OFAC's expanded use of secondary sanctions in recent months creates new operational risk for non-U.S. financial institutions and multinational corporates with material U.S. nexus. The recent designations significantly expand the practical reach of U.S. sanctions, with implications for correspondent-banking arrangements, transaction processing, and customer screening.
For non-U.S. institutions, the practical question is no longer whether OFAC secondary sanctions are 'extraterritorial' — that ship sailed long ago — but rather how to calibrate compliance posture for an environment in which a meaningful percentage of cross-border transactions touch U.S. sanctions concerns.
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