InfoBytes Blog
Treasury makes recommendations to enhance effectiveness of sanctions
On October 18, the U.S. Treasury Department released the results from a comprehensive economic and financial sanctions review and issued recommendations on preserving and enhancing sanctions’ effectiveness in supporting national security and U.S. interests going forward. The 2021 sanctions review involved the participation of hundreds of sanctions stakeholders, including former Treasury officials, the Departments of State and Justice, USAID, Congress, small and large commercial businesses and financial institutions, and foreign governments, among others. The review found that while sanctions are “an essential and effective policy tool,” there are new challenges, “including rising risks from new payments systems, the growing use of digital assets, and cybercriminals,” as well as the “impact of sanctions on the flow of legitimate humanitarian aid to those in need.” The review noted that “American adversaries—and some allies—are already reducing their use of the U.S. dollar and their exposure to the U.S. financial system more broadly in cross-border transactions,” and that Treasury is “mindful of the risk that, if left unchecked, these digital assets and payments systems could harm the efficacy of our sanctions.” The review further found that in the past 20 years, there has been a 933 percent increase in the number of sanctions designations, and stressed that in order to ensure sanctions continue to support U.S. national security objectives, there must be changes made to adapt and modernize the underlying system by which sanctions are deployed.
The review made the following recommendations to mitigate these challenges and bolster the effectiveness of sanctions programs: (i) adopt a structured policy framework linking sanctions to a clear policy objective; (ii) engage in multilateral coordination when possible; (iii) calibrate sanctions to prevent unintended economic, political, and humanitarian impact; (iv) expand existing outreach to ensure sanctions are easily understood, enforceable, and, where possible, reversible; and (v) invest in modernizing Treasury’s sanctions technology, workforce, and infrastructure, especially with respect to digital assets and services.