Third Party Liability and Economic Sanctions

Chapter 5 examined the doctrine of control liability in US corporate regulatory law and how it addresses the complexity of multi-national enterprises and their cross-border activities and the need to pierce the veil of corporate personality in order to make economic sanctions controls more effective against the owners and controllers of complex corporate groups. The coherent interpretation and application of domestic legal and regulatory principles are necessary to ensure consistent application and implementation of economic sanctions across jurisdictions. This chapter analyses principles of third party liability and how they apply to third party intermediaries and professionals who facilitate, assist or aid and abet commercial transactions with targeted states and specially designated entities. Indeed, an important feature of third party liability concerns its application not only to parties in actual or direct breach of the regulatory regime, but also to those who have facilitated, participated, assisted or aided and abetted such breaches. In particular, the Department of Treasury OFAC regulations impose various degrees of civil and criminal liability on third party financial institutions and professionals which serve as intermediaries or accessories in facilitating or assisting transactions in violation of US economic sanctions.’ Similarly, the Bureau of Industry and Security Export Administration Regulations (EARs) impose civil and criminal liability on those who facilitate or assist others in direct breach of US economic sanctions.2