Secondary Sanctions & Extraterritorial Reach Flashcards

The Global Magnitsky Human Rights Accountability Act authorizes U.S. sanctions against foreign persons for which of the following?

Answer: Significant corruption or gross violations of internationally recognized human rights

The Global Magnitsky Act authorizes the President to impose sanctions against foreign individuals responsible for significant corruption or serious human rights abuses, regardless of country.

Which statute serves as the primary legal authority for presidential imposition of secondary sanctions through executive orders?

Answer: The International Emergency Economic Powers Act (IEEPA)

IEEPA grants the President broad authority to regulate or prohibit economic transactions during declared national emergencies involving foreign threats, and is the primary basis for most modern secondary sanctions programs.

'De-risking' by foreign financial institutions in response to secondary sanctions concerns typically involves which behavior?

Answer: Terminating relationships with entire jurisdictions or customer segments to avoid any sanctions exposure

De-risking refers to foreign banks exiting entire markets or customer categories rather than managing individual risks, often driven by secondary sanctions pressure and compliance cost concerns.

Under the Comprehensive Iran Sanctions, Accountability, and Divestiture Act (CISADA), which activity by a foreign bank can result in loss of its U.S. correspondent account?

Answer: Knowingly facilitating significant financial transactions on behalf of the IRGC or designated Iranian parties

CISADA authorizes OFAC to prohibit or restrict a foreign bank's U.S. correspondent accounts if it knowingly facilitates significant financial transactions for the IRGC or other designated Iranian parties.

Which of the following is NOT typically a factor OFAC considers when determining whether a transaction is 'significant' for secondary sanctions purposes?

Answer: The nationality of the individual employees processing the transaction

OFAC's 'significant transaction' analysis focuses on transaction size, nature, and national security impact — the nationality of compliance employees is not a determining factor.

A non-U.S. company that knowingly facilitates a 'significant' transaction for a party designated under North Korea-related secondary sanctions may face which of the following consequences?

Answer: Loss of access to U.S. markets and potential designation on the SDN List

Under secondary sanctions, non-U.S. companies that facilitate significant transactions for North Korea-related designated parties risk being placed on the SDN List and losing access to U.S. markets.

What is the primary purpose of OFAC's 'significant transaction' standard in secondary sanctions enforcement?

Answer: To distinguish sanctionable foreign conduct from routine commercial activity that does not warrant sanctions

The 'significant transaction' standard helps OFAC identify when foreign conduct rises to a level warranting secondary sanctions, distinguishing sanctionable activity from routine commerce with minimal sanctions nexus.