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