Secondary Sanctions to Prove First-Order Challenge

As promised, this report provides an in-depth assessment of President Biden’s Friday executive order  expanding anti-Russia sanctions via secondary ones on financial institutions that – knowingly or not – facilitate or conduct newly-identified transactions related to sanctioned persons, services, or goods.  These address frequent Congressional criticism about ineffective sanctions (see Client Report SANCTION20) and expose both foreign banks and U.S. correspondents to heightened legal and reputational risk.  However, as described in this report, secondary sanctions reach beyond the banks to entities often used to facilitate transactions critical to Russia’s war effort in foreign-exchange, insurance, and the payments markets.  However, it appears that sanctions risk applies only to MSBs, not to payment processors or system operators.

SANCTION21.pdf