UAB Magazine Issue October 2026

92 Study Union of Arab Banks - October - 2026 Understanding the rules: Primary and secondary sanctions U.S. sanctions are not all the same. Understanding the differences is important because the consequences for a bank depend on the rules that apply to a particular transaction. Primary sanctions generally restrict dealings involving designated individuals, companies, governments, or other parties where the relevant U.S. jurisdictional requirements are met. These restrictions directly affect U.S. persons and institutions, while non-U.S. banks may also be exposed through their activities, use of U.S. financial channels, or involvement in prohibited transactions. Secondary sanctions operate differently. Under certain U.S. legal authorities, non-U.S. institutions may face sanctions for specified dealings with designated parties or activities, evenwhere a transaction does not otherwise involve U.S. persons. Whether a particular transaction creates such exposure depends on the applicable legal authority, the parties involved, the nature of the activity, and any relevant exceptions or authorizations. A transaction involving a high-risk jurisdiction does not, by itself, establish that a sanctions violation has occurred. Depending on the applicable authority, the consequences may include restrictions on access to U.S. correspondent accounts or other measures. Another important instrument is Section 311 of the USA PATRIOT Act. It allows the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) to propose or impose special measures against foreign financial institutions identified as primary money laundering concerns. These measures are distinct from secondary sanctions, although their practical consequences can be similar, particularly when access to the U.S. financial system is affected . Instrument What it addresses Why it matters for MENA banks Primary sanctions Prohibited dealings involving designated parties within the relevant legal scope Payments, customers, and transactions may be blocked or rejected Secondary sanctions Specified dealings by non- U.S. persons or institutions under applicable sanctions authorities Certain activities may put access to U.S. financial services at risk FinCEN Section 311 measures Foreign institutions identified as primary money laundering concerns U.S. correspondent accounts may be restricted or prohibited AML/CFT requirements Money laundering and terrorist financing risks Weak customer due diligence and transaction monitoring can create regulatory and commercial exposure Source: Union of Arab Banks – Research Department based on U.S. regulatory guidance and banking- sector analysis. Table 1. Key U.S. regulatory instruments and their implications for banks