What Are Financial Sanctions?
Financial sanctions explained - the measures that follow the dollar.
Overview
Financial sanctions are the measures that restrict transactions with designated parties: asset freezes (blocking), transaction prohibitions, and restrictions that follow US-dollar clearing.
The types
- Blocking sanctions - freeze the party's property; transactions are prohibited
- Sectoral sanctions - restrict specific activities (e.g., debt, energy)
- Secondary sanctions - reach non-US persons facilitating prohibited activity
Why they follow the dollar
US-dollar clearing runs through US correspondent banks - the mechanism that gives OFAC its global reach. The secondary-sanctions post covers the extraterritorial layer.
The agent implication
Financial sanctions apply to payments regardless of who initiates them - an agent's transfer to a blocked party is as prohibited as a human's.