SECONDARY SANCTIONS: CHAINS OF LIABILITY, INTERMEDIARIES, AND EXTRATERRITORIAL PRESSURE

This report examines secondary sanctions as a distinct form of sanctions pressure in which legal and compliance risk is transferred from the primary target to third parties, intermediaries, financial institutions, service providers, and other entities involved in transactions, supply chains, payment infrastructure, or corporate support. Its purpose is to show that secondary sanctions are not merely “additional sanctions,” but a mechanism of extraterritorial coercion that converts another party’s sanctions toxicity into the recipient’s own legal, banking, and operational risk, even where the recipient is formally outside the original designation. In official Treasury and OFAC materials, U.S. authorities repeatedly state that foreign financial institutions and other non-U.S. persons may face consequences for knowingly conducting or facilitating significant transactions for designated persons or sanctioned sectors, while the European Union continues to treat extraterritorial third-country sanctions as a threat to EU operators and maintains the Blocking Statute as a protective instrument. FATF, for its part, described in 2025 the use of intermediaries, obscured beneficial ownership, technological channels, and maritime and shipping structures as key sanctions-evasion typologies. It is at the intersection of these regimes that the modern zone of maximum risk emerges.