General Note on Enforcement Actions Resulting From “Bank-to-Bank” Transactions that Only Indirectly Involve Sanctions Targets (“Complex Payment Structures,” Structurally Linked Transactions, etc.)

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TURBOFAC Commentary (4655 words)

General Note on Enforcement Actions Resulting From “Bank-to-Bank” Transactions that Only Indirectly Involve Sanctions Targets (“Complex Payment Structures,” Structurally Linked Transactions, etc.)

1) BACKGROUND

One of the more opaque aspects of bank-related sanctions compliance—especially as it relates to the routing payments through the U.S. financial system by banks not otherwise subject to primary sanctions prohibition—is the lack of a clear sense of what sort of bank-to-bank transactions not involving prohibited parties on their faces are nevertheless prohibited, e.g. because they "cause" a U.S. financial institution to "export" financial services to a sanctioned destination, because they "cause" a U.S. financial institution to export financial services to a sanctioned destination, or both. By “bank-to-bank payments” and/or “bank-to-bank” transactions, we refer to transactions between one or more banks where the beneficiary or beneficiaries of a given payment (or securities or other transaction) is a bank itself, rather...