At a November 2024 sanctions and anti-money laundering panel discussion, former Deputy Assistant Attorney General for the Department of Justice's National Security Division David Newman stated that the National Security Division was "fundamentally an apolitical division," referencing the relative stability across presidential administrations in enforcing national security actions.1 While it is certainly true that national–security-related investigations and enforcement actions will, as a general rule, follow similar paths, often taking many years to resolve across both Republican and Democratic administrations, in the area of economic sanctions enforcement specifically, priorities are set at the top—that is, the President establishes his administration's foreign policy goals, and sanctions enforcement follows close in step. Economic sanctions and export control enforcement and regulations are tools that all presidents have used in the last fifty years, but the manner and strategy of implementation and enforcement will vary depending on the Commander-in-Chief's directives. The new Trump Administration suggested it will continue to use, and in certain cases elevate, economic sanctions as one tool in the national security toolbox, while also understanding the importance of avoiding drastic unintended consequences, like undermining the value of the US dollar, overuse of economic sanctions, or indiscriminate enforcement.
This Essay consists of four parts: Part I explores the role of economic sanctions in supporting and developing US national security policy. Part II discusses how this policy is implemented through issuing regulations and conducting government prosecutions involving the violation of such regulations. Part III addresses how a company may defend itself in the course of such a government prosecution, through examination of a case study. Part IV looks to the future and highlights what we may see in economic sanctions regulations and enforcement during the coming four years of the new Trump Administration.
I. SANCTIONS SUPPORTING NATIONAL SECURITY
The US government administers its economic sanctions program primarily through the Department of the Treasury's Office of Foreign Assets Control, ("OFAC") which is responsible for promulgating regulations mandated by executive action or enacted legislation.2 OFAC is also the civil enforcement arm regarding economic sanctions, addressing non-compliance through investigations and enforcement proceedings.3 The Department of Justice shares enforcement responsibilities through its National Security Division ("NSD"), which enforces economic sanctions and export controls "to protect national security interests and promote foreign policy objectives."4 NSD will sometimes partner with the DOJ Criminal Division and the various US Attorney's Offices to direct criminal prosecutions that have been referred to them by OFAC or through one of the investigating agencies.5 The Commerce Department's Bureau of Industry and Security ("BIS") is another key partner, "advanc[ing] national security through technology leadership and vigilant export controls" and enforcing restrictions on exports of items and technology that have the potential of harming national security.6 In addition, the State Department has a role administering the International Traffic in Arms Regulations, through promulgating and enforcing regulations with respect to exports of defense articles and defense services.7
The government's economic sanctions and export control enforcement regimes are implemented primarily through the Arms Export Control Act, the Export Control Reform Act, and the International Emergency Economic Powers Act ("IEEPA").8 Congress also legislated several other economic sanctions authorities during the past two decades that directed action in specific contexts or gave the President additional powers. IEEPA, enacted in 1977, permits the President, after declaring a national emergency and often in connection with a national security threat, to wield economic and enforcement power to address the articulated threat.9 This can include a number of available options, including designating a person or entity as a Specially Designated National ("SDN"), essentially blocking all dealings by US persons with that bad actor absent an exemption or specific license, or enacting prohibitions or restrictions on US persons in engaging in specific types of activity with a designated entity, sector, or state or geographic region.10 The targets of economic sanctions cover a wide range of individuals or entities, including terrorist networks, narcotics traffickers, certain government officials of rogue states, cyber criminals, human rights abusers and other criminals, and countries or entities that support these bad actors or pose a national security threat to the United States.11
Since President Jimmy Carter issued Executive Order 12170 in response to the Iranian hostage crisis, US presidents often relied on IEEPA to effectuate national security goals and priorities.12 Initially, IEEPA was used sparingly and directed at targeted actors, namely in Iran, Cuba, and Latin America.13 After President Carter, Presidents Ronald Reagan and George H.W. Bush used sanctions as part of their foreign policy initiatives to curtail hostile governments in Libya, Panama, Nicaragua, and Iraq. However, it was not until President Bill Clinton issued Executive Order 12947 that a president issued an order that used economic sanctions against a broader category of actors classified as terrorists or that supported terrorism, specifically those who had the purpose of "disrupting the Middle East peace process."14 This was followed by additional executive orders in Clinton's second term against specifically identified terrorists, such as Usama Bin Laden. This initiated the Executive Branch's utilization of the extraordinary power of US economic sanctions as part of the War on Terror.
But it was not until after the September 11th terrorist attacks that the use of economic sanctions, authorized by IEEPA, markedly expanded in scope and became integral to the national security arsenal in the fight against global terrorism both in the United States and abroad.15 Through various authorities granted under the USA Patriot Act, the US government now had access to unprecedented amounts of data from global financial institutions and used the power of economic sanctions to combat its adversaries, including countries such as North Korea, which threatened American safety through its potential nuclear capabilities.16
Economic sanctions have become more and more expansive in their use and application, in furtherance of presidential priorities. The George W. Bush Administration used economic sanctions in the wake of the September 11th terrorist attacks in its efforts to hold those who planned and executed the attacks accountable and to combat global terrorism networks. President Barack Obama's Administration targeted human rights abusers in the Middle East and Africa and implemented broad Russia-related sanctions after the annexation of Crimea, while also significantly relaxing certain restrictions involving Iran and Cuba. The first administration of President Donald Trump implemented different priorities, targeting the Maduro regime in Venezuela, China, and Russia. The Trump Administration also reimposed strict economic sanctions against Iran and tightened some of the Cuban sanctions that had been eased by President Obama. Under President Joe Biden sanctions policy focused in large part, on the unprecedented use and scale of US economic sanctions to punish and isolate Russia after its invasion of Ukraine.
II. SANCTIONS ENFORCEMENT AND PROSECUTORIAL PRIORITIES
With the spike in economic sanctions implementation and enforcement in 2001, global financial institutions became frequent targets of both civil and prosecutorial enforcement, given the number of transactions that they processed, their global reach, and their ability to pay exceedingly large penalties.17 Whereas the George W. Bush Administration initiated a growing number of enforcement actions for relatively smaller monetary penalties, the Obama Administration enacted a seeming "whale hunting" strategy that imposed larger fines on select targets.18 A representative number of these matters were against large, global financial institutions, demonstrating that it had become a priority to pursue these types of cases.19
The first Trump Administration did not focus on just financial institutions to the same extent as the previous administration. While large banks still faced intense scrutiny, there was more variety in the cases brought. 20 DOJ prosecutors showed that financial institutions are not the only targets of economic sanctions investigations and companies outside the financial sector are equally at risk for enforcement of sanctions violations, especially if the relevant non-compliant conduct directly undermines national security imperatives and harms the United States. This approach continued into the Biden Administration, with a focus on Russiarelated investigations and enforcement actions. The DOJ's Task Force KleptoCapture pursued several significant sanctions enforcement cases against Russian oligarchs and other, non-US based entities and individuals who supported the Russian regime, including the indictment and successful prosecution of several individuals for evading Russian sanctions or related anti-money laundering regulations.21 For example, in February 2024, a Russian citizen residing in Georgia pleaded guilty to one count of conducting an unlicensed money-transmitting business, in connection with a money laundering scheme involving Russian SDNs and other entities in the financial services sector of the Russian economy.22 KleptoCapture had seized or obtained judgments to forfeit more than US $700 million in assets from individuals and entities that have helped Russia's President Putin and his war efforts.23
On the civil enforcement side, OFAC settled with EFG International, a global private banking group headquartered in Zurich, in March 2024 for nearly US $3.75 million, the first OFAC enforcement action involving sanctions imposed on Russia after its invasion of Ukraine.24 EFG's apparent violations related to several economic sanctions programs, including Cuba and Kingpin Act sanctions, and the Russian component of the violative conduct involved EFG's dealings in dividends with a designated Russian entity client, despite internal EFG restrictions that had been placed on the designated entity's account.25 More Russia-related enforcement actions initiated during the Biden Administration have proven to be too complex to reach prompt settlement despite having taken much of OFAC's overall resources during the last three years.26
Footnotes
1. Austin Cope, National security enforcement is "fundamentally apolitical", senior DOJ prosecutor says, GLOB. INVESTIGATIONS REVIEW (Nov. 14, 2024), https://globalinvestigationsreview.com/just-sanctions/article/national-securityenforcement-fundamentally-apolitical-senior-doj-prosecutor-says [https://perma.cc/M363-SLM2].
2. See Office of Foreign Assets Control, Mission, U.S. DEP'T OF THE TREASURY, https://ofac.treasury.gov/ [https://perma.cc/U2Dp-5VYW] (last visited March 31, 2025) ("The Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.").
3. See JENNIFER K. ELSEA, CONG. RSCH. SERV., IF12063, ENFORCEMENT OF ECONOMIC SANCTIONS: AN OVERVIEW 1 (2024), https://crsreports.congress.gov/product/pdf/IF/IF12063 [https://perma.cc/WW8WSZW3].
4. National Security Division, Mission, U.S. DEP'T OF JUST., https://www.justice.gov/nsd/export-control-and-sanctions [https://perma.cc/ZH4SGVXU] (last visited March 31, 2025).
5. See ELSEA, supra note 3, at 2.
6. See About BIS, BUREAU OF INDUS.&SEC., https://www.bis.gov/about-bis (last visited March 31, 2025) [https://perma.cc/RL3F-LME7].
7. See 22 C.F.R. § 120.1 (2024).
8. See id; see also Arms Expert Control Act, 22 U.S.C. §§ 2771-81 (1976); Export Control Reform Act of 2018, 50 U.S.C. §§ 4801-26 (2018); International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-08 (1977).
9. See International Emergency Economic Powers Act, 50 U.S.C. § 1701.
10. See Office of Foreign Assets Control, OFAC Sanctions List Service, U.S. DEP'T OF THE TREASURY, https://sanctionslist.ofac.treas.gov/Home/SdnList [https://perma.cc/L257- Y2QY].
11. See generally Office of Foreign Assets Control, OFAC Sanctions Programs and Country Information, U.S. DEP'T OF THE TREASURY,https://ofac.treasury.gov/sanctionsprograms-and-country-information [https://perma.cc/A9W4-HP9T].
12. See Kate Hewitt & Richard Nephew, How the Iran hostage crisis shaped the US approach to sanctions, BROOKINGS INST. (Mar. 12, 2019), https://www.brookings.edu/articles/how-the-iran-hostage-crisis-shaped-the-usapproach-to-sanctions/ [https://perma.cc/2BR2-C5S3].
13. See Jeff Stein & Federica Cocco, How four U.S. presidents unleashed economic warfare across the globe, WASH. POST (July 25, 2024), https://www.washingtonpost.com/business/interactive/2024/us-sanction-countrieswork/ [https://perma.cc/2BR2-C5S3].
14. James J. Savage, Executive Use of the International Emergency Economic Powers Act – Evolution through the Terrorist and Taliban Sanctions, 10 CURRENTS: INT'L TRADE L.J. 28, 35 (2001); see also Exec. Order No. 12,947, 3 C.F.R. § 1995 (1995).
15. See Stein & Cocco, supra note 13.
16. Id.
17. See Bryan Early & Keith Preble, The Past, Present, and Future of U.S. Sanctions Enforcement, WAR ON THE ROCKS (Feb. 23, 2021), https://warontherocks.com/2021/02/the-past-present-and-future-of-u-s-sanctionsenforcement/ [https://perma.cc/VA66-WK7M].
18. See Bryan R. Early & Keith A. Preble, Going Fishing versus Hunting Whales: Explaining Changes in How the U.S. Enforces Economic Sanctions, 29 SEC. STUD. 231, 231– 267 (2020).
19. See Early & Preble, supra note 17; see also John P. Carlin, Assistant Att'y Gen., U.S. Dep't of Just., Remarks at Practicing Law Institute's Coping with U.S. Export Controls and Sanctions 2015 Conference (Dec. 18, 2015), https://www.justice.gov/archives/opa/speech/assistant-attorney-general-john-pcarlin-delivers-remarks-practising-law-institute-s [https://perma.cc/4YQW-R62V] (noting that corporate misconduct, particularly in "large international corporate structures" was a DOJ enforcement priority).
20. See Early & Preble, supra note 17.
21. See Press Release, U.S. Dep't of Just., Task Force KleptoCapture Announces Array of New Charges, Arrests, and Forfeiture Proceedings in Advance of Second Anniversary of Illegal Invasion of Ukraine (Feb. 22, 2024), https://www.justice.gov/opa/pr/task-forcekleptocapture-announces-array-new-charges-arrests-and-forfeiture-proceedings [https://perma.cc/QPL8-7E9
22. Id.
23. Id. The Task Force has been disbanded in the current administration with its resources moving to the US's efforts to eliminate drug cartels and transnational criminal organizations. See Memorandum from Pam Bondi, Att'y Gen., U.S. Dep't of Just., Total Elimination of Cartels and Transnational Criminal Organizations (Feb. 5, 2025), https://www.justice.gov/ag/media/1388546/dl?inline [https://perma.cc/ST3W-K8LB].
24. See Press Release, U.S. Dep't of the Treasury, Office of Foreign Assets Control, EFG International AG Settles with OFAC for $3,740,442 for Apparent Violations of Multiple Sanctions Programs (Mar. 14, 2024),https://ofac.treasury.gov/media/932766/download?inline [https://perma.cc/7H9FANJE].
25. See id.
26. See Ana De Liz, Tricky Russia investigations likely behind drop in OFAC enforcement, GLOB. INVESTIGATIONS REV. (Nov. 22, 2024), https://globalinvestigationsreview.com/news-and-features/investigatorsguides/russia/article/tricky-russia-investigations-likely-behind-drop-in-ofacenforcement [https://perma.cc/4EHZ-KYZN].
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