Short history of the most important EU and US sanctions lists

Have you ever thought about the history of sanctions lists? What made them arise? Sanctions lists serve as a whip on the impact of the EU, US, UN and individual countries on companies and entire countries whose activities violate international law and threaten security and peace in the world. Let’s take a closer look at the genesis of the most important US and EU sanctions lists.

Short history of the most important EU and US sanctions lists

Brief introduction: what are sanctions and what is a sanction list

Sanctions are preventive measures that are implemented by governments and international bodies. The purpose of imposing sanctions on individuals, companies and countries is to change the behaviour of entities subject to sanctions and prohibit or limit illegal or dangerous activities of certain high-risk individuals or groups.

Sanctions list are in turn lists of sanctions that are applied to individuals, countries, groups and companies. They are compiled by governments or international bodies, such as the European Union or the United Nations. Sanction lists are obligatorily checked, above all, by financial institutions which are the subject to the Anti-Money Laundering Directive (shortly AML Directive).

In Europe and the United States of America sanctions function as international restrictive measures that serve as foreign policy tools. The increased use of sanctions in Europe was initiated by the signing of the Maastricht Treaty in 1992. In the US, the political value of sanctions was noticed 43 years earlier- to be exact in 1949, when the Export Control Act was passed by the US government. These actions ultimately led to the creation of The Office of Foreign Assets Control of the US Department of the Treasury, and to the OFAC sanctions lists.

A brief history of the USA OFAC sanction lists

Cutting off from commercial networks and the global financial system by imposing sanctions has been one of the tools of foreign policy in the USA for more than 70 years. Historically in the United States of America, sanctions have served both as the dream of an idealist who believed that war could be ended without a fight or casualties, and the cudgel of a realist who knows that sanctions are in fact an economic weapon that could lead to the death of thousands of civilians only by imposing sanctions that prevents food supplies.

Sanctions were applied by USA, inter alia, with the advent of World War II after the Nazi invasions of Denmark and Norway in 1940. Franklin Delano Roosevelt decided then to freeze Danish and Norwegian assets in the United States — he imposed a sanctions list that kept millions of dollars out of the hands of the Nazis (prevented the use of foreign exchange and securities belonging to the occupied countries). Sanctions were back then administered by the Office of Foreign Funds Control (FFC).

A few years after the end of World War II, in 1949, the US passed the Export Control Act, which gave the President of the United States the power to control US trade with the country’s enemies by imposing sanctions. This led, inter alia, to the fact that in the 1950s, all imports of the ‘Chinese type’ goods, including soy sauce, were subject to complete control by US officials.

In December 1950, a new bureaucratic apparatus was established to administer US sanctions — the Office of Foreign Assets Control or shortly OFAC, which replaced the Office of Foreign Funds Control (FFC). At present, the sanction lists administered by OFAC are considered to be one of the most important US sanction lists.

Sanction lists of the United States of America OFAC

The United States of America sanctions list ‘OFAC Specially Designated Nationals (SDN) List (U.S. Treasury)’ is one of the most important US sanctions lists administered by OFAC. This sanctions list includes individuals and companies that are owned or controlled by the sanctioned individuals or countries. It is also a lists of individuals, groups and entities such as terrorists and drug dealers. The assets of the people and companies on this list are frozen. US citizens and companies cannot do business with the individuals and entities on this list.

Another important OFAC sanctions list, which publishes the names of foreign persons and entities that have violated, attempted to infringe, conspired to violate or caused a violation of US sanctions against Syria or Iran, is the ‘OFAC Foreign Sanctions Evaders (FSE) List (U.S. Treasury)’. It is also a list of foreign persons who have facilitated transactions for or on behalf of sanctioned persons. Transactions made by persons from the USA or within the United States with a person/company from the FSE list are prohibited.

Other US sanction lists that are administered by OFAC include:

  • ‘Sectoral Sanctions Identifications (SSI) List’
  • ‘Non-SDN Palestinian Legislative Council (NS-PLC) List’
  • ‘The List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (formerly OFAC Part 561 List)’
  • ‘Non-SDN Iranian Sanctions Act (NS-ISA) List’

History of CFSP — the most important sanction lists of the European Union

Before the establishment of the European Union, it was the European Political Cooperation (EPC) who was responsible for sanctions in the European Community. The start of the EPC is linked to The Hague Summit in december 1969. At the beginning, the EPC was an informal structure, this changed the subordination of the EPC to the European Council in 1974.

The activities of the EPC in the 1980s mainly involved the promotion of general principles of cooperation in European countries. However, there have been specific measures, such as the imposition of sanctions in the form of an arms embargo against China in 1989. The embargo was imposed after the Chinese military had quelled the democratic movement in Tian’anmen Square.

The purpose of establishing the EPC was equitable — the participants dreamed of increasing the influence of European countries in the international arena, which should necessarily go hand in hand with concern for security. But the EPC was so concerned about discussing security and defence issues that it decided to exclude it entirely from the agenda. It took several years for the organisation to realise that fear has big eyes and political cooperation is not possible without a discussion of defence and security.

History of EU sanctions list — from the 1990s until now

Sanction lists in the European Union, as we know it more or less today, appeared as a tool of the Common Foreign and Security Policy (CFSP). The CFSP was established under the Maastricht Treaty, which was signed on February 7, 1992. On the basis of the same treaty, on November 1, 1993, the European Union emerged.

In the 1990s, the CFSP passed sanctions against world leaders who violated the rule of law and human rights. They were, among others, the presidents of the Republic of Zaire (formerly the Democratic Republic of the Congo) and Haiti (1993). A few years later, in 1999, the list was expanded to include war-related sanctions in the former Yugoslavia and then in Afghanistan.

The name of the CFSP is the source of the title of the most important sanctions list in the territory of the EU Members: ‘Common Foreign and Security Policy (CFSP) of the European Union’. This consolidated sanction list is respected by all EU Members in accordance with European Union law. This is a list of individuals, groups and entities that have been financially sanctioned by the European Union. The list is the legal basis for the partial or complete cessation or restriction of economic and financial relationships with the listed entities.

The ‘Common Foreign and Security Policy (CFSP) of the European Union’ list can be downloaded from the European Union website HERE (logging in via the Authentication System is required). You can also see the EU sanctions on the interactive EU sanctions map.

Interactive map of EU sanctions — Source: https://www.sanctionsmap.eu/#/main

Do you want to have quick access to the largest sanctions lists in the world?

As a technology company specialising in RegTech, we offer the Sanctions Lists API for business, which includes 38 of the world’s largest sanctions lists. In addition to the US and EU lists, you will also find there, among others, sanction lists of the United Nations, Canada, France, Ukraine, Poland and Great Britain. Get to know our company and ask about the API: https://transparentdata.pl/en/

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