CGSS cheat sheet

UN Charter Chapter VII, Article 41 authorizes the Security Council to impose measures not involving armed force; resolutions are binding on member states under Article 25.

Primary sanctions restrict conduct of persons within the issuing jurisdiction; secondary sanctions threaten measures against non-residents for conduct outside the jurisdiction.

OFAC 50 Percent Rule: an entity owned 50% or more, directly or indirectly, in the aggregate by one or more blocked persons is itself blocked even if not listed.

IEEPA (50 U.S.C. 1701 et seq.) is the principal US peacetime sanctions statute; it requires a declared national emergency and permits blocking and prohibiting transactions.

EU restrictive measures are adopted under the CFSP; measures interrupting economic relations are implemented by a Council regulation under Article 215 TFEU, directly applicable in member states.

Comprehensive embargoes prohibit most trade and financial dealings with a country; targeted sanctions restrict specific persons, sectors, or activities.

Asset freezes immobilize funds and economic resources owned or controlled by designated persons; title to the assets does not transfer.

Extraterritorial reach arises from US secondary sanctions and from use of US dollars or US-origin goods; EU blocking statutes prohibit compliance with certain listed US measures.

Designation generally requires a legal basis, a statement of reasons, and a delisting or review mechanism; UN delisting uses the Focal Point or Ombudsperson process.

OFAC maintains country programs (e.g., Iran, North Korea, Cuba, Syria, Russia) and thematic programs (counter-narcotics, WMD, human rights, corruption).

The SDN List identifies blocked persons; US persons must block their property and may not deal with them, while other OFAC lists such as SSI impose narrower restrictions.

The Russia SSI list imposes sectoral restrictions such as limits on new debt or equity rather than full blocking; the 50 Percent Rule applies to SSI entities for those restrictions.

EU restrictive measures include asset freezes, travel bans, sectoral bans, and trade restrictions; they are directly applicable regulations implemented by national competent authorities.

The UK administers sanctions through OFSI under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) and accompanying statutory regulations.

UN Security Council committees administer regimes such as 1267 (ISIL/Al-Qaida), 1718 (DPRK), and 2231 (Iran); member states implement through national law.

US persons must comply with OFAC wherever located; foreign subsidiaries of US companies are generally not directly subject unless US persons or US-origin goods are involved.

CAATSA authorizes secondary sanctions on significant transactions with Russia, Iran, and North Korea, including defense and energy sector dealings.

BIS export controls under the EAR are distinct from OFAC sanctions; both may apply to the same transaction and require separate authorization.

OFAC's framework identifies five elements: management commitment, risk assessment, internal controls, testing and auditing, and training.

A risk assessment covers customers, products and services, geographies, delivery channels, and transaction types, and is documented and refreshed periodically.

Internal controls include sanctions lists, customer due diligence, enhanced due diligence, escalation, blocking or rejecting procedures, and recordkeeping.

Governance requires board or senior management oversight, a designated sanctions officer, and reporting lines independent of business lines.

Independent testing is risk-based, performed by internal audit or an external party, and covers both design and operating effectiveness.

Training is role-based and tailored to sanctions exposure, with completion records retained and refreshed annually or after material change.

Policies and procedures address primary sanctions and secondary-sanctions risk, including for non-US operations and subsidiaries.

Escalation and decision records document the rationale for releasing a payment, exiting a relationship, or filing a report.

OFAC recordkeeping rules generally require retention of blocked property and transaction records for at least five years.

Screening matches names and identifiers against sanctions lists; fuzzy matching generates candidate alerts that require disposition.

Match disposition uses secondary identifiers such as date of birth, nationality, address, passport number, or registration number to confirm or dismiss a hit.

A true match to a blocked person requires blocking property or rejecting the transaction and reporting to the regulator.

OFAC requires blocked property reports within 10 business days of blocking and an annual report of blocked property by September 30.

Rejected transactions must be reported to OFAC within 10 business days.

Monitoring is risk-based with defined scenarios, thresholds, tuning, and documented alert investigation and disposition.

Investigations preserve evidence, document sources and reasoning, and consider SAR filing and voluntary self-disclosure.

Screening coverage includes onboarding, periodic rescreening, payment filtering, trade documents, and vessel or transport screening.

Transliteration, aliases, and name-order variations are common causes of false negatives and should be tested.

Common evasion methods include shell or front companies, intermediaries, transshipment through third countries, and misdescription of goods.

Trade-based evasion uses false invoicing, undervaluation or overvaluation, mislabeled goods, and dual-use items without required licenses.

Maritime evasion includes AIS manipulation, dark-fleet vessels, ship-to-ship transfers, and flag changes to obscure origin or destination.

Beneficial ownership concealment through nominees, layered corporate structures, and free trade zones is a key red flag.

Alternative value transfer mechanisms include hawala, prepaid cards, gold, and crypto assets, complicating tracing.

Red flags include new counterparties, unusual routing, reluctance to provide end-use information, and payment from unrelated third parties.

End-use and end-user due diligence plus catch-all controls help detect diversion of dual-use goods.

Circular transactions and offset arrangements may be used to disguise payments to sanctioned parties.

US sanctions are administered civilly by OFAC and enforced criminally by DOJ; BIS enforces export controls under the EAR.

OFAC civil sanctions liability is strict for US persons; intent is not required to establish a violation.

Aggravating factors include concealment, willful conduct, senior management involvement, and repeated violations; mitigating factors include self-disclosure, cooperation, and remediation.

Voluntary self-disclosure can significantly reduce penalties and may qualify for favorable treatment.

EU penalties are set by member states and vary; national competent authorities investigate and sanction violations.

Emerging issues include Russia-related price cap compliance, secondary sanctions, crypto assets, ransomware payments, and humanitarian carve-outs.

The maritime and oil sectors face heightened scrutiny, including AIS and ship-to-ship transfer monitoring.

Enforcement trends include multi-agency coordination, corporate monitorships, and penalties calculated on transaction value.