Hiding in Plain Sight: Currency-Based Jurisdiction in U.S. Sanctions Enforcement

Introduction

The U.S. government exerts powerful pressure on parties around the world through its use of unilateral economic sanctions.1 Often, this involves prohibiting U.S. corporate and natural persons from doing business with certain foreign jurisdictions, entities and individuals, or industries, and penalizing them if they do business anyway. So, for example, Amazon agreed to pay nearly $135,000 in 2020 for selling goods into Crimea, Iran, and Syria, as well as processing orders for individuals associated with the foreign missions of Cuba, Iran, North Korea, Sudan, and Syria. The U.S. government also claims jurisdiction over prohibited activities that take place on U.S. soil, such as when the German enterprise software company SAP SE exported software and related services from the United States to individuals in Iran. 

This Essay examines a less noticed way the U.S. government regulates conduct abroad: by prohibiting all transactions with sanctioned parties that simply pass through the U.S. financial system. This approach essentially prohibits all noncash use of the U.S. dollar (USD) in transactions with sanctioned parties and, once again, penalizes violators. These cases at first glance look much like the Amazon and SAP cases. In one, a tobacco manufacturer agreed to pay $332,500 for violating U.S. sanctions against North Korea. But the fundamentals are different from Amazon or SAP. The manufacturer was based in Mumbai, and its violation involved a shipment of tobacco from India to North Korea, which never went anywhere near the United States. So, what basis did the United States claim for regulating this conduct? Only one. The North Korean customer paid the manufacturer—through a series of intermediaries also outside the United States—in USD. Such attachment of sanctions to the USD is what Professor Susan Emmenegger and attorney Florence von Mutzenbecher term “currency-based jurisdiction,” earlier called “correspondent account jurisdiction.” And, although it has a name, this jurisdictional theory is not yet sufficiently understood.

Currency-based jurisdiction occupies a liminal space in economic sanctions practice, which is typically divided into primary and secondary sanctions. Primary sanctions rely on traditional bases for jurisdiction, covering, for example, transactions involving U.S. persons like the Amazon case or conduct in the United States like the SAP case. Secondary sanctions extend to transactions with no U.S. nexus.2 Accordingly, primary sanctions rest on far firmer legal ground,3 with the most strident assertions that the United States is violating the international law of jurisdiction limited to secondary sanctions. Yet scholars and practitioners disagree on how sanctions premised on currency-based jurisdiction, with their present but limited nexus to the United States, should be categorized. Some, including the U.S. government, classify them as primary because they do involve some nexus with U.S. territory.4 Others consider sanctions of this sort to be secondary sanctions because they “aim to regulate economic transactions between a third state and a target state.” By thus standing at the threshold between the two categories, currency-based jurisdiction raises important questions about the relationship between jurisdiction, regulation, and legality in U.S. sanctions enforcement.

Some scholars have begun paying greater attention to currency-based jurisdiction, but the scale of this phenomenon has not yet been fully appreciated. Recent work in this area has been undertaken by Professors William Dodge and Emmenegger, among others.5 Emmenegger and Florence Zuber, for example, have detailed the mechanisms by which currency-based jurisdiction is exerted, as well as more recent expansions of that tool. Yet the practical implications involved warrant substantially more research into the legality of the use of currency-based jurisdiction.

Judging by our novel data set compiling and assessing enforcement actions during the last two complete presidential administrations—President Donald Trump’s first administration and President Joe Biden’s administration—currency-based jurisdiction is in fact a cornerstone of U.S. sanctions practice. Accordingly, all studies of U.S. sanctions must grapple with currency-based jurisdiction, including its cornerstone status and the acute concerns around this jurisdiction’s legality. We do not purport to reach a final conclusion on the compatibility of currency-based jurisdiction with international law in this introductory study. However, given the scale of the practice illustrated here, if currency-based jurisdiction does not comply with international law—or with U.S. domestic law for that matter6—then U.S. sanctions enforcement must change radically. 

I. The Contested Legality of U.S. Economic Sanctions

With no multilateral treaty on the jurisdiction to regulate in place, customary international law (CIL) alone governs the jurisdictional dimensions of prescriptive practices like sanctions.7 This source of law8 provides six bases for jurisdiction, granting a state authority to regulate conduct that has one of the following connections to the state: (1) conduct or (2) effects in the state’s territory; (3) conduct by or (4) conduct injuring nationals of the state; (5) threats to fundamental national security interests involving the state’s territory or effects in the state; or (6) universal jurisdiction for certain crimes under international law. CIL does not necessarily limit jurisdiction to these bases, however.9 It requires, more simply, that there is either a “genuine connection” between the subject of regulation and the state, or that the exercise of prescriptive jurisdiction is “reasonable”—depending on who you ask. 

Traditional primary sanctions clearly meet the jurisdictional CIL criteria,10 while secondary sanctions are more dubious. The question is where the liminal currency-based jurisdiction cases fall. Importantly, some have suggested these sanctions violate international law. Dodge, for example, has argued that none of the six bases of prescriptive jurisdiction justify the United States’ use of dollar-based sanctions.11 In particular, Dodge asserts that even the basis with the strongest potential for this practice, effects-based jurisdiction, cannot support it, noting that “[i]t is difficult to see how merely clearing a transaction between foreign nationals that begins and ends outside the United States rises to the level of a substantial effect.”12 Along similar lines,13 Terry has argued that dollar-clearing activities are not a “‘substantial’ part of the business transaction” at issue and so do “not provide the necessary territorial nexus” sufficient to support the exercise of such sanctions by way of territorial jurisdiction.14

Dodge also raises an important point connecting international and domestic law: If the use of dollar-based sanctions “would violate customary international law, there is a serious question whether the president may act without more explicit authorization from Congress.”15 He acknowledges that “it is well established within the US legal system that Congress has the authority to violate international law.”16 But he highlights that the statutory basis for many sanctions regulations, the International Emergency Economic Powers Act of 1977 (IEEPA), only authorizes the President to regulate financial transactions “by any person, or with respect to any property, subject to the jurisdiction of the United States.”17

Referencing “the interpretive rule that federal statutes must be read not to violate international law if fairly possible,”18 Dodge concludes that “it is doubtful that the president has the constitutional authority to violate customary international law in the absence of express congressional authorization,” which “IEEPA does not provide.”19 Currency-based jurisdiction is thus suspect at least under international law and, if one buys Dodge’s argument, it is also suspect under domestic law delegating authority from Congress to the President.

Despite these questions about currency-based jurisdiction’s legality, its use as the basis for enforcement has exploded in recent years—both in terms of the number of actions taken by the Office of Foreign Assets Control (OFAC) within the U.S. Department of the Treasury, and in terms of the dollar value of associated settlements and penalties. This Essay aims to quantify the use of the dollar-based theory of liability relative to the universe of OFAC settlements and penalties. These numbers reveal the following: If Dodge and others are correct that either international or U.S. law prohibits this use of sanctions, the impact on how OFAC currently conducts enforcement would be staggering. It is essential, therefore, to invest in greater examination of this cornerstone element of U.S. sanctions enforcement.

II. Revealing the Scale of Currency-Based Jurisdiction 

A. Methodology

This Essay attempts to quantify the portion of OFAC enforcement actions which have dollar linkages as their basis of U.S. jurisdiction. We examined enforcement actions made public by OFAC over an eight-year period covering two presidential administrations, from President Trump’s first inauguration on January 20, 2017, through the end of President Biden’s term on January 20, 2025. We gathered details about these actions using the information publicly available on OFAC’s website, most commonly in the form of Enforcement Releases, Settlement Agreements, and Press Releases. We used those sources to obtain, among other data, the dollar value of the settlement or penalties issued; the number of apparent violations identified; the dollar value of the transactions that were the basis of the apparent violations;20 and any jurisdictional links with the United States that were present and disclosed in the publicly available documents. In our newly compiled data set, we then coded each enforcement action according to its reliance on currency-based jurisdiction, or lack thereof. 

B. Findings

There were 127 enforcement actions in the data set for which OFAC assessed over $3 billion in penalties and settlements.21 At first glance, currency-based jurisdiction appears a relatively minor element of sanctions enforcement, with only one in every five actions relying on it in some form. Yet viewed from the perspective of the actions’ comparative significance—as measured by the penalties assessed and settlements reached—those 20% of actions account for 60% of enforcement practice between the first Trump administration and the Biden administration.

Figure 1: Number of Actions (2017–2025)

Figure 2: Penalties and Settlements in Enforcement Actions (2017–2025)

Of the 127 actions in the data set, the following 18 enforcement actions (listed by defendant name) describe correspondent banking as the sole U.S. jurisdictional link: CSE Global Limited and CSE TransTel Pte. Ltd. (2017); Société Générale S.A. (2018); UniCredit Bank (2019, 3 actions); British Arab Commercial Bank plc (2019); Union de Banques Arabes et Françaises (2021); PT Bukit Muria Jaya (2021); Bank of China (UK) Ltd. (2021); Mashreqbank psc (2021); Sojitz (Hong Kong) Ltd. (2022); Toll Holdings Limited (2022); Godfrey Phillips India Ltd. (2023); British American Tobacco p.l.c. (2023); Swedbank Latvia AS (2023); SCG Plastics Co., Ltd. (2024); Mondo TV, S.p.a. (2024); Vietnam Beverage Co. Ltd. (2024). In our examination of the enforcement documents in each of these cases, we were unable to locate any reference to a jurisdictional link to the United States beyond correspondent banking. We therefore refer to these collectively as the “Currency Only” group. 

In addition, the following seven enforcement actions describe reliance on correspondent banking relationships, as well as other independent grounds establishing a jurisdictional link to the United States: Standard Chartered Bank (2019, 2 actions); Essentra FZE Company Limited (2020); First Bank SA and JC Flowers & Co. (2021); CA Indosuez (Switzerland) S.A. (2022); CFM Indosuez Wealth (2022); and Aiotec GmbH (2024). Finally, one additional enforcement action, that of National Commercial Bank (2020), depended at least in part on currency-based jurisdiction. It may also have relied on other grounds, as the language of the publicly available documents was not clear on that point. We refer to these eight actions collectively as the “Currency Plus” group. 

Collectively, then, currency-based actions represent only a relatively small number of the actions that OFAC pursued in this time frame. In total, approximately 14% of the enforcement actions in the data set relied solely on the involvement of USD as the basis for U.S. jurisdiction, and another approximately 6% relied in part on currency-based jurisdiction (Figure 1). Combined, currency-based jurisdiction was at play in only about 20% of the enforcement actions in the data set, and this proportion was steady across the two covered administrations (Figures 4 & 5).

Figure 3: Number of Actions by Administration (2017–2021)

Figure 4: Number of Actions Under Trump I Administration (2017–2021)

Figure 5: Number of Actions Under Biden Administration (2021–2025)

Yet the currency-based cases represent a markedly outsized portion of the penalties assessed and settlement amounts reached during this period (Figure 2). The Currency Only cases represent approximately 39% of the total penalties assessed or settlement amounts reached, and the Currency Plus cases represent approximately 21%—roughly three times each category’s share of actions by count—for a total of 60% of the penalties and settlements in the data set.

As with the number of actions, the outsized penalties and settlements in currency-based enforcement actions generally hold across the two administrations. Here, though, one massive outlier action during the Biden administration—in which OFAC determined the online currency exchange Binance violated U.S. law when processing over 1.6 million transactions between U.S. customers and sanctioned jurisdictions or persons—skews the proportion of penalties and settlements assessed during that period away from currency-based cases (compare Figures 7 & 8). OFAC settled that single action, which did not need currency-based jurisdiction because of the involvement of U.S. customers, for a whopping $969 million—1.5 times the size of the Standard Chartered settlement, which is the next-largest settlement in the data set. Removing Binance, the figures look much more similar across the administrations (compare Figures 7 & 9). But, even with it present, the penalty and settlement amounts in the currency-based cases remain disproportionately large.

Figure 6: Penalties and Settlements in Enforcement Actions by Administration

Figure 7: Penalties and Settlements in Enforcement Actions Under Trump I Administration (2017–2021)

Figure 8: Penalties and Settlements in Enforcement Actions Under Biden Administration (2021–2025)

Figure 9: Penalties and Settlements in Enforcement Actions Except Binance Under Biden Administration (2021–2025)

The currency-based cases also represent the overwhelming majority of the reported value of sanctioned transactions. That is, almost 90% of the reported value of the transactions at issue is associated with currency-based cases (Figure 10). We do not consider this a reliable indicator on its own, however, because the transaction value is not publicly available in every case. Although we were able to locate some information through other sources where OFAC did not report it, the transaction value remains unknown for twenty actions (16%) in our data set, and, importantly, all of these are not currency based. Accordingly, the proportion depicted in Figure 10 is an overcount of the currency-based actions’ share of transaction value, and we can only say that the reported value represents an oversized share compared to the number of actions involved (Figure 11).

Figure 10: Reported Value of Sanctioned Transactions (2017–2025)

Figure 11: Number of Actions with Reported Value of Sanctioned Transactions (2017–2025)

Finally, it is worth noting that currency-based cases likewise have a disproportionately large role across a wide variety of sanctions programs, although certain programs are more reliant on them than others. OFAC reported violations of eighteen different programs in enforcement actions between the two administrations, and it relied on currency-based jurisdiction in at least one action for eleven of those programs (Figure 12). Following the trend above, the number of actions relying on traditional jurisdictional bases was higher for most of the programs, but the balance flips when considering penalty and settlement amounts (Figures 13 & 14). Indeed, the difference in penalties and settlements in actions enforcing sanctions associated with Sudan, Burma, nuclear nonproliferation, and counterterrorism is especially stark (Figure 14).

Figure 12: Proportion of Sanctions Programs Enforced Via At Least One Currency-Based Action (2017–2025)

Figure 13: Count of Enforcement Actions by Program (2017–2025)

Figure 14: Penalty and Settlement Amounts in Enforcement Actions by Program (2017–2025)

III. Implications and the Path Forward

These numbers reveal that, over the relevant time period, the relatively small number of currency-based actions masks the enormous significance of this jurisdictional theory to OFAC sanctions enforcement. This finding matters for at least three reasons. First, it means that any serious engagement with U.S. sanctions practice must reckon with currency-based jurisdiction, if for no other reason than by virtue of its economic scale. Second, the comparative size of the potential penalties at stake in such cases may have an outsized deterrent effect impacting parties that the United States otherwise would not be able to reach. Third, it highlights that recent U.S. sanctions practice may be more at odds with international law than previously recognized.

To start, the scale of currency-based jurisdiction, as demonstrated here, screams out for attention. Not only are penalties and settlements in the data set’s currency-based actions disproportionately large compared to their proportion of overall actions (Figure 1), but they dwarf the amounts at stake in cases based on more traditional jurisdictional theories (Figure 2). Accordingly, analysis of U.S. sanctions practice that does not directly reckon with currency-based jurisdiction misses a core element of that practice.

Such large penalties and settlements in currency-based actions also create an outsized deterrent effect impacting non-U.S. parties. This is especially the case for banks involved in the most prominent currency-based jurisdiction cases, such as Standard Chartered Bank and British Arab Commercial Bank., Such banks stand in a position to multiply their compliance—or overcompliance—with U.S. sanctions outward by restricting their customers’ ability to transact with U.S.-sanctioned parties.22 What’s more, when banks manage regulatory risk, or “de-risk,” by withdrawing from sanctioned regions entirely—sometimes even beyond the scope of existing sanctions regulations—the ability of those banks’ customers to transact with parties in the sanctioned regions is compromised in turn.

Moreover, what does it mean for the rule of law that an outsized portion of OFAC enforcement penalties rests on dubious jurisdictional grounds, at least when it comes to international law? It implies a lack of respect for the norms of international law, which in this space holds equally true whether one is considering the sanctions power as exerted in President Trump’s first administration or that used by President Biden. The similar treatment of currency-based jurisdiction by both administrations reveals the extent to which this basis of jurisdiction has become a core feature of standard American sanctions enforcement, one which is unlikely to become permanently dislodged absent a sustained critical examination of its legality. Dodge has done an important service in this area by linking the questionable basis of such enforcement under international law with issues of domestic legality—specifically, whether such enforcement, given the lack of explicit congressional authorization in IEEPA for the President to transgress CIL, violates domestic law as well. By our analysis, we have attempted to quantify what precisely is at stake in terms of sanctions enforcement practice.

Interestingly, sanctions enforcement actions during President Trump’s second term have so far avoided this legal gray area. The administration has made clear that there is no love lost between it and the international legal system, expressing a range of sentiments from apathy to outright hostility toward international norms and institutions. Yet every OFAC enforcement action since President Trump’s recent inauguration has relied on the undisputed jurisdictional bases of regulating conduct by U.S. persons and inside the United States. As of May 15, 2026, OFAC has issued fifteen enforcement actions in President Trump’s second term. In each, jurisdiction rested on the involvement of a U.S. person or entity, conduct on U.S. territory, or both. No action relied solely on the USD nexus that characterized so many high-value settlements under the prior two administrations.

Perhaps surprisingly, then, the same administration that is flouting international law in so many other ways is—at least for now—adhering to it more closely in this particular way. Only time will tell whether the government will continue resisting the urge to reach for this powerful tool. 

The significance of that restraint becomes clear when one considers just how powerful currency-based sanctions are. By transmitting sanctions restrictions onto foreign parties through the U.S. dollar alone, they allow America to reach conduct abroad that no other jurisdictional theory could touch. Those concerned with the protection of American power and interests, and the ability of OFAC to deal with threats from abroad, may well ask about the implications of OFAC curtailing its use of currency-based jurisdiction in the name of respect for the rule of law, whether international or domestic. Certainly, our analysis shows that, were OFAC to durably pull back in this area, it would represent a significant departure from at least the last two administrations’ enforcement of high-value cases. 

Our analysis also shows that pulling back from currency-based jurisdiction might have an outsized effect on the enforcement of certain sanctions programs. Two programs that relied heavily on currency-based jurisdiction for enforcement—Sudan and Syria (Figure 14)—have been largely repealed. But the other programs where penalties and settlements in currency-based cases were greater than in non-currency-based cases remain in force. Taking currency-based jurisdiction off the table would have profound impacts on enforcement, especially in the Burma, nuclear nonproliferation, counterterrorism, and Libya sanctions programs, all of which present extreme discrepancies in penalty and settlement amounts (Figure 14).

Yet OFAC is not without other tools to deal with various threats. OFAC could continue its vigorous efforts to designate primary sanctions targets. Every time OFAC does so, it prohibits U.S. parties or those in the U.S. from transacting with those targets, and it often results in asset freezing and prohibitions on trade. 

In this Essay, we have not attempted to determine whether the few, as of yet, voices arguing that currency-based jurisdiction violates CIL and U.S. domestic law are correct. Rather, we have aimed to show the implications of that finding should it be true, and we have sought to highlight the importance of this topic for study. Given our findings on the significance of currency-based jurisdiction for OFAC enforcement, especially in terms of penalties assessed and settlements reached, further examination into the legality of currency-based jurisdiction must be conducted.

• See generally Daniel McDowell, Bucking the Buck: US Financial Sanctions & the International Backlash Against the Dollar (2023). Universal sanctions in particular are those “adopted by states individually or collectively outside the framework of the UN and are not based on a UN Security Council resolution.”
• Some of the United States’ sanctions against Iran, for example, prohibit any and all transactions with certain Iranian individuals, entities, or sectors. That means the U.S. can sanction even non-U.S. persons engaging in conduct without any connection to the United States.
• As Professor Patrick Terry notes, “[a]lthough controversial, many view the unilateral imposition of primary sanctions against a target state as a lawful exercise of state sovereignty.”
• Martin Vogt, The Impact of Unilateral (Especially US Secondary) Sanctions, in The Cambridge Handbook of Secondary Sanctions and International Law 64, 68 (Tom Ruys, Cedric Ryngaert & Felipe Rodríguez Silvestre eds., 2025) (explaining that settlement of USD wire transfers necessarily involves one or more U.S. financial institutions, allowing the United States to “rely on applying primary sanctions” without “recourse to secondary sanctions”).
• See infra Part I.
• See infra notes 15–19 and accompanying text (discussing Dodge’s argument that currency-based jurisdiction violates U.S. domestic law because it violates customary international law).
• “Only in the field of international criminal jurisdiction have treaties [regulating jurisdiction] been concluded, although none of these treaties dealt exclusively with the law of jurisdiction.” Cedric Ryngaert, Jurisdiction in International Law 4 n.12 (2008) (emphasis in original).
• See Statute of the International Court of Justice art. 38(1)(b), June 26, 1945, 59 Stat. 1055, 1060 (“The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply . . . international custom, as evidence of a general practice accepted as law[, inter alia][.]”); see also Howard S. Schrader, Note, Custom and General Principles as Sources of International Law in American Federal Courts, 82 Colum. L. Rev. 751, 754 (1982) (“Article 38(1) of the Statute of the International Court of Justice lists four sources from which international rules may be derived.”).
• Restatement (Fourth) of the Foreign Rels. L. of the U.S. § 407 cmt. c (Am. L. Inst. 2018) (describing the bases as “not exhaustive” and noting that “[s]ome accepted exercises of jurisdiction . . . do not fit neatly within these categories”).
• This is not to suggest that primary sanctions are necessarily compatible with all aspects of international law, for example, that even primary sanctions violate international human rights law.
• William S. Dodge, Challenging Secondary Sanctions in US Courts, in The Cambridge Handbook of Secondary Sanctions and International Law, supra note 4, at 165, 176.
• Id. at 176–77.
• Focusing especially on the effects basis of jurisdiction, which requires “activity that has ‘substantial and direct’ effects” on the regulating state “irrespective of where that activity occurs,” Terry finds no justification for the exercise of currency-based jurisdiction by the United States. Patrick C.R. Terry, Secondary Sanctions, Access Restrictions and Customary International Law, in The Cambridge Handbook of Secondary Sanctions and International Law, supra note 4, at 117, 131–32.
• Id. at 130–31.
• Dodge, supra note 11, at 173.
• Id. at 175.
• IEEPA was the subject of the recent Supreme Court opinion regarding the legality of certain tariffs enacted during President Trump’s second term. Likewise, the question of who is subject to the jurisdiction of the United States has featured prominently in the Court’s consideration of the birthright citizenship case.
• Dodge, supra note 11, at 175.
• Id. at 176.
• Information about the dollar value of the flagged transactions was not available in every case. For further discussion of the 16% of cases missing this information, see infra Part II.B.
• The total figure for the actions in the data set was $3,158,365,264.95.
• See Christine Abely, The Russia Sanctions 47–48 (2023) (introducing the overcompliance phenomenon and its relationship to extraterritoriality).