“The practical effect of this is that it makes it almost impossible for these individuals and entities to interact with the U.S. financial system, and by virtue of that, with much of the global financial system,” Alex Zerden told VOA. He is a former Treasury Department official who worked on anti-money laundering and terrorism finance issues.
U.S. financial sanctions have extremely broad reach for a number of reasons, one of which is the global dominance of the U.S. financial services industry. A large percentage of transactions between entities outside the United States still involve U.S. banks and payments systems, meaning that non-U.S. financial institutions can be effectively cut off from global commerce if they do business with OFAC-sanctioned entities.
Zerden, now the CEO of Capitol Peak Strategies, said that even though some governments in the Middle East consider Hamas a legitimate political entity, the banks in their countries are still likely to observe OFAC’s sanctions on the organization for fear of losing the ability to transact with U.S. banks.
“Sanctions are sanctions for the purposes of compliance. So, irrespective of the political views of certain jurisdictions, banks seeking to access the U.S. financial system will likely inevitably comply with these sanctions,” Zerden said.
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