On Oct. 18, 2021, the U.S. Department of the Treasury (the Treasury) announced the results of its review of U.S. economic and financial sanctions.1 During her confirmation hearing in January 2021, Janet L. Yellen, secretary of the Treasury, committed to performing a comprehensive review of U.S. sanctions and their effectiveness. Wally Adeyemo, deputy secretary, oversaw this effort. Treasury officials met with hundreds of sanctions stakeholders, including "[m]embers of Congress, and their staffs, interagency partners, the private sector, foreign governments, nongovernmental organizations, academics, and Treasury's sanctions workforce." The purpose of the review was to ensure that sanctions remain an effective tool for advancing U.S. national security and foreign policy interests. The review focused on two primary issues: (i) the framework that guides the Treasury's imposition of economic and financial sanctions and (ii) the operational, structural and procedural changes that may be needed to improve sanctions' effectiveness.  

Results of the Sanctions Review

The Treasury's review explains that sanctions are a formidable tool to address a wide range of threats to national security, foreign policy and the U.S. economy. The Treasury utilizes sanctions to impose material costs on U.S. adversaries when their conduct threatens American interests. Sanctions can include the imposition of trade restrictions and the "blocking" of a party's assets, which prohibits any transactions involving that person's property without the Treasury's authorization. Sanctions have been used successfully, for example, to undermine Iran's nuclear weapons program and to seize billions of dollars from the Cali Cartel, a drug trafficking organization.2

However, the review notes that there are new and emerging challenges to sanctions' efficacy. These challenges include the development of alternative payment platforms and digital currencies, which have created opportunities for sanctioned actors to transact outside the U.S. financial system. American adversaries and allies also are reducing their use of the U.S. dollar as the nation's use of sanctions has increased by over 933% in the past 20 years.3

In light of these technological and economic developments, the Treasury proposes five steps to modernize sanctions and preserve their efficacy: (i) adopt a structured policy framework that links sanctions to a clear policy objective; (ii) incorporate multilateral coordination where possible; (iii) calibrate sanctions to mitigate unintended economic, political and humanitarian impacts; (iv) ensure sanctions are easily understood, enforceable and adaptable; and (v) invest in modernizing the Treasury's sanctions technology, workforce and infrastructure.

The Treasury explains that sanctions should be tied to a clear and discrete policy objective and incorporate "economic analysis, technical expertise, and intelligence[.]" They should not be applied lightly, and the Treasury should evaluate if they are the right tool for an identified policy objective. Sanctions also are most effective when the U.S. collaborates and shares information with its allies and partners. Multilateral coordination can harmonize sanctions regimes internationally and enhance America's leadership abroad.

While sanctions can counteract threats to America's security and economy, they have the potential to cause harmful, unintended impacts on domestic workers and businesses, allies, and nontargeted populations abroad. The Treasury plans to tailor sanctions to mitigate these negative effects and expand sanctions exceptions to support humanitarian activities in sanctioned jurisdictions. The Treasury also intends to communicate more effectively with sanctions stakeholders by using plain language and improving the navigability of its public website. The Treasury recognizes that it should modernize its technology, workforce and infrastructure and deepen its knowledge of the digital assets and services space.

The Treasury believes that all these steps should be done in coordination with the National Security Council, the Department of State, the U.S. Agency for International Development, the Department of Justice and other interagency partners.


The Treasury recognizes that it will need to adapt to evolving technologies and economic shifts that pose risks to sanctions' effectiveness. The steps that it has proposed in its review serve as a general framework for modernizing sanctions and addressing these emerging challenges.


1. U.S. Department of the Treasury, The Treasury 2021 Sanctions Review (Oct. 18, 2021),

2. The Treasury maintains a list of the individuals and companies that it has sanctioned called the Specially Designated Nationals and Blocked Persons List (the SDN List). See U.S. Department of Treasury, Specially Designated Nationals List - Data Formats & Data Schemas (Oct. 29, 2021),

3. On Oct. 15, 2021, the Treasury's Office of Foreign Assets Control (OFAC) published sanctions compliance guidance for the virtual currency industry. See U.S. Department of the Treasury, Office of Foreign Assets Control, Sanctions Compliance Guidance for the Virtual Currency Industry (Oct. 15, 2021),; see also OFAC Issues Sanctions Compliance Guidance for Virtual Currency Industry (Nov. 1, 2021),

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