What are sectoral sanctions?
Sectoral sanctions restrict specific activities in a named sector of a target economy, such as raising new debt or equity or supplying deep-water drilling services, rather than freezing the assets of the parties involved.
Sectoral measures were designed to press strategic industries while leaving ordinary trade open. The United States implements them through OFAC directives and the SSI List; the EU implements them through articles of Council regulations prohibiting dealings in particular financial instruments, goods or services. The recurring screening mistake runs in both directions: treating a sectoral hit like a blocking hit, or ignoring it because the counterparty is not an SDN. The correct response is to read the directive and apply the prohibition it names.
What this workflow covers
SCOPE- The hit names the directive; the directive names the barred transaction types.
- Screening has to carry prohibition text through to the analyst, not a name and a score.
- Where a directive reaches entities owned 50 percent or more by a listed party, the restriction travels down the ownership chain.
- Breaching a sectoral prohibition is an enforcement matter in the same way as breaching a blocking prohibition.
Compliance glossary
TERMS- Directive
- An OFAC instrument setting out the specific prohibitions that apply to parties listed under a sectoral sanctions programme.
- Comprehensive sanctions
- Measures that prohibit substantially all dealings with a territory or government, as opposed to activity-specific sectoral measures.
Authoritative references
SOURCES- 01Sectoral Sanctions Identifications (SSI) List
U.S. Department of the Treasury — OFAC
- 02Overview of sanctions and related tools
European Commission
Frequently asked questions
Q&A- Sectoral or comprehensive: what changes for us?
- Comprehensive sanctions target a whole jurisdiction and prohibit virtually all dealings with it. Sectoral sanctions target defined activities in named sectors, leaving other dealings with the same counterparty lawful. The compliance question shifts from who you are dealing with to what kind of transaction it is.
- Can a sectorally listed party also be an SDN?
- Yes, and it happens routinely as regimes tighten. A party can be added to the SDN List while remaining on a sectoral register, so screening has to report every list a name matched rather than the first one it found.
- Do sectoral rules bite outside the issuing jurisdiction?
- The prohibitions bind persons within the issuing jurisdiction. Their practical reach is wider, because currency clearing, group policies and contractual clauses carry them into third-country transactions.