Top Treasury Official Defends Agency's Sanctions Approach

A top Treasury official acknowledged criticism that the agency is abusing its sanctions powers but stood by the approach, saying the sanctions are necessary and that the Treasury is mitigating impacts on U.S. companies by issuing more compliance guidance.

Sigal Mandelker, Treasury’s undersecretary for terrorism and financial intelligence, said the criticism is nothing new. “This is a conversation that’s been going on for some time. The argument that we’ve been overusing our tools -- we’ve heard it for many, many years,” Mandelker said during a July 31 panel hosted by the Center for Strategic and International Studies. “Although it's something that people have been talking about a lot today.”

Experts have criticized the Trump administration’s lack of a clear foreign policy and sanctions strategy, saying sanctions are most effective when they have a specific goal and are used as leverage in negotiations (see 1905130046). Other experts have been critical of the U.S.'s sanctions strategy against Iran, saying the administration has almost no significant sanctions left to impose on the country (see 1907030048).

But Mandelker said that, beginning in World War II, U.S. sanctions have a long history of working effectively, and she seemed to disagree with the critique that some U.S. sanctions programs are too broad. “It was the right thing to do then, and it is the right thing to do today,” she said. “When you look at how we’re using this tool, we’re using it very pointedly, very strategically to disrupt the ability of bad actors to do bad things.”

But she also conceded that some sanctions may unintentionally hurt U.S. and global companies. She said the Treasury’s Office of Foreign Assets Control is “prioritizing” communication with U.S. industries through “detailed press releases,” sanctions advisories, guidance and frequently asked questions lists to help lessen the damage. Mandelker pointed to OFAC’s May 2 sanctions compliance guide that detailed components of what the agency said are effective compliance programs (see 1905030055). Mandelker said OFAC will continue to increase those types of guidance.

“We have to be mindful that there may be unintended consequences,” she said. ”We’re always thinking about those potential effects.”

Mandelker also dismissed the notion that U.S. sanctions are largely unilateral and that the U.S. doesn't prioritize international cooperation. She pointed to the Financial Action Task Force, an international governmental organization to combat money laundering, as an example of cooperation. “We put a lot of effort into strengthening partnerships around the world, on the Hill and in the private sector,” Mandelker said. “We’re going to be much more successful if we work in partnership with allies and partners to disrupt bad activity.”