CSS Secondary Sanctions & Extraterritorial Reach 3

Question 1

Which Executive Order most broadly authorizes secondary sanctions related to Russia's harmful foreign activities post-2021?

Accepted Answer

E.O. 14024

Answer

E.O. 13661

Answer

E.O. 13685

Answer

E.O. 13662

Question 2

How do 'blocking' (primary) sanctions differ from secondary sanctions in terms of their immediate legal effect?

Accepted Answer

Blocking sanctions freeze assets and prohibit U.S. person transactions; secondary sanctions extend prohibitions to non-U.S. persons dealing with sanctioned parties

Answer

Blocking sanctions apply to individuals only; secondary sanctions apply to entire countries

Answer

Blocking sanctions are civil remedies only; secondary sanctions are criminal in nature

Answer

Blocking sanctions require congressional approval; secondary sanctions are purely executive actions

Question 3

A European bank processes a payment for a Russian energy company on the SSI (Sectoral Sanctions Identifications) List. Under U.S. secondary sanctions, which outcome is most likely?

Accepted Answer

OFAC may investigate and potentially restrict the bank's access to U.S. correspondent banking

Answer

The European bank faces automatic criminal prosecution in U.S. courts

Answer

The European bank must file a mandatory report with FinCEN within 10 business days

Answer

The transaction is automatically blocked by SWIFT's sanctions filtering system

Question 4

The Sectoral Sanctions Identifications (SSI) List differs from the SDN List in which key way?

Accepted Answer

SSI listings impose targeted prohibitions on specific types of transactions rather than blocking all dealings with the listed entity

Answer

SSI listings result in full blocking of all assets; SDN listings only restrict specific transaction types

Answer

SSI listings apply only to non-U.S. persons; SDN listings apply globally to all persons

Answer

SSI listings are automatically temporary; SDN listings are automatically permanent

Question 5

When OFAC evaluates whether to impose secondary sanctions on a non-U.S. person who transacted with an Iranian entity, which statement best describes OFAC's enforcement posture?

Accepted Answer

Secondary sanctions are largely discretionary — OFAC evaluates significance and policy factors before imposing consequences

Answer

Secondary sanctions are mandatory — OFAC must automatically sanction any non-U.S. person who completes a prohibited transaction

Answer

Secondary sanctions can only be applied if a U.S. person was also involved in the same transaction

Answer

OFAC has no authority to sanction non-U.S. persons who operate entirely outside the United States

Question 6

The OFAC '50 Percent Rule' is particularly relevant to secondary sanctions because it:

Accepted Answer

Extends sanctions to entities owned 50% or more by one or more SDN-designated parties, even if the entity itself is not listed

Answer

Requires foreign companies to disclose if 50% of their revenues derive from sanctioned jurisdictions

Answer

Sets a 50% ownership threshold below which OFAC will not pursue secondary sanctions enforcement

Answer

Mandates that 50% of a compliance program's resources address secondary sanctions exposure

Question 7

Which of the following best explains why correspondent banking relationships are the primary leverage point for U.S. secondary sanctions enforcement?

Accepted Answer

Access to U.S. dollar clearing and the U.S. financial system is essential for most international transactions, giving the U.S. significant leverage over foreign institutions

Answer

U.S. banks are legally liable for the sanctions violations of their foreign correspondent partners

Answer

Correspondent accounts held in the U.S. are directly subject to OFAC blocking orders as domestic property

Answer

Foreign banks with U.S. correspondent accounts automatically become subject to U.S. primary sanctions