Sanctions are one of the most effective instruments of the international relations being used to put pressure on countries and individuals. But did you know there are different types of sanctions with unique impacts? Begin the exploration of the complex topics of primary and secondary sanctions by discovering how political and economic processes work in the modern world. Learn how these measures influence the foreign affairs and what it implies to the firms and states in the global market. Read on to demystify and understand the roles of primary and secondary sanctions.
What are Sanctions?
Sanctions are one of the major instruments of state and international organizations’ foreign policy, which does not involve the use of armed forces to change the behavior of the target country or a group of countries. Economic sanctions which may include limits on trade, banning of travel, ban on supply of arms and ammunition, and freezing of assets of certain people and organizations with the aim of making them change their behavior to conform to international norms.

Sanctions are essential in the protection of human rights, prevention of nuclear spread, fight against terrorism and to punish aggressive state conduct. By cutting off access to economic resources, technology, and markets, sanctions aim to create a substantial impact on the target, compelling them to change their policies or behavior. In addition to the direct consequences, sanctions also contain a powerful message of the international community’s disapproval and reduce the target state’s ability to shape international politics.
What are Primary Sanctions?
Primary sanctions programs are punitive measures. They are targeting domestic entities and apply directly to residents, and entities based within the sanctioning country’s legal jurisdiction. These economic sanctions expressly restrict such entities from carrying out certain operations or business with certain people, organizations, or countries. For example, the United States commonly uses primary sanctions with the help of the Office of Foreign Assets Control (OFAC). Such sanctions target country’s financial system and territory and have severe consequences if not followed.
Examples of Primary Sanctions
The primary sanctions generally apply in a country’s diplomacy, and they can deal with national security interests and international relations.
Primary economic sanctions are direct measures imposed by a country on its citizens, businesses, or residents, prohibiting them from engaging in specific economic activities or financial transactions with designated individuals, organizations, or countries. For example, the United States’ trade embargoes with Cuba are a primary economic sanction.
A rather noteworthy and extensive example is the United States embargo on all Cuban goods and services that began in the 1960s. This embargo restricts the people, firms, and financial institutions. It stops them from importing goods and services and investing in Cuban organizations. It also exposes them to a travel ban. The goal is to negotiate for a change in the Cuban government and human rights. The trade sanctions impose these restrictions. They apply to travel, remittances, business, imports, exports, and finance.
Another example is US sanctions. The Iranian government was involved. They imposed certain stipulations on the Iranian nuclear program. Possible measures have limited national Iranian oil company to export oil, use the global banking system, and get the tech it needs for its energy industry. The sanctions played a big role in diplomacy. They aimed to force Iran to comply with nuclear non-proliferation agreements.
Moreover, the measures aim to stop the North Korean government from building nuclear weapons and using people smugglers. They also aim to stop international trade considerably and investments with this state. These sanctions compromise the UN’s intention of cutting its source of finance and resources to its military types of equipment and expansion.
The international sanctions aim to reduce North Korea’s income sources. They do this by cutting off imports of the products and services from targeted industries. These include coal, textiles, and seafood. The goal is to force North Korea to start productive talks on the nuclear issue.
Primary sanctions require change within the imposing nation’s jurisdiction. They are the most clearly defined and are carried out through strict liability regime and penalties. Different government bodies enforce and regulate it. Not following it brings major penalties, which are legal repercussions. They include monetary penalties and more.
What are Secondary Sanctions?
The secondary sanctions are an extension of primary sanctions and go one step further. While primary sanctions are directed at one country or an organization, secondary sanctions are meant to alter the behavior of third countries and companies by punishing them for interacting with the sanctioned country. Just like in a ripple effect where not only the first circle feels pressure but any entity who has the temerity to deal with the first circle is also punished.
It is important to comprehend the differences between primary and secondary sanctions. Primary sanctions target a country’s population and domestic organizations, whereas secondary sanctions apply those restrictions to international actors dealing with the sanctioned parties. These sanctions should be complied with otherwise they lead to harsh penalties. Through getting the required license such as those issued by OFAC and seeking advice from sanctions lawyers, one can be able to legally engage in business and contribute to the achievement of the goals of making the world a safer place.

United States targeted countries
Examples of Secondary Sanctions
Most secondary sanctions are considered a tool that adds more voices to primary sanctions. The goal of OFAC primary sanctions is to make organizations conform to certain regimes.
Secondary economic sanctions impose penalties on third parties that do business with the sanctioned entities, thereby extending the reach of the primary sanctions. For instance, the US financial system may impose secondary financial sanctions even on foreign companies that conduct significant transactions with Iranian businesses, discouraging international cooperation with Iran by threatening to restrict access to the U.S. market.
For example, the U. S. has adopted second-phase sanctions on foreign firms that deal with Iran, especially on oil and banking Industries. These sanctions delay international cooperation with IRAN. Foreign firms fear to do deals that may deny them US markets.
Another example is the secondary sanctions on Russia. They target foreign individuals and companies that supply Russia’s defense and energy industries. The intention behind these secondary sanctions impose penalties is to place an inhibition on Russia and to counter all actions concerning global security. This limits Russia’s ability to support its military and develop its economy. It does so by putting fines on foreign businesses that deal with Russian firms in defense and energy.
Likewise, there are secondary sanctions for North Korea to deal with the situation where foreign firms support Pyongyang’s nuclear and missile projects. These sanctions also complicate the regime’s outside interactions. They discourage other countries from making deals with it. The U. S. and its allies have used secondary sanctions to deny North Korea access to the common banks and trading systems to strengthen its funding for the weapons programs. <H2> Who needs to comply with Primary and Secondary Sanctions?
Who needs to comply with Primary and Secondary Sanctions?
Adherence to primary and secondary sanctions is necessary for a vast number of subjects. Primary sanctions imposed by a country’s government apply to all domestic companies and persons. MNCs operate globally. They are subject to both primary and secondary sanctions in any country where they do business. Any foreign business, regardless of whether it operates in a country outside the sanctioning country, finds itself barred from trading with the sanctioned entity. This is to avoid being hit by secondary sanctions that may lock it out of key markets, such as the US or the EU. Banks and other financial organizations are key actors that implement sanctions by conducting observations and providing information on prohibited operations and related assets’ freeze. For instance, a company with its operational base in Europe but conducts most of its business activities in the U. S. has to refrain from doing business with people from Iran due to penalties from the U. S government. This implies ensuring that no partners, clients, or transactions are linked in anyway to the primary or secondary sanctions themselves. Likewise, if a given foreign bank is dealing with North Korean actors it has to abide by sanctions in order to continue accessing the American financial system. Non-compliance with these sanctions can bring grave consequences such as fines, withdrawal of business license, and limitation in exportation. Primary and secondary sanctions have many interrelated rules. One needs to pay close attention and consult careful compliance officers and legal counsels.
Who Needs to Comply with Primary and Secondary Sanctions?
Primary and secondary sanctions remain vital parts of global legal mechanisms, and identifying who has to adhere to them remains essential for any subject operating in international commerce.
The list of those who must comply with primary sanctions include:
- citizens and permanent residents of United States;
- any Company or Entity incorporated in the United States;
- any person or entity physically present in the United States.
On the other hand, non-U. S. citizens and entities that deal with or invest in certain activities of sanctioned countries must adhere to secondary sanctions.
Getting OFAC License
An OFAC License is a permit given to entities to conduct business that would ordinarily contravene the U. S sanctions regulations, by the Office of Foreign Assets Control. These licenses are very important to those involved in business and individuals dealing with the sanctioned entities to enable them to lawfully undertake prohibited activities. There are two types of licenses: the general one that relates to certain kinds of transactions and the specific one which is given transaction by transaction.
The Procedure to Apply for an OFAC License
- Firstly you have to submit an application. Ensure it is complete and properly filled then attach all the documents that should accompany the application to OFAC.
- Then OFAC checks the application based on the current sanction regulation in the country. The particular case may take several months to be reviewed; it depends on the complexity of the case and OFAC’s caseload.
Although the procedures may entail a legal process, one should seek the assistance of legal bodies in order to facilitate and follow the legal requirements.
OFAC License is needed by any business or a person involved with any transactions to and from any country, entity or person on the list of the sanctioned ones. These are often the multinational business entities, the banking industries, and companies that conduct their business in the politically sensitive areas. It is required to abide by the OFAC regulations to prevent severe consequences such as fines for violations and limitations on operations. Therefore, an OFAC License guarantees legal compliance for otherwise prohibited transactions, thus saving businesses from legal and financial implications.
Sanctions Lawyers

Sanctions relate to international relations and are a challenging thing to deal with; however, we can assist you. Our lawyers and solicitors work with international sanctions compliance. Our services encompass the provision of specific advice on sanction laws, methods of managing risks and help in the preparation of the applications to the OFAC license. They assist in establishing strong code of ethics, making compliance evaluations, and handling the cases of violation of sanctions. Our experience is to guarantee that the operations of your business are legal to avoid serious penalties including market restrictions for your business. For compliance and to shield your global business, get in touch with us today.
We are always available at [email protected] or by calling +357 25 059 684.