generic search content for “US person” is actually about FATCA/IRS tax residency, a genuinely different legal test built for a different purpose.
- The tax test requires citizenship, a green card, or meeting the Substantial Presence Test; OFAC’s test simply requires physical presence, no accumulated time threshold needed.
- For Cuba and Iran specifically, sanctions extend to foreign entities a US person owns or controls, generally at 50%+ equity or majority board control.
- A US company’s foreign branches remain bound by US sanctions law wherever they physically operate, distinct from the separate foreign-subsidiary ownership extension.
- US persons carry affirmative reporting duties: blocked property reports within 10 business days and annually, and rejected-transaction reports for certain non-blocked but prohibited dealings.
- OFAC’s broad facilitation doctrine can create liability for a US person who assists a non-US person’s prohibited transaction without directly executing it.
On this page
What “US person” means under OFACWhy most search results for this term aren’t about sanctions at allOFAC’s test vs the tax test: where they actually divergeHow the US person definition extends through ownershipEntities count too, not just individualsWhat being a US person actually obligates you to doThe facilitation trap: acting on someone else’s behalfGetting this right in a compliance programmeFAQsRead more
What “US person” means under OFAC
Under OFAC’s sanctions regulations, a US person includes any United States citizen, any permanent resident alien (green card holder), any entity organised under the laws of the United States or any jurisdiction within the United States, including the foreign branches of such entities, and any individual or entity physically located within the United States, regardless of that person’s nationality or immigration status. This is the population primary US sanctions apply to directly, distinct from secondary sanctions, which reach beyond this group entirely.
Why most search results for this term aren’t about sanctions at all
Worth being direct about this: the phrase “US person” is heavily associated online with a completely different legal question, tax residency under the Foreign Account Tax Compliance Act, FATCA, and general IRS rules. Most generic content on this exact phrase addresses whether someone owes US tax on worldwide income, not whether they’re bound by US sanctions law. The two concepts share a name and overlap substantially, but they’re genuinely different legal tests, built for different purposes, and conflating them can lead to a real misunderstanding of which obligation actually applies to a given situation.
OFAC’s test vs the tax test: where they actually diverge
The tax definition of US person, used for FATCA and IRS reporting, generally covers US citizens and green card holders, plus anyone who meets the Substantial Presence Test, a cumulative day-count formula requiring at least 31 days in the current year and 183 days across a weighted three-year period. Someone meeting the tax test is subject to US taxation on worldwide income regardless of where they currently live, a feature of America’s citizenship-based tax system that most other countries don’t use.
OFAC’s sanctions test works differently in a critical respect: it captures any individual physically present in the United States at the relevant time, regardless of nationality, immigration status, or length of stay. A foreign national visiting the US for a single business meeting is a US person for OFAC purposes during that visit, even though that same person, absent much longer or repeated presence, wouldn’t meet the tax definition’s Substantial Presence Test at all. The two tests measure genuinely different things: OFAC asks where you are and what you’re organised under; the tax rules ask about citizenship, residency status, and accumulated physical presence over time.
How the US person definition extends through ownership
For certain sanctions programmes specifically, Cuba and Iran among them, the restrictions extend beyond the core US person definition to reach foreign entities owned or controlled by a US person, commonly meaning foreign subsidiaries of US companies. “Owned or controlled” in this context is generally understood to mean holding at least 50% of the equity interest, a majority of board seats, or otherwise controlling the entity’s actions, policies, and personnel decisions, an ownership-based extension that echoes the logic behind OFAC’s separate 50 Percent Rule, though applied here to determine who’s bound by the restriction rather than who’s automatically blocked by it.
Entities count too, not just individuals
The US person definition isn’t limited to natural persons. Any corporation, partnership, or other entity organised under US federal or state law is a US person for sanctions purposes, including a foreign branch of such an entity operating outside the United States. This means a US company’s own overseas branch office remains bound by US sanctions law wherever it physically operates, a distinct and broader reach than the foreign-subsidiary ownership extension described above, which applies specifically to separately incorporated foreign entities a US person controls rather than a direct branch of the US entity itself.
What being a US person actually obligates you to do
US persons carry direct, affirmative obligations under OFAC’s regulations beyond simply avoiding prohibited transactions. Holders of blocked property must report to OFAC within 10 business days of the blocking and annually thereafter, consistent with the asset freeze reporting requirements under 31 C.F.R. § 501.603. US persons, including financial institutions specifically, are also required to reject, meaning return to the originator without processing, transactions that aren’t blocked outright but would otherwise violate OFAC’s regulations, with a separate rejected-transaction report required under 31 C.F.R. § 501.604 for transactions involving wire transfers, trade finance, securities, checks, foreign exchange, or goods and services.
The facilitation trap: acting on someone else’s behalf
OFAC construes “facilitation” broadly, covering any instance where a US person assists or supports a non-US person’s transaction directly or indirectly involving a comprehensively sanctioned country or party, even where the US person never directly touches the prohibited transaction itself. A US person approving, financing, or otherwise enabling a non-US subsidiary’s dealings with a sanctioned party can face direct liability for facilitation, which is precisely why global companies with US-person elements anywhere in their structure need sanctions policies that extend well beyond their US-based operations specifically.
Getting this right in a compliance programme
A firm’s own sanctions programme needs to identify precisely which parts of its operations, employees, entities, transactions, actually meet the OFAC definition of US person, since that determination is what triggers primary sanctions obligations directly, distinct from the broader secondary sanctions exposure that can reach entities with no US person status at all. Documentation should use OFAC’s own definition explicitly, citing the actual regulatory basis, rather than importing a looser, tax-context understanding of the phrase that doesn’t capture OFAC’s specific physical-presence and entity-organisation tests.
Confirm which sanctions obligations actually apply to your structure
Map US person status across entities, branches, and personnel before assuming exposure either way.
Frequently asked questions
What is a US person under OFAC?
Any US citizen, permanent resident alien, entity organised under US federal or state law (including foreign branches), or any individual physically located within the United States, regardless of nationality or immigration status.
Is the OFAC definition of US person the same as the tax definition?
No. The tax definition, used for FATCA and IRS purposes, covers citizens, green card holders, and anyone meeting the Substantial Presence Test. OFAC’s definition also captures anyone simply physically present in the US at the relevant time, regardless of how long they’ve been there.
Is a foreign tourist visiting the US considered a US person for sanctions purposes?
Yes, while physically present. OFAC’s definition includes any individual located within the United States regardless of nationality, unlike the tax definition, which requires meeting a cumulative presence threshold.
Do US sanctions apply to a US company’s foreign branches?
Yes. Any entity organised under US law, including its foreign branches operating outside the United States, remains bound by US sanctions regulations regardless of where that branch physically operates.
Do sanctions extend to foreign subsidiaries a US person owns?
For certain programmes, particularly Cuba and Iran, yes. Restrictions extend to foreign entities owned or controlled by a US person, generally meaning at least 50% equity ownership, majority board control, or otherwise controlling the entity’s decisions.
What reporting obligations does a US person have under OFAC?
Holders of blocked property must report within 10 business days of blocking and annually thereafter. US persons must also reject and report certain non-blocked but otherwise prohibited transactions within 10 business days.
Can a US person be liable for facilitating a non-US person’s sanctions violation?
Yes. OFAC interprets facilitation broadly, covering any US person assistance or support for a non-US person’s transaction involving a sanctioned party, even without directly touching the prohibited transaction.
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Last reviewed July 19, 2026 · 11 min read · Written for compliance and risk professionals · By the WhoWiki editorial team
Key takeaway: Under OFAC’s sanctions regulations, a US person is any US citizen, permanent resident alien, entity organised under US law or the law of any US jurisdiction, or any individual physically located within the United States, regardless of nationality. This is a genuinely different test from the “US person” definition used for tax purposes under FATCA and IRS rules, and most search results for this exact phrase are actually about the tax version.