Secondary Sanctions are the third tool in OFAC’s sanctions arsenal, which also include the traditional country-based and list-based sanctions. They serve as supplemental sanctions to support diplomatic, law enforcement, economic, and national security goals more directly addressed in the other two sanction methods. Secondary Sanctions often seek to close the loopholes that listed entities may use to circumvent trade and financial prohibitions via enlisting a non-sanctioned third party to act on their behalf. For example, a non-listed bank in a non-sanctioned country may find itself subject to Secondary Sanctions if OFAC deems that the entity is facilitating economic activity for a listed entity or country (either intentionally or by negligence).

Companies maintain impetus to screen against Secondary Sanctions violators (de facto and official) because:

  • Regulations compel them to do so; and
  • It is a corporate responsibility imperative to prevent money laundering and terrorist financing.

Companies can assist in the development and enforcement of Secondary Sanctions through maintaining effective transaction monitoring and screening programs, as well as implementing “know-your-customer’s-customer” (KYCC) principles where high-risk correspondent relationships exist.