Global sanctions are a powerful tool of coercion, imposing costs for the target country and its people while helping to deter a war or other aggressive act. But the effectiveness of these economic instruments depends on how well they work in tandem with other policy options. This is particularly true in the 21st century, where globalization has increased the speed and scope at which sanction shocks are transmitted to other countries’ economies, increasing their overall impact.
Sanctions are imposed on countries, individuals and entities accused of violating state or international law. They can take many forms:
Asset Freezes and Seizures: This is a restriction on the sale or transfer of assets that belong to sanctioned individuals or companies and are usually aimed at punishing those who commit financial crimes such as money laundering, terrorist financing or drug trafficking.
Trade Restrictions: This is a ban on the flow of goods between the sanctioned country and third countries and can be applied to both final and intermediate goods. It can be used to punish individuals and companies that violate state and international laws as well as to pressure them into compliance with those laws.
The Office of Foreign Assets Control (“OFAC”) is the US government agency that administers and enforces economic and trade sanctions based on national security, foreign policy and/or counterterrorism goals against targeted foreign countries and regimes, terrorists and international narcotics traffickers, and those seeking to obtain weapons of mass destruction and other dangerous technologies. OFAC regularly updates its website with new designations and changes in existing designations.