US Treasury reviews sanctions system, emphasizes issues related to cryptocurrency
© WikiMedia (Florian Hirzinger)
US Treasury reviews sanctions system, emphasizes issues related to cryptocurrency

The US Department of Treasury’s Office of Foreign Assets Control (OFAC) on Monday released its review of the US sanctions system and addressed new challenges.

Former President Donald Trump used sanctions as primary tools to address foreign policy concerns, and Treasury Secretary Janet Yellen promised to review the use of these tools during her confirmation.

The OFAC sanctions report contains five key recommendations for sanctions going forward: (1) adopting a structured policy framework that links sanctions to a clear policy objective; (2) coordinating multilaterally; (3) calibrating sanctions to mitigate unintended economic, political, and humanitarian impact; (4) ensuring sanctions are easily understood, enforceable, and, where possible, reversible; and (5) investing in modernizing Treasury’s sanctions technology, workforce, and infrastructure. Several of these goals appear to be targets to avoid arbitrary and unilateral sanctions.

The OFAC sanctions report also makes special note of the impact of cryptocurrency on the sanctions program. Outside of the traditional US finance system, sanctions programs are less effective. A primary reason why US sanctions are so effective is because US financial institutions are prohibited from processing or facilitating transactions for designated persons. The use of alternative payment systems and cryptocurrencies weaken sanctions as a tool. However, the sanctions report notes that modernizing OFAC’s resources and technology to address cryptocurrencies would be able to check back against this.

Deputy Secretary Adeyemo stated: “Sanctions are a fundamentally important tool to advance our national security interests. Treasury’s sanctions review has shown that this powerful instrument continues to deliver results but also faces new challenges. We’re committed to working with partners and allies to modernize and strengthen this critical tool.”