Abstract:
Scholars have long disputed the legality under international law of U.S. sanctions programs that apply to entirely foreign transactions in order to shape conduct abroad. Relatively little attention has been paid in the scholarly conversation, however, to “currency-based” or “correspondent banking” theories where the U.S. government asserts jurisdiction over an otherwise foreign transaction purely because it is denominated in U.S. dollars.
This draft-in-progress with Professor Christine Abely is based on a newly compiled data set that reveals currency-based jurisdiction is in fact a cornerstone of U.S. sanctions practice. In an eight-year period covering two presidential administrations (2017–2025), we find that currency-based cases indeed represent a minority—only twenty percent—of the total number of actions undertaken by the Office of Foreign Assets Control (OFAC). Yet they have been used in a wide range of OFAC sanctions programs, and these cases are many of OFAC’s largest enforcements. They represent sixty percent of penalties assessed in the period and likely an even greater percent of sanctioned transaction value. Moreover, in the overwhelming majority of currency-based cases, no other justification for U.S. jurisdiction was apparently available. We accordingly argue that currency-based jurisdiction demands far greater attention than it currently receives and that its true scale must be taken into account. If such cases violate international—or even domestic—law, then bringing OFAC actions into compliance would have enormous impacts.