Economic Sanctions

The US Department of Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, individuals, entities and regimes. Unless licensed by Treasury’s Office of Foreign Assets Control (OFAC), goods, technologies or services generally may not be exported, re-exported, sold or supplied, either directly or indirectly, from the United States or by a US person, wherever located, to any sanctioned country, person or entity. 

Economic sanctions administered by OFAC are classified as either “country-based” or “list-based” programs. Country-based economic sanctions programs prohibit almost all transactions between US persons and the targeted country. The prohibition extends to transactions between US persons and the targeted country’s representatives or state-owned companies, and, in some cases, citizens no matter where located. List-based economic sanctions programs prohibit transactions between US persons and specific individuals and entities allegedly engaged in disfavored activities, including narcotics trafficking, international terrorism and proliferation of weapons of mass destruction. The targets of these programs are designated as “Blocked Persons” and are listed on the “Specially Designated Nationals and Blocked Persons List.” 

Compliance

To ensure ongoing compliance with US programs and other applicable laws, active sanctions screening should be a part of compliance programs . This is critical to preventing and detecting violations of applicable laws and, in the event that a violation does occur, an effective compliance program can help to mitigate the penalties imposed by the US government.  Because US sanctions programs are frequently revised and adjusted, it is important for parties to regularly check for updates.

How the National Security Regimes Interact

While administered primarily by OFAC, the US State Department provides foreign policy guidance and the US Commerce Department uses certain export controls to prevent the bypassing of US sanctions programs.  The US Department of Justice prosecutes willful violations of US sanctions and export control laws.

What You Need To Know

  • Buyers need to be aware that they will almost certainly be asked during the CFIUS review process whether they have done business with countries subject to US and UN sanctions. 

  • Foreign buyers should gauge whether licenses for goods, technologies or services to sanctioned countries are essential to running a target US business and whether they are likely to be approved.