General Note on Sanctions Provisions for which Determining Applicability Requires "Counterfactual" Analysis of Transactions (System Ed. Note)

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TURBOFAC Commentary (4834 words)

General Note on Sanctions Provisions for which Determining Applicability Requires "Counterfactual" Analysis of Transactions (System Ed. Note)

1) BACKGROUND

Many key sanctions provisions require a form of "counterfactual analysis" in order to determine whether a given transaction is or is not prohibited or potentially sanctionable. There is a common thread that runs through almost all of the situations in which the application of OFAC-administered sanctions laws entails counterfactual analyses. Namely, the key question is:

“Would this transaction be prohibited if it were engaged in by a U.S. person or in the United States"?

We refer to this as "the standard counterfactual question."

A very close cousin of "the standard counterfactual question" is “would this offshore transaction with no U.S. nexus be generally licensed if it were engaged in directly by a U.S. person?”

While there are a number of...