What does the acronym SDN stand for in financial compliance?

The acronym SDN in financial compliance stands for Specifically Designated Nationals. This term refers to individuals, groups, entities, and vessels that are subject to sanctions by the U.S. Office of Foreign Assets Control (OFAC). When someone is identified as an SDN, it means they are prohibited from transactions involving U.S. persons or within U.S. jurisdiction due to reasons such as involvement in terrorism, drug trafficking, or other activities that threaten the national security and foreign policy interests of the United States.

Understanding this designation is critical for compliance officers and financial institutions, as they must ensure they do not engage in business with SDNs, thereby avoiding potential legal and financial penalties. Properly identifying and monitoring SDNs is a key component of anti-money laundering (AML) and counter-terrorism financing (CTF) efforts.