Glossary term
Primary Sanctions
Subject: Financial Crime, Sanctions
Primary sanctions are the prohibitions a country applies to its own citizens, companies and activity within its territory, forbidding them from dealing with a targeted country, entity or person.
Explanation
The legal basis is simple: a state controls its own people and ground. US primary sanctions bind US persons: American citizens and permanent residents, American-incorporated firms and anyone on US soil. For a few programmes they also reach foreign subsidiaries of US firms. EU sanctions apply within the EU, to EU nationals wherever they are, and to companies incorporated in a member state. Primary sanctions are the baseline regime. Breaking them is a direct offence by the person concerned, with fines or criminal charges, and firms carry out screening and blocking to comply. They differ from secondary sanctions, which try to reach people outside the country. Primary measures can be targeted at listed parties, cover whole sectors, or ban almost all dealings with a country. Before anything else, a firm has to know whose primary sanctions bind it.
Example
A US-incorporated manufacturer receives an order from a distributor in a third country. The goods would end up in a country under a US embargo. Because the manufacturer is a US person, US primary sanctions apply to it directly, wherever the buyer sits. The compliance officer stops the sale and records why.
Not to be confused with
- Secondary Sanctions
- Aim at foreign firms outside the sanctioning country. Primary sanctions bind the country’s own nationals and territory.