February 2026 · 6-minute read
A practical guide for CFOs and compliance officers navigating sanctions screening flags, OFAC licenses, and keeping students enrolled while staying compliant.
Disclaimer: This content is provided for educational and informational purposes only and does not constitute legal advice. Sanctions regulations are complex. Schools facing a flag should consult with qualified legal counsel.
Your business office runs a sanctions screening on a tuition payment, and a name comes back flagged. Before you panic, remember this: A screening flag is not an automatic bar to enrollment.
It is the starting point of a process with well-established pathways. OFAC (the Office of Foreign Assets Control) maintains a licensing framework specifically designed to authorize otherwise prohibited transactions—including education.
A potential match usually means one of three things. As schools screen more candidates following the IMG Academy settlement, these flags are increasingly common.
The most common outcome. A shared name or partial match with someone on a sanctions list. Add dates of birth or nationality to quickly clear these.
Enough overlapping data points to warrant an investigation, requiring more information gathering before confirmation.
The individual or entity is definitely on a sanctions list. Even so, licensing pathways may still be available.
If the match is confirmed, can the tuition transaction still proceed? It depends on which licensing framework applies.
Automatic Authorization
A broad authorization published by OFAC that allows certain transactions to proceed without requiring an individual application.
Formal Application
An individual authorization granted directly by OFAC for a particular transaction when a general license does not cover it.
What does this look like in practice? Here are four hypothetical situations heavily mirrored from real-world school interactions.
Scenario: A student's family resides in Iran. The parent is flagged under the Iranian Transactions and Sanctions Regulations (ITSR).
Path Forward: Specific License Application. OFAC has historically shown willingness to authorize education-related transactions with Iran via counsel documentation.
Scenario: A tuition payment originates from a grandparent located in the sanctioned region of Crimea (Ukraine).
Path Forward: Specific License Application. Because the transaction originates from a comprehensively sanctioned territory, a formal request isolating the educational funds is required.
Scenario: A major development donation triggers a high-confidence match on the Specially Designated Nationals (SDN) List.
Path Forward: Consult Counsel Immediately. You cannot accept these funds without specific authorization. The transaction must likely be paused or rejected.
Scenario: A Cuban-origin family residing abroad routes a tuition payment through a third-country banking system.
Path Forward: General License Likely. OFAC's 31 CFR § 515.565 authorizes many Cuban educational activities automatically, requiring internal recordkeeping only.
Failing to act on a result is an aggravating factor for OFAC enforcement.
Overriding results without documented rationale breaks the audit trail.
Banks do not absorb your liability. Educational institutions own their OFAC risk.
Adverse enrollment decisions based purely on a flag expose schools to heavy reputational risk.
Document the list version, match confidence, and date.
Do not process the funds. Place them into a temporary hold state.
Filter out obvious false positives via Date of Birth or Address.
Pass the confirmed flag to an attorney experienced in U.S. sanctions law.
Determine if a General License applies or start the Specific License application.
Explain diplomatically to the family that a routine compliance review is occurring without causing alarm.
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