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To address violations of international law, human rights abuses, and other forms of state-sponsored crime, governments may impose economic sanctions against designated targets around the world. Sanctions cover a range of financial restrictions and prohibitions and are often deployed to achieve foreign policy objectives through economic pressure. They may present a way to resolve geopolitical conflicts or avoid military interventions. Typical sanctions measures include:
Since they are financial measures, the effectiveness of sanctions depends on the capability of the issuing country to enforce them. Accordingly, countries that impose sanctions must also issue sanctions lists containing the latest designated targets and implement sanctions compliance regulations on persons within their jurisdiction, with the threat of criminal penalties for violations.
Given the prevalence of sanctions across the modern geopolitical landscape, banks and financial institutions must understand their compliance obligations and which restrictions apply within their jurisdiction.
The United Nations issues the UN Security Council (UNSC) Consolidated Sanctions List, which sets out the names of its designated global sanctions targets.
In practice, UN sanctions are imposed for three types of behavior: violations of international law, threats to international peace, and violent activity within state borders. While a majority vote passes sanctions, any of the five permanent UNSC members may veto their application. This system often leads to a lack of UN action: following Russia’s invasion of Ukraine in February 2022, Russia exercised its veto power to block UN sanctions against it. Similarly, China has blocked sanctions against the Myanmar government for its treatment of the Rohingyas. When UN sanctions are successfully imposed, enforcement of the relevant measures is handled by member states.
Find out more about UN sanctions.
As a central European governmental body, the EU issues and implements a range of financial sanctions against global targets:
EU sanctions are issued under the Common Foreign and Security Policy’s authority (CFSP) to promote the EU’s democratic values, preserve global peace, and protect international law. The EU’s sanctions regime has evolved since its inception: in May 2019, the EU introduced a cyber-crime sanctions regime, and in December 2020, a Global Human Rights Sanctions Regime (GHRSR) which specifically targets human rights abuses.
The EU also has a Blocking Statute. This legal measure prevents EU persons from complying with extraterritorial (secondary) sanctions imposed by third countries. As stated, EU sanctions enforcement falls to member state governments rather than a centralized authority, and member states also control the penalties imposed for sanctions violations.
Find out more about EU sanctions.
The Office of Financial Assets Control (OFAC) maintains many sanctions programs on behalf of the United States Treasury:
The US sanctions regime is arguably the most influential in the world. Since the US shares many geopolitical, economic, and security concerns with other Western nations, its sanctions programs typically align with those of the UN, the UK, and the EU. In 2016, the US introduced a dedicated human rights sanctions program under the authority of the Global Magnitsky Act: the program allows the US government to specifically address global human rights abuses by targeting the individuals and groups responsible for those crimes rather than entire countries. The Magnitsky Act has since inspired the development of similar human rights sanctions regimes across the West.
The US Bureau of Industry and Security (BIS) is also part of the US sanctions regime. The BIS Entity List sets out the names of foreign persons subject to US licensing and sanctions requirements known as Export Administration Regulations (EAR). BIS sanctions typically regulate the export of dual-use goods that terrorists or oppressive governments may misuse.
In addition to its primary global sanctions, which apply directly to US persons, the US also implements secondary sanctions against third countries. Secondary sanctions essentially block foreign third parties from doing business with the targets of US primary sanctions – at the risk of trade restrictions with the US.
Find out more about OFAC sanctions.
HM Treasury maintains the sanctions list of the United Kingdom:
Since it left the EU in 2020, the UK has implemented an autonomous sanctions regime under the authority of the Sanctions and Anti-Money Laundering Act (SAMLA). Given its political alignment with other Western nations, the UK shares a lot of sanctions targets with the US, the UN, and the EU. Like the US, the UK has also implemented a human rights sanctions regime and implemented a Global Anti-Corruption regime in April 2021.
Find out more about HM Treasury sanctions.
The Department of Foreign Affairs and Trade (DFAT) implements and enforces sanctions for the Australian government:
Australia’s autonomous sanctions regime is enforced under the Autonomous Sanctions Act of 2011. The regime reflects the foreign policy and security concerns and includes Magnitsky-style legislation to address foreign human rights abuses. DFAT coordinates sanctions enforcement with the Australian Sanctions Office (ASO).
Find out more about DFAT Sanctions.
Canada’s global sanctions regime complements its UN obligations and includes a strong focus on human rights:
As the second-largest economy in North America, Canada’s sanctions regime is influential on a global and regional scale. The JVCFO Act reflects Canada’s foreign policy focus on human rights abuses. With that in mind, Canada has acted to impose sanctions against Russia following its annexation of Crimea and subsequent invasion of Ukraine. It has also imposed sanctions against Myanmar’s military regime.
Japan’s global sanctions regime is built on several acts of legislation. Primarily, it draws on the 1949 Foreign Exchange and Foreign Trade Act (FEFTA):
As a result of its ongoing aggressive posture in the region and its development of long-range nuclear weapons, North Korea is a significant sanctions target for Japan. Accordingly, Japan has enforced an import embargo on North Korea since 2006 and an export embargo since 2009. Japan’s government recently voted to extend its sanctions against North Korea for two years, meaning that current measures will remain in place until 2023.
In 2021, lawmakers announced a cross-party alliance to develop Japan’s Magnitsky-style human rights sanctions regime. The move reflects Japan’s desire to align more closely with the sanctions regimes of the West.
As China’s economic status has grown, so has its ability to exert global influence. With that in mind, following its 2019 trade war with the US, China’s Ministry of Commerce (MOFCOM) announced that it would be implementing an autonomous sanctions program:
China’s Blocking Rules were implemented in response to US secondary sanctions that prevent Chinese companies from trading with companies in North Korea and Iran. Chinese persons suffering financially due to their compliance with the Blocking Rules may be authorized to sue companies that do not comply.
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Originally published June 21, 2014, updated July 4, 2022
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