In recent years, the U.S government has been quick to impose heavy sanctions on Iran, China, and Russia. U.S sanctions have throttled Cuba for almost six decades.
Purpose of The Sanctions and Regulations
US sanctions and regulations intended to force foreign adversaries to step away from activities that might threaten national security, such as developing nuclear weapons and terrorism. Although these sanctions appear to be aimed at foreign countries, they are more harmful to business owners on home soil.
Consequently, business owners originating from a country that is the subject of a United States sanction need to understand how the various types of US sanctions could potentially harm their revenue streams, financial status, and rights to inherit property.
Understanding US sanctions and regulations also provides insights that will enable you to be more agile in the market or respond to risk and compliance.
On a fundamental level, the U.S. limits sanctions to countries deemed to be violating the USA PATRIOT Act 2001. Sanctions included “blocking property and prohibiting transactions with persons in countries who commit, threaten to commit, or support terrorism.”
Under the Trump Administration, the US government extended its powers to issue restrictions. In 2018, China was hit with sanctions that affected a reported $60bn worth of products, and the U.S. accused China of corporate espionage.
The Types of U.S. Sanctions
U.S. sanctions and regulations are a set of legal tools achieved U.S. administered by the Office of Foreign Assets Control (“OFAC”), a subsidiary of the Treasury Department. There are primary and secondary sanctions.
The purpose of the sanctions is to influence and enforce foreign policy and establish national security goals.
Primary sanctions apply to U.S. nationals, permanent residents, or situations with a U.S. nexus. Primary sanctions can be enforced regardless of where a U.S. citizen resides.
There are types of sanctions are:
List-based blocking sanctions: target individuals, groups, and businesses deemed to be a threat to national security, foreign policy, and the economy of the United States.
In general, sanctions are only administered for serious offenses such as terrorism, drug trafficking, human rights abuses, genocide, and organized crime.
Targeted sanctions: freeze funds and other financial assets of individuals and businesses suspected in any of the above crimes. There are also heavy restrictions on investments, trade, and travel.
Comprehensive country or regional sanctions: Target foreign nationals with dual nationality in the United States. When sanctions or embargoes are administered against a foreign country, people with origins or property in such countries are restricted in the goods and services they can trade in America.
They may also be hit with financial restrictions and prohibited from investing in property. This makes it difficult for foreign nationals to inherit property gifted to them in a will.
At the time of writing, sanctioned countries are Cuba, Iran, Afghanistan, Libya, China, Congo, North Korea, Mali, Somalia, Sudan, and Yemen. Russia has, of course, recently been added to the list for invading Ukraine.
The U.S. government also issues secondary sanctions against countries, industries, and individuals even in the absence of a U.S. nexus.
