Federal Sanctions Programs

U.S. economic sanctions — primarily authorized under the International Emergency Economic Powers Act (IEEPA, 50 U.S.C. §§ 1701–1707) and administered by the Treasury Department's Office of Foreign Assets Control (OFAC) — are the most powerful economic tool in American foreign policy, blocking billions of dollars in transactions and freezing assets of designated individuals, entities, and entire countries. IEEPA gives the President broad authority to declare a national emergency and impose sanctions whenever "any unusual and extraordinary threat" to U.S. national security, foreign policy, or the economy originates "in whole or in substantial part outside the United States" — an expansive grant that Presidents have used to sanction Russia, Iran, North Korea, Cuba, Venezuela, Belarus, Myanmar, and dozens of targeted individuals from terrorists to cartel leaders to foreign government officials. The OFAC's Specially Designated Nationals (SDN) list — currently containing thousands of names — prohibits any U.S. person or entity from transacting with listed parties; companies that violate sanctions face civil penalties up to program-specific caps (currently ~$377,700 per IEEPA violation in 2026) or twice the transaction amount, plus potential criminal prosecution. Secondary sanctions — targeting non-U.S. persons who do business with sanctioned countries — give the U.S. extraterritorial reach that has created significant friction with European and Asian allies who view them as an overreach. The Trump administration's aggressive use of IEEPA tariff authority in 2025 — imposing tariffs on allies and adversaries alike — has put new legal scrutiny on the breadth of presidential IEEPA powers, with court challenges testing whether tariffs qualify as a legitimate IEEPA use.

Current Law (2026)

Legal Authority

• 50 U.S.C. § 1701-1707 (IEEPA) — International Emergency Economic Powers Act (President may declare national emergency and block property, prohibit transactions, and impose sanctions against foreign persons/entities threatening national security, foreign policy, or the economy; basis for most modern sanctions programs)
• 22 U.S.C. § 8511-8514 — Comprehensive Iran Sanctions (sanctions on financial institutions transacting with Iran; energy sector sanctions; human rights sanctions; divestment authorization for state/local governments)
• 22 U.S.C. § 8801-8804 — Iran Freedom and Counter-Proliferation Act (sanctions on energy, shipping, shipbuilding sectors; precious metals; automotive sector; sanctions on persons maintaining accounts at sanctioned Iranian financial institutions)
• 22 U.S.C. § 6001-6032 — Cuban sanctions (Cuban Democracy Act and Cuban Liberty and Democratic Solidarity Act; economic embargo; secondary sanctions on third-country companies trafficking in confiscated property)
• 22 U.S.C. § 2751-2778 — Arms Export Control Act (controls on export of defense articles and services; International Traffic in Arms Regulations / ITAR; Munitions List; Congressional notification for major sales; export licenses)
• 22 U.S.C. § 2780 — Transactions with countries supporting terrorism (prohibitions on export of munitions items to countries designated as state sponsors of terrorism)

How It Works

U.S. sanctions are one of the most powerful tools of American foreign policy — using the dominance of the U.S. financial system and the dollar to pressure foreign governments, entities, and individuals.

Sanctions are typically imposed through presidential executive orders under IEEPA authority and administered by OFAC at the Treasury Department. The core mechanism: U.S. persons (citizens, permanent residents, U.S.-incorporated entities, and anyone physically in the United States) are prohibited from transacting with sanctioned targets. Because virtually all international dollar transactions clear through U.S. banks, and because non-U.S. banks need access to the U.S. financial system, sanctions effectively cut targets off from the global financial system — even when transactions don't directly involve U.S. persons. Sanctions programs take several forms: comprehensive sanctions prohibit virtually all transactions with an entire country (Cuba, North Korea, and at various times Iran and Syria); list-based sanctions block the assets of and prohibit transactions with specific individuals and entities on the Specially Designated Nationals (SDN) list (over 12,000 entries); sectoral sanctions target specific economic sectors of a country (Russia's financial, energy, and defense sectors) without blocking it entirely; and secondary sanctions penalize non-U.S. persons who transact with sanctioned targets, extending U.S. sanctions reach far beyond U.S. jurisdiction. Every business touching the U.S. financial system must screen transactions against OFAC's lists; the "50% rule" means entities owned 50% or more by SDN-listed persons are themselves blocked even if not separately listed. OFAC issues general licenses (for specific categories of permitted transactions) and specific licenses (for individual transactions).

Related but distinct from OFAC sanctions, the Bureau of Industry and Security (BIS) at the Commerce Department administers export controls on dual-use goods and technology through the Export Administration Regulations (EAR), with items on the Commerce Control List requiring licenses to certain destinations; the State Department controls defense articles through ITAR and the U.S. Munitions List. OFAC can impose civil penalties of up to $377,700 per IEEPA violation or twice the transaction amount (whichever is greater); criminal violations — willful evasion attempts — carry up to $1 million in fines and 20 years imprisonment, with BIS export control violations carrying similar penalties. OFAC publishes enforcement actions providing compliance guidance, and voluntary self-disclosure is a significant mitigating factor in determining penalties.

How It Affects You

If you're a business owner, importer, exporter, or contractor with international operations: Sanctions compliance is not optional, and ignorance is not a defense — OFAC's strict liability standard means that a transaction with a sanctioned party can result in civil penalties even if you didn't know the party was sanctioned. Your compliance obligation is to screen all counterparties (customers, suppliers, intermediaries, beneficial owners) against the SDN (Specially Designated Nationals) list before every transaction. OFAC's SDN search tool is free at sanctionssearch.ofac.treas.gov. Civil penalties run up to $377,700 per IEEPA violation or twice the transaction value (TWEA-Cuba caps at ~$91,522 — penalty caps are program-specific) (whichever is greater); willful violations carry up to $1 million in fines and 20 years imprisonment. The minimum compliance program for any business with international exposure: screen all parties before transacting; have a written screening policy; train staff on red flags; document your screening. OFAC's Framework for OFAC Compliance Commitments (ofac.treasury.gov/media/57221/download) outlines the five essential components of a compliant program. If you discover a potential violation, voluntary self-disclosure to OFAC is a significant mitigating factor — enforcement penalties are routinely reduced 50% or more for good-faith self-disclosers. Export-oriented businesses must also comply separately with EAR (Export Administration Regulations) and potentially ITAR; the Commerce Department's BIS handles EAR compliance (bis.doc.gov).

If you send money internationally or use international financial services: Every wire transfer, international ACH, and remittance you send is screened against OFAC's sanctions lists by the financial institutions in the payment chain — this is why you sometimes see unexplained wire transfer delays or rejections. Transfers involving comprehensively sanctioned countries (Iran, North Korea, Cuba, Syria, Crimea) are blocked entirely without a specific OFAC license. For Cuba specifically: travel is permitted under specific OFAC general license categories — family visits, journalism, academic/educational activities, support for the Cuban people — but pure tourist travel is not authorized. Check the current Cuba general license status at ofac.treasury.gov/sanctions/programs/cuba before booking; the rules have changed multiple times between administrations. For Iran and North Korea, essentially all financial transactions without a specific OFAC license are prohibited, including paying for goods that originate in those countries or passing through Iranian or North Korean financial intermediaries. If your bank blocked a transfer you believe was legitimate, request the specific reason in writing — you may be able to provide documentation that clarifies the parties are not sanctioned, or apply for an OFAC license if the transaction involves a legitimate humanitarian or licensed purpose.

If you invest in foreign companies, securities, or funds: U.S. sanctions programs increasingly restrict investment — not just trade. Executive Order 13959 and its successors prohibit U.S. persons from transacting in publicly traded securities of companies on the CMIC (Chinese Military-Industrial Complex) list. Russian sanctions prohibit new investment in Russia's energy sector and the purchase of Russian sovereign debt. The Venezuela sanctions program restricts investment in Venezuela's state oil company (PDVSA) and related entities. Investment funds with exposure to sanctioned entities face mandatory divestiture obligations; some state pension funds have been required by state law to divest from Iran- or Russia-related holdings. Before investing in foreign companies — especially in China, Russia, the Middle East, or any emerging market with sanction-adjacent geopolitics — check whether the target or its beneficial owners appear on OFAC's SDN, CMIC, or other lists. The ACAMS sanctions resource center (acams.org) and the Association of Global Custodians provide compliance guidance for investment professionals navigating the intersection of sanctions and securities law.

If you're a financial institution, fintech, or payments company: Sanctions compliance is a core regulatory requirement — not just for banks but for money service businesses, cryptocurrency exchanges, broker-dealers, and any entity that moves money. Banks must maintain automated transaction screening systems, file Suspicious Activity Reports (SARs) for potential sanctions evasion, and either block or reject prohibited transactions. The consequences for failure are dramatic: BNP Paribas paid $8.9 billion in 2014 for processing transactions with Cuba, Iran, and Sudan; Standard Chartered paid $1.1 billion for Iran-related violations. Cryptocurrency exchanges face the same OFAC obligations as traditional financial institutions — OFAC has designated crypto addresses associated with sanctioned entities and expects exchanges to screen against them. The OFAC Frequently Asked Questions database (ofac.treasury.gov/faqs) is the primary interpretive resource for new fact patterns; the Association of Certified Anti-Money Laundering Specialists (acams.org) and the Bank Secrecy Act/AML Working Group provide training and compliance resources.

State Variations

Federal sanctions preempt most state activity in foreign affairs, but:

• Several statutes explicitly authorize state/local governments to divest pension funds from companies doing business with sanctioned countries (e.g., Iran divestment under § 8532)
• State procurement restrictions sometimes overlap with federal sanctions (e.g., prohibiting state contracts with companies doing business in sanctioned countries)
• State-level anti-BDS (Boycott, Divestment, Sanctions against Israel) laws operate in a separate but related space

Implementing Regulations

• 31 CFR Part 501 — OFAC reporting, procedures, and penalties (reporting requirements, blocked property procedures, civil penalty framework, license applications)
• 31 CFR Parts 510–599 — OFAC country and list-based sanctions programs (Iran, North Korea, Russia/Ukraine, Cuba, Syria, Venezuela, counterterrorism, counternarcotics, cyber-related sanctions, and other country-specific programs)
• 31 CFR Part 1060 — FinCEN provisions (delegation of authorities)

Pending Legislation

• S 1889 (Sen. Scott, R-SC) — Repeals Iran Sanctions Act sunset to keep sanctions authorities in place. Status: Introduced.
• S 1755 (Sen. Sullivan, R-AK) — Hong Kong Judicial Sanctions Act: review whether named HK officials meet sanctions criteria. Status: Introduced.
• HR 2622 (Rep. Connolly, D-VA) — Russia-North Korea Cooperation Sanctions Act: targets actors helping NK send arms to Russia. Status: Introduced.

Recent Developments

• Russia sanctions following the 2022 invasion of Ukraine represent the most extensive sanctions program since the Iran nuclear deal — including central bank asset freezes, SWIFT disconnection, energy price caps, and sweeping SDN designations
• China-focused export controls on advanced semiconductors and chip-making equipment have created a new paradigm of technology-based economic restrictions
• OFAC has increased cryptocurrency enforcement, sanctioning mixer services and wallet addresses used for sanctions evasion and ransomware payments
• Secondary sanctions enforcement has expanded, with increasing pressure on third-country entities that facilitate transactions with sanctioned targets
• The effectiveness and unintended consequences of sanctions (humanitarian impact, dollar weaponization concerns, sanctions evasion through alternative payment systems) are subjects of active policy debate

In March 2026, OFAC published notice of removing one person and one vessel from the Specially Designated Nationals and Blocked Persons List (SDN List), reflecting ongoing adjustments to sanctions designations.