Enforcement of Economic Sanctions: An Overview

Enforcement of Economic Sanctions: An Overview

Updated March 18, 2024
Enforcement of Economic Sanctions: An Overview
The United States imposes economic restrictive measures
consultation with the Secretary of State, may designate
(“economic sanctions”) on foreign states or non-state actors
individuals under Executive Order 14024 include that the
that engage in objectionable conduct. The sanctions may
foreign person is “a political subdivision, agency, or
encompass individuals, sectors, and entities that are
instrumentality of the Government of the Russian
financing or otherwise connected to the targeted states or
Federation” or has engaged in “activities that undermine the
entities. The imposition of economic sanctions, which
peace, security, political stability, or territorial integrity of
includes the blocking (freezing) of assets and restrictions on
the United States, its allies, or its partners.”
trade to deter financing that conduct, is meant to
accomplish foreign policy and national security goals. This
Based on intelligence and other information, the
In Focus provides a brief overview of how economic
Department of Treasury (Treasury) or the Department of
sanctions are imposed and enforced.
State may identify specific persons that meet the criteria of
the relevant executive orders and statutes. Persons whose
Imposition of Economic Sanctions
assets are blocked and with whom U.S. persons may
Most economic sanctions are imposed using authority
generally not deal appear on the Specially Designated
delegated to the President in the International Emergency
Nationals and Blocked Persons List (SDN List). Persons
Economic Powers Act (IEEPA) and the National
whose assets are not blocked, but with whom certain
Emergencies Act. The President may, upon declaring a
transactions are prohibited, appear on non-SDN lists,
national emergency involving any “unusual and
collectively arranged by Treasury’s Office of Foreign
extraordinary threat, which has its source in whole or
Assets Control (OFAC) in a Consolidated Sanctions List.
substantial part outside the United States,” restrict or
prohibit a wide range of transactions involving “property in
OFAC administers these economic sanctions programs
which any foreign country or a national thereof has any
targeting malign activities in several jurisdictions as well as
interest by any person, or with respect to any property,
other types of conduct that are harmful to U.S. national
subject to the jurisdiction of the United States.” “Person”
security. Regulations pertaining to the sanctions programs
includes natural persons and entities.
are found in 31 C.F.R. Chapter V.
During periods when the United States “is engaged in
For further information on IEEPA, see CRS Report
armed hostilities or has been attacked by a foreign country
R45618, The International Emergency Economic Powers
or foreign nationals,” the President’s authority to block and
Act: Origins, Evolution, and Use.
prohibit transactions in designated persons’ property is
expanded to include confiscation of property. The President
Enforcement of Economic Sanctions
may order that the property of any foreign person be
Sanctions implementation is shared across the executive
confiscated, with title to such property vesting in an agency
branch, primarily among the Department of State, Treasury
or person designated by the President. The President may
(through OFAC), the Department of Commerce, and the
also establish the terms on which the confiscated property
Department of Justice (DOJ).
may be held or sold, among other things. (Similar authority
is available during a declared war under the Trading with
OFAC
the Enemy Act.)
If OFAC suspects that a person or entity may be acting in
violation of economic sanctions, it may open enforcement
To exercise authorities under IEEPA, the President issues
proceedings. Based on the evidence, OFAC may issue a
an executive order that (1) declares that conditions
finding of no violation, a request for further information, a
constitute a national emergency under the National
cautionary letter, a finding of a violation, a finding of a
Emergencies Act, (2) designates targeted persons and sets
violation with civil monetary penalty, or a criminal referral.
out criteria by which the Secretary of the Treasury or other
Should OFAC have reason to believe that the sanctions
officials (e.g., the Secretary of State) may designate specific
violation may be ongoing or recur, it may also issue a
foreign persons who will be subject to the sanctions, and (3)
cease-and-desist order. Where relevant, OFAC may also
establishes the types of transactions or other prohibitions
revoke, suspend, modify, withhold, or deny licenses to
that shall apply to a designated foreign state or person. For
engage in certain transactions.
example, Executive Order 14024, related to countering
“harmful foreign activities of the Government of the
If OFAC imposes a monetary penalty, the amount varies
Russian Federation,” blocks a designee’s property within
depending on the relevant statutory authority and an
the United States and prohibits any U.S. person from
evaluation of the circumstances. To calculate the penalty,
engaging in transactions related to that property. The
OFAC first determines the “base amount” by considering
grounds on which the Secretary of the Treasury, in
whether the violation qualifies as “egregious” and whether
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Enforcement of Economic Sanctions: An Overview
the individual voluntarily self-disclosed the violation. The
The Consolidated Appropriations Act of 2023 temporarily
egregiousness determination is based on a consideration of
authorizes the Attorney General to transfer to the Secretary
factors including the violator’s willfulness, harm to the
of State proceeds from certain assets forfeited prior to May
sanctions program’s objectives, and individual
1, 2025, in connection with the Russian Harmful Foreign
characteristics (e.g., commercial sophistication). Then
Activities Sanctions program implementing Executive
OFAC considers aggravating and mitigating factors,
Order 14024 for transfer to Ukraine “to remediate the
including whether the violator took remedial action or
harms of Russian aggression towards Ukraine.”
cooperated with OFAC’s investigation to calculate a final
penalty. Should OFAC believe that a particular case might
Asset forfeiture. The United States’ authority to confiscate
warrant criminal penalties, it may refer the case to DOJ.
assets within its jurisdiction generally derives from civil
and criminal forfeiture statutes. Cooperation with foreign
Violators face civil penalties of up to $250,000 (which, as
allies may enable the United States to seize and subject to
annually adjusted under the Federal Civil Penalties Inflation
forfeiture assets located abroad.
Adjustment Act of 1990, now amounts to $368,136) or “an
amount that is twice the amount of the transaction that is
the basis of the violation.”
Criminal forfeiture authorities are found in various parts of
See Economic Sanctions
the U.S. Code and require a defendant to forfeit “tainted”
Enforcement Guidelines. Seventy-five percent of the civil
property—that is, property involved in or derived from
penalties and net proceeds of forfeitures related to violation
certain illegal activity. These “statutes serve important
of sanctions and other criminal provisions involving
governmental interests such as ‘separating a criminal from
designated state sponsors of terrorism go into the United
his ill-gotten gains,’ [and] ‘returning property, in full, to
States Victims of State Sponsored Terrorism (USVSST)
those wrongfully deprived or defrauded of it.’” Honeycutt v.
Fund. Otherwise, civil fines are deposited into the General
United States, 581 U.S. 443, 447 (2017). For example, 18
Fund of the U.S. Treasury. Proceeds of the remaining 25%
U.S.C. § 982 provides for criminal forfeiture of real or
and most other civil forfeitures for sanctions violations are
personal property following a defendant’s criminal
deposited into the DOJ Asset Forfeiture Fund or the
conviction if that property was involved in or traceable to a
Treasury Forfeiture Fund.
variety of offenses, including money laundering, securities
U.S. Department of Justice
fraud, and mail or wire fraud.
DOJ handles criminal violations of sanctions as well as
Civil forfeiture allows the government to bring an action
civil forfeitures. It also investigates conduct that may
against property rather than a person, generally on the
facilitate sanctions violations, such as money laundering
theory that the property is suspected of being involved in a
and export control violations. DOJ’s National Security
crime. For instance, the United States can seek civil
Division leads sanctions violations prosecutions, while
forfeiture of real or personal property if that property was
other prosecutions may be led by other offices, including
involved in or traceable to, among other things, money
the Money Laundering and Asset Recovery Section within
laundering, securities fraud, or mail or wire fraud. Property
the Criminal Division.
involved in IEEPA violations is subject to civil forfeiture
under 18 U.S.C. § 981 as “specified unlawful activity.”
Because most sanctions are imposed using IEEPA or other
sanctions laws that incorporate its authorities, DOJ
Unlike in criminal cases, the government need not obtain a
sanctions prosecutions often rely on IEEPA’s penalty
criminal conviction against the individual whose property
provision. Violators face criminal fines of up to $1 million
or up to 20 years’ imprisonment for willful violations.
the government seeks to civilly forfeit. Under 18 U.S.C. §
983, an “innocent owner” may contest a civil forfeiture on
Criminal fines associated with designated state sponsors of
the grounds that he or she did not know of the illegal
terrorism are deposited into the USVSST Fund. Otherwise,
conduct giving rise to the forfeiture or, on learning of the
fines may go into the Crime Victims Fund.
illegal conduct, took all reasonable steps to terminate the
property’s involvement in such conduct.
Sanctions-related charges. The DOJ may also seek to
address the conduct that enables sanctions violations
Although Congress retains significant discretion in crafting
through other available authority. For example, Attorney
criminal and civil forfeiture provisions, the Constitution’s
General Merrick Garland in 2022 announced the creation of
Excessive Fines Clause limits the scope of forfeiture laws.
Task Force KleptoCapture to enforce sanctions imposed by
the United States in response to Russia’s
In the criminal context, the forfeiture must not be “grossly
2022 expanded
disproportionate to the gravity of a defendant’s offense.”
invasion of Ukraine. In addition to investigating sanctions
United States v. Bajakajian, 524 U.S. 321, 334 (1998). In
violations, the task force investigates efforts to undermine
the civil context, the Excessive Fines Clause applies only
economic sanctions, including money laundering and
when the relevant statutory provision’s purpose is at least
export control violations, often seeking forfeiture of assets
partly punitive rather than strictly remedial (e.g., ties
identified as the proceeds of unlawful conduct. DOJ and
forfeiture to the commission of certain crimes). Austin v.
Treasury are also participating in the multilateral Russian
United States, 509 U.S. 602, 622 (1993).
Elites, Proxies, and Oligarchs Task Force created to allow
allied countries to “share information to take concrete
Jennifer K. Elsea, Legislative Attorney
actions, including sanctions, asset freezing, civil and
criminal asset seizure, and criminal prosecution.”
IF12063

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Enforcement of Economic Sanctions: An Overview

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