In the last ten years, secondary sanctions have played an important role for European regulators as well as for compliance officers working for economic operators. Even though such European practitioners are looking for guidance and experience from their interlocutors from the other side of the Atlantic, including from the US Office of Foreign Assets Control, secondary sanctions do not act in the leading role but are one of many risk factors to be considered by economic operators. Instead, prohibitive policies of European economic operators, including financial institutions, against certain governments, such as Iran and to a lesser degree Russia, are mostly based on risks unrelated to secondary sanctions. On this premise, the chapter will briefly describe the relevant regulatory framework and will then explain how the regulations are operationally implemented in international financial institutions. In doing this, the chapter will also touch on practical challenges for sanctions compliance officers, such as extraterritoriality and the EU Blocking Regulation.

Non-US corporations, especially banks, have long experienced the expansive enforcement of unilateral US sanctions regulations. The common factor in these cases is that jurisdiction is based on the alleged use of the US financial system. A recent case shows that the US authorities have expanded their jurisdictional claim even further by establishing a new theory of sanctions liability. Under what we call the correlation theory, a sufficient US nexus exists if a sanctions-related transaction correlates with a transaction which, at some point, is processed via the United States. This expansion signifies an enlargement of what the United States considers as primary sanctions. It goes hand in hand with a reduction of what it considers to be secondary sanctions. So far, the US authorities have not provided a clear and comprehensive definition of their newly developed liability framework. Less nebulous than the parameters of the correlation theory is the outcome it produces: any transaction involving a sanctioned client by an internationally active bank can potentially be pulled into US sanctions jurisdiction.