On October 18, 2021, the U.S. Department of the Treasury released the 2021 Sanctions Review (“the Review”), which delineates Treasury’s framework for employing economic sanctions and provides key recommendations on modernizing the U.S. sanctions regime to ensure sanctions remain effective.1 The Secretary of the Treasury, Janet Yellen, requested the Review to ensure that sanctions remain an effective tool for promoting U.S. national security interests by reviewing the Treasury Department’s strategic, operational, and procedural approach to sanctions implementation and making key recommendations on their use. During the review process, Treasury interviewed hundreds of stakeholders, to include U.S. interagency partners, foreign governments, members of Congress, the private sector, nongovernmental organizations, and academics, generating major anticipation on the Review and its findings.

  • The Review reiterates key sanctions considerations previously emphasized by Treasury but does not appear to signal a significant change in how Treasury will use sanctions over the short-term. The Review provides limited new information regarding Treasury’s future use of sanctions or how implementation may deviate from current practices. The Review indicates that Treasury will seek to support humanitarian-related activities, minimize the unintended impact of sanctions, and collaborate with relevant stakeholders to promote better awareness of sanctions risks.  These are all goals that Treasury has articulated in the past and sought to undertake as part of its sanctions implementation process.
  • Treasury will advocate for direct engagement with the private sector and foreign counterparts to calibrate sanctions. On October 19, 2021, the Deputy Secretary of the Treasury Department, Wally Adeyemo, testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs and indicated that Treasury will “use existing forums to coordinate and collaborate on sanctions and build a more formal mechanism for receiving feedback and advice in providing information to stakeholders.”
  • The Review notes that sanctions have been used successfully to address pressing national security issues. Since September 11, 2001, the U.S. government has increasingly relied on the use of U.S. economic sanctions to address a variety of national security threats. Treasury provided examples such as preventing Iran from obtaining funds to fund its support for terrorism and blocking assets of narcotraffickers and terrorist groups such as the Cali Cartel and Hezbollah, respectively.
  • The Review also lists key challenges that undermine the effectiveness of U.S. economic sanctions. These challenges include actions by cybercriminals, efforts by adversaries to reduce reliance on the use of the U.S. dollar in cross-border transactions, and payment systems enabled by technological innovation that provide an alternative to the use of the U.S. dollar, such as digital currencies. The Review acknowledges that digital currencies and other alternative payment systems play a role in facilitating sanctions evasion.

Key Takeaways from the 2021 Sanctions Review

The Review outlines steps to modernize the use of U.S. economic sanctions and ensure that sanctions remain an effective policy tool. One key step includes establishing a broad policy framework to ensure that Treasury applies sanctions consistently and judiciously. Among other things, the framework seeks to assess whether sanctions are the best policy tool to address a given issue, whether sanctions have been calibrated to minimize unintended impacts, and whether sanctions are easily understood, enforceable, and reversible, if the sanctions target changes its behavior.

To modernize the use of sanctions, Treasury has indicated that it will prioritize the following steps:

  • Advance multilateral sanctions over unilateral sanctions. The U.S. government will augment its coordination efforts, which will align sanctions lists with the EU, UK, and other U.S. ally countries. The Biden Administration has taken certain steps earlier this year, for example with the joint U.S./EU/ and Canadian announcement of actions targeting certain Chinese entities for human rights abuses in Xinjiang.2 Nevertheless, the majority of U.S. sanctions designations done by the Biden Administration have been unilateral to date. Indeed, the Biden Administration has utilized unilateral sanctions to pursue national security objectives across a range of programs.
  • Support the flow of legitimate humanitarian and economic goods, services, and funds and calibrate sanctions to minimize unintended impacts. The Treasury Department will likely conduct additional engagement with the private sector to emphasize a non-enforcement posture for activities supporting legitimate assistance such as the delivery of humanitarian goods to persons in sanctioned jurisdictions.3 In addition, Deputy Secretary Adeyemo has indicated that Treasury will closely examine the authorities under existing sanctions programs to ensure that licensing regimes are tailored to provide appropriate exceptions for legitimate humanitarian assistance.4
  • Calibrate sanctions to minimize unintended impacts of sanctions, including on small businesses and domestic workers. Treasury acknowledges that the resources required to implement an effective sanctions compliance framework may be more difficult for small businesses as compared to larger businesses with a sophisticated and well-resourced compliance department.5 Treasury seeks to streamline and regulations and prohibitions to minimize burdens on those that may struggle to comply with U.S. sanctions.
  • Collaborate with relevant stakeholders including industry, financial institutions, civil society, and media to ensure that sanctions compliance obligations are more easily understood. Treasury will consider increasing its outreach to certain stakeholders in the private sector to communicate sanctions compliance obligations more effectively. Treasury will likely ramp up its engagement with participants in specific industries, such as the digital assets space, and may seek to streamline and improve the public-facing guidance on its website.

Challenges and Considerations for the Private Sector

  • The Review does not provide new regulations or major changes to sanctions-related guidance. The Review is self-reflective and focuses on assessing how sanctions have shifted and steps Treasury needs to take to maintain and adapt to the changing financial landscape and range of illicit actors.
  • The Review does not include an examination of the objectives, achievements, and impacts of specific sanctions programs. The key steps resulting from the Review are broad and do not mark a significant shift in the use of sanctions under the Biden Administration, which has continued to use sanctions to promote broad national security interests in line with previous administrations. As a result, industry participants will likely face similar levels of sanctions-related risk over the short-term and should continue to rely on a risk-based approach to sanctions compliance.
  • Sanctions stakeholders should carefully watch Treasury’s next steps in setting up a communication mechanism to better provide and receive feedback. In the coming months, OFAC is likely to integrate new tools to formalize and more effectively receive and provide feedback on stakeholder’s questions.
  • Treasury has signaled that it will prioritize the legitimate flow of goods, services, and funds to sanctioned jurisdictions. The Office of Foreign Assets Control (“OFAC”) will likely take a more proactive approach to authorizing the provision of humanitarian goods and services and other legitimate products by implementing additional general and specific licenses, including wind-down general licenses, alongside the rollout of the creation and implementation of new sanctions authorities. For example, in September 2021, the Biden Administration implemented a new sanctions authority targeting those complicit in actions that obstruct the peace process in northern Ethiopia but did not designate any persons. Simultaneously, OFAC issued three general licenses, supporting humanitarian assistance, certain transactions in support of nongovernmental organizations, and the work of UN agencies. This action is reflective of how OFAC may implement and enforce future sanctions authorities and the unlikeliness of targeting those supporting legitimate humanitarian activities.


U.S. Department of the Treasury, 2021 Sanctions Review, https://home.treasury.gov/system/files/136/Treasury-2021-sanctions-review.pdf
2 “U.S., EU, Canada and Britain announce sanctions on China over the abuse of Uyghurs,” The Washington Post, https://www.washingtonpost.com/world/xinjiang-sanctions-european-union/2021/03/22/1b0d69aa-8b0a-11eb-a33e-da28941cb9ac_story.html
3 U.S. Department of the Treasury, Office of Foreign Assets Control, Guidance Related to the Provision of Humanitarian Assistance by Not-For-Profit Non-Governmental Organizations. https://home.treasury.gov/system/files/126/ngo_humanitarian.pdf  
4 Remarks by Deputy Secretary Adeyemo, “The Future of U.S. Sanctions Policy with Wally Adeyemo and Jack Lew,” Center for a New American Security, October 21, 2021. https://www.youtube.com/watch?v=MvjhNK8PXpQ. Remarks beginning at 51:15.
5 “Using Sanctions Screening and List Management to Support a Stable Sanctions Compliance Framework,” K2 Integrity, https://www.k2integrity.com/en/knowledge/expert-insights/2021/using-sanctions-screening-and-list-management-to-support-a-stable-sanctions-compliance-framework