Financial Sanctions

Global digital communications technology, coupled with the political appeal of sanctions as a perceived means to compel changes in behavior of sovereign states, has given policymakers the tool of financial sanctions, also called "smart sanctions" since they do not involve blanket embargoes on trade, per se. Because the global financial system functions by means of instantaneous electronic communications, entities worldwide can be identified as sanctionable, placed on a "do not do business with" list, and thus presumably severed from the financial system.

Since the United States remains the epicenter of global financial exchange, financial sanctions proceeding concentrically from U.S.-based bank relations with their counterparts in the rest of the world can be compelled to serve as agents to compel cooperation to interdict the financial activities of the targeted entities.

Following September 11th and the passage of the USA Patriot Act, which broke new ground in codifying financial sanctions as an anti-terrorism tool, the position of the Under Secretary for Terrorism and Financial Intelligence was created in the U.S. Treasury Department to direct Treasury's efforts to cut the lines of financial support for terrorists, fight financial crime, enforce economic sanctions against rogue nations, and combat the financial support of the proliferation of weapons of mass destruction.

The Under Secretary heads the Office of Terrorism and Financial Intelligence (TFI). Both were created when the Administration of President George W. Bush announced on May 8, 2004, that the Executive Office of Terrorist Financing and Financial Crimes (TFFC), the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), and other allocated resources from the Treasury Department would be brought under the new office's control. The Under Secretary for Terrorism and Financial Intelligence also possesses oversight of Treasury's Office of Intelligence and Analysis (Treasury Department).

The Office of Terrorism and Financial Intelligence is one of 16 agencies in the U.S. Intelligence Community.

USA*Engage appreciates the distinction between targeted financial sanctions and blanket trade embargoes. That said, financial sanctions are not free of counterproductive consequences, for example, when they become impediments to other U.S. foreign policy measures, such as the promotion of humanitarian trade – agricultural commodities, food, medicine and medical products – regardless of sanctions on a targeted country.


USA*Engage Report Card for the 111th Congress


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